Startup community trends to watch

After the seismic disruption 2020 brought to startup communities everywhere, we’re in the midst of another major shift: the movement of human capital during the pandemic.

Startup community trends to watch

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After the seismic disruption 2020 brought to startup communities everywhere, we’re in the midst of another major shift: the movement of human capital during the pandemic. According to Upwork, near-term migration rates could be three to four times beyond usual, driven largely by the increase in remote work.

After a bit of research and reflection, I see a few interesting trends in play.

Trend #1: The Next Tech Hubs Will (Actually) Emerge

For years, articles about "the next Silicon Valley" have circulated in the US and abroad. While this notion is far oversimplified (and frankly, clickbait), many leaders have recently explored startup activity beyond the traditional tech hubs:

  • Steve Case, former AOL cofounder known for Revolution's Rise of the Rest Fund, predicts in his book The Third Wave that new hubs will develop where local policy, public-private partnerships and university research converge.
  • Brad Feld, author of Startup Communities: Building an Entrepreneurial Ecosystem in Your City and The Startup Community Way, posits that shifting talent and tax benefits will drive a "Great HQ Migration" to the states of Texas, Florida and Washington – or even Alaska, Nevada, South Dakota, and Wyoming.
  • Peter Yared, startup CEO and longtime San Francisco resident, examines the rise of sector specific "alt-cities," like Austin (tech), Miami (finance) and Nashville (music).

I predict the next tech hubs will not get big wins and headlines, but gain ground in "ecosystem market share," measurable in part by national shifts in capital deployed, talent hired and deals closed. There's an interesting roundup of 2020 data here.

But where will these new tech hubs actually emerge?

U.S. Census Bureau data shows the southeast and southwest growing rapidly.

If the census data above is any indication, major regional cities in the south and west will see a boost. The established startup communities of Atlanta, Nashville, Raleigh-Durham, Tampa, Miami, Denver, Salt Lake City, Phoenix, and all major cities in Texas will gain ground. Get ready to hear a lot about Texas, y’all.

"Austin? But do I have to apply?"

Vacation towns also stand to benefit, as an influx of remote tech workers seeking a change of scenery could accelerate local startup community growth. Years ago, Brad Feld's love for Boulder, CO and his ability to activate local angel capital planted the seeds for what has become a vibrant tech scene.

Other destinations that could emerge include Park City, UT, Truckee, CA, Honolulu, HI, Burlington, VT, and San Juan, PR. Perhaps the startup communities in these cities will grow as Boulder did, or experiments like Summit's Powder Mountain project will breathe new energy into the area.

A vista from Summit's Powder Mountain in Utah.

The real question, however, is how these cities will foster and retain healthy, meaningful community growth. A litany of social problems will likely arise, from rising housing costs and gentrification, to clashes between longtime residents and new arrivals. These issues have surfaced both near and far, from Seattle, WA to Lisbon, Portugal.

To mitigate this tension, ecosystem builders can organize “Intro to Our Startup Community” events or neighborhood town halls that connect new arrivals with longtime tech workers, main street small business owners and local residents in general.

The communities that navigate these disruptive changes with inclusion and care will emerge as the next wave of success stories.

Trend #2: The Rise of Tech in Edge Cities

The major tech cities of San Francisco and New York have lost residents, but there's more to the story than a mass exodus. James Currier, general partner at seed-stage venture firm NfX, argues that the math still supports established tech hubs, and founders should take note.

According to a recent study by moving services company MyMove, many people in major tech hubs actually relocated to city peripheries in the first six months of the pandemic. Areas such as Oakland, CA, Long Island City, NY, and Santa Monica, CA all saw a net increase, for instance.

MyMove examined change-of-address requests across 4 major cities, highlighting a trend of residents moving to edge cities.

These "edge cities" provide a welcome solution for city residents who seek urban amenities without moving to the suburbs. Whether drawn to more space, walkable neighborhoods or quick access to downtown, these movers have found a balance in edge cities. A few other areas that could grow quickly are Arlington, VA, Scottsdale, AZ, and the Hudson Valley in New York.

I've lived this experience firsthand as a remote employee in Brooklyn, NY. Before the pandemic, my typical week involved working from home, a flex membership at a coworking space a 10-minute walk away, and one to two trips into Manhattan for lunch or meetings at off hours. While Brooklyn already has more startup density than most edge cities, it exemplifies a future trend.

The migration of people from city cores to edge cities will create more distributed and accessible startup communities. I predict increased demand for nearby, flexible entrepreneurship resources, such as hyper-local and remote-friendly coworking, hybrid events and entrepreneur support groups. The edge cities that manage this demand thoughtfully have an opportunity to create thriving neighborhoods for all.

Trend #3: Relocation Latency

Although the pandemic nudged many people towards a new chapter of their lives, it's also placed millions in a holding pattern.

According to a Pew Research Center study last July, 52 percent of young adults were "living with a parent." The effective closure of social life in cities has created a regressive relocation trend: a growing swath of Millennial and Gen-Z young adults have moved home.

Many young adults are "living with a parent," limiting their participation in startup communities.

Young professionals are a key pillar of startup communities, where they often explore new ideas, attend hackathons and form the talent pipeline. Much of this crucial workforce is now absent from prominent startup communities, putting youthful startup energy on pause nationwide.

This relocation latency is a trend with a ton of kinetic potential. These young adults could be students fresh on the job hunt for the first time, unemployed due to recent layoffs, or now fully remote employees looking to save money. They could be caring for family members at home, working odd jobs or exploring the increasingly accessible creator economy. Regardless, their presence has dwindled in major tech hubs everywhere.

After a year back at home, I believe the vast majority of this workforce will return to startup communities with renewed skill, excitement and intention. In fact, their delayed relocation could backfill the departure of tech employees from city cores by mid-2022.

The Future and Fundamentals

Of course, only time will reveal the future of startup communities. The pandemic has thrown off many life plans, spurring a massive human migration and (hopefully net positive) social changes.

Trends aside, the fundamentals remain:

  • Startup communities must be entrepreneur led.
  • They must be welcoming to new arrivals and inclusive to all.
  • They require careful stewardship and devotion to values.
  • They take decades to build.

As startup community leaders look forward, they can look to these fundamentals to navigate these trends in the year ahead and beyond.