By Jennifer Weinhart, Senior Policy Advisor, Engine Advocacy & Foundation
While innovative ideas and entrepreneurship can be found everywhere across the country, startup founders from rural areas and small revitalizing towns face unique challenges. From barriers to securing capital, to limited talent availability, to problems accessing reliable, affordable broadband, launching and growing a startup in a rural community can be a steep climb for many founders. As policymakers consider everything from oversight of government grants, to broadband reliability, to STEM education, and more, they should keep the perspective of rural founders in mind.
Government programs and grants, both for regional economic development and as a direct resource for startups and support organizations, are critical sources of capital for the innovation ecosystem, but accessibility of these resources can be an issue. Many startups and support organizations, particularly in rural communities, are lean and have limited staff. Accessing and applying for grants and programs is both complex and time consuming, if would-be recipients are aware of the programs and processes in the first place. Policymakers should take steps to publicize these programs in communities all across the country as well as to streamline and simplify grant application processes to make them more accessible to rural startup ecosystem members.
But government grants aren’t enough to sustain the startup ecosystem, and rural and rural-adjacent founders lack the connections to venture capital investments seen in larger tech hubs. According to the Center on Rural Innovation, less than 1 percent of venture capital is awarded to rural startups. As Lee Lance, co-founder and CEO of Ecobot based in Asheville, North Carolina, explained, his company had to look to the nearby Research Triangle for initial funding. “If we had tried to raise strictly in Asheville, we wouldn’t have been able to get off the ground,” he said.
As Ecobot was able to tap into networks of investors looking to invest outside of New York City and Silicon Valley, rural startups could benefit from similarly-minded investment partners. Federal help to direct and incentivize investment in rural startups, including angel investment and venture capital, can help to provide opportunities rural startups need.
Even with adequate investment, rural startups still face struggles in launching and growing due to talent needs. Without a significant population in rural areas — let alone a large population with STEM skills and education — rural entrepreneurs have a smaller labor force to draw from and are at a disadvantage when competing against large, better resourced companies when trying to attract the limited pool of skilled workers. Federal funds for the development of rural talent pools are needed to incentivize the development of a rural technology workforce.
As Amanda Chocko, Director of Entrepreneurship at Zeeland, Michigan-based Lakeshore Advantage explained, “Quite often, our entrepreneurs are competing with larger companies for the talent they need to generate revenue and raise capital. So we need to look at ways of giving startups better access to the talent they need to get off the ground. Whether it’s through internships, apprenticeships, or entrepreneurs-in-residence programs, anything that can be subsidized or formalized to provide more access to talented workers would be a huge help for these companies.” Steps to strengthen STEM training and education in rural communities so that young people are compelled to pursue technology careers would help alleviate this talent shortage.
Innovation ecosystems in rural areas are also dramatically impacted by the availability of reliable and affordable broadband. Communities that lack sufficient Internet access have trouble attracting and retaining high-skilled talent, investment, and innovative technology companies. “Attracting more companies to the region, bringing in the talent of the future, and educating our students and tomorrow’s startup founders is all reliant on access to high-speed Internet,” Chocko explained.
And even when startups themselves have broadband access, their users might not. As Lance of Ecobot explained, his company built its tool knowing that users — typically civil engineers doing remote fieldwork on construction projects working towards approval from environmental regulators — don’t have reliable access at any point while they’re on a job, let alone while they’re collecting field data. While Ecobot can work with intermittent and low-quality Internet access, broadband access should catch up with innovation to make efficiency and cost-effectiveness more accessible, Lance explained. “From our perspective, technology is what will save the world and bolster the economy — not cutting back environmental policy,” he said. “Additionally, more advanced technology will help us reach another one of our goals — getting construction started more efficiently and at a lower cost.”
As policymakers consider the wide range of issues impacting startup ecosystems and rural populations, it’s critical that they see where the two overlap and how policy can support rural startup founders.
Engine is a non-profit technology policy, research, and advocacy organization that bridges the gap between policymakers and startups. Engine works with government and a community of thousands of high-technology, growth-oriented startups across the nation to support the development of technology entrepreneurship through economic research, policy analysis, and advocacy on local and national issues.