A Cold Shower for Startup Communities?

Like many people, we are big fans of startup communities. We’d like to think that the benefits of these groups, and their economic and social impact, is self-evident. But we’re even bigger fans of contrarian reasoning, and having one’s beliefs challenged is thought-provoking, so this post naturally caught our eye. for it turns out that there might be a little more self at stake than actual evidence.

The author, a PhD student named Carlos Kemeny, sets loose a few pesky little data swarms into the utopian startup paradise. He writes:

The startup movement is an appealing prospect for entrepreneurs, regional investors, and policy makers. However, even with flashy launches and rebranding efforts, regions are still struggling to lure venture capital dollars – a strong predictor of a vibrant, sustainable entrepreneurial community – away from Silicon Valley. Venture capital investment data […] suggest that uninformed efforts to create entrepreneurial communities may be in vain. 

In Colorado, such heresy means contradicting the gospel of Pope Feld, which you don’t want to do (unless you are the U.S. Customs office). But Kemeny goes right into the chapel:

The problem is that Feld, as well as many who have jumped on the bandwagon, have failed to evaluate rigorously the impact and sustainability of entrepreneurial communities through quantitative and qualitative data analysis.  

In particular, while Boulder’s share of venture investment has grown, Colorado’s has not, which means that instead of growing the pie, all the energy going to Boulder’s startup communities may simply be redistributing it. The argument is admittedly one-dimensional, and relies primarily on the paucity of venture capital dollars that flow outside California. And to his credit, Kemeny argues for standardization of metrics that might allow this to be more than a battle of subjective opinions.

So until the data materializes, we are just going to head back to our iBean Bag, slump into our Scottevest hoodie, hide behind our customized MacBook Air, sip our Blue Bottle soy latte, stick our bluebuds in our ears and wait until this is all over.