This is what we’re trying to do with VilCap Communities, help bring together communities of startups in different cities across the country and help them share resources, share networks, to help them compete with a place like New York or Silicon Valley. We see that there are plenty of unique local strengths that will help cities get there.
What’s the ideal process for building entrepreneurs? It’s not isolation, because an isolated entrepreneur inevitably turns into a sad person that loves Cartoon Network and hates human interaction, building a product in solitude that never receives the feedback necessary to help it grow. No, the ideal process of building an entrepreneur hinges on communities, a place offering a myriad of resources to would-be CEOs — knowledge, access, training, feedback, all of the things that every startup business requires to flourish. There are select areas where this framework is already in place, places like Silicon Valley and New York, promoting a healthy culture for entrepreneurs to test out ideas, interact with investors and consumers, and use these resources to potentially create a fantastic business. The flip side is obvious — there are countless areas that lack a prosperous entrepreneurial community, even though a push in the right direction could turn many of these areas into a place entrepreneurs could thrive.
Village Capital has spent the last seven years bringing together entrepreneurs from similar communities, giving them the opportunity to work with and learn from people attacking the same problems, all based around their peer-selected investment model (more on this later). During the course of this process, a question arose — what if we set up communities, both domestic and foreign, designed to help entrepreneurs flourish in areas that haven’t been mined in the same manner as a Silicon Valley or New York?
The answer to this question is VilCap Communities.
“Our goal is to get into cities that are trying to build a community around entrepreneurs,” said Chris Cusak, Senior Associate for Special Projects at Village Capital. “The best part of what we do, the unique part of what we do is this peer-selection model, this methodology that we think gives accelerators and early-stage investors a better way to make investment decisions. So how can we help people who are interested in trying to do that, do it themselves?”
I promised an explanation on the peer-selected investment model, so here goes — pulling together a cohort of companies working on a specific sector, each entrepreneur is asked to grade the other companies based upon defined criteria and at the end of the program, the top two companies receive investment dollars.
VilCap Communities will launch 11 international communities and between 12–15 United States communities in 2016 behind this methodology, where entrepreneurs can grow, learn, and connect with a variety of helpful individuals.
“We’ve done a formal set of customer discovery and got a lot of feedback,” said Cusak. “We talked to 400 organizations around the world and specifically designed this program with their feedback and goals in mind. We heard two pretty consistent problems. One, early-stage investors can’t find access to companies solving the problems they care about. And also there are lots of accelerators that are spinning off great companies that can’t help them find investors — not just investors, but that broader community support that entrepreneurs need to grow.”
Though the global communities have already been announced, VilCap Communities will officially launch on March 18 during a weekend event in Salt Lake City. This event — put on by Village Capital with help from Ewing Marion Kauffman Foundation, Sorenson Global Impact Investing Center, Revolution, and Rise of the Rest — will bring together VilCap community leaders from around the world and will be keynoted by Steve Case, co-founder of AOL and Revolution. Other festivities include a gathering of funders and investors on March 19 and a ski day on March 20.
“We’re asking applicants to pick a sector that they’re uniquely positioned to support in their community,” said Cusak. “We’ve gotten applications from more than 35 cities across the country. We’ve gotten a total — between our US and international application pools — more than 100 folks interested who really want to solve a unique problem relevant to their community and do it using local resources that they feel are stronger than most other places.”
Not every startup community can be Silicon Valley — this is completely fine, as I’ve written about before on this website. VilCap Communities isn’t trying to turn every community into Silicon Valley, but rather provide a way for entrepreneurs to embrace and profit from the things exclusive to their area.
“We just ran one of our core Village Capital programs in Albuquerque, a water-focused program,” said Cusak. “And look, Albuquerque would be the first to tell you as a city that they’re not competitive with Silicon Valley across the board and certainly not with consumer technology startups and things like that. But what Albuquerque does have is a unique understanding of water efficiency and sanitation issues. They have an incredible amount of research from the Sandia Labs, New Mexico State, and all these other universities that have a huge amount of government resources dedicated to water. The community itself is receptive to water efficiency products because they’ve been living through a drought for decades. So all of this comes together and makes for a really good place to start a water business, especially if you’re using technology.”
This is the beauty of startup communities. They provide a place for entrepreneurs to connect and grow alongside like-minded individuals, people who view the problems of a specific area through the same lens. Albuquerque is uniquely positioned to focus on the problem of water efficiency, just as many other communities are uniquely positioned to address the problems within their own area. VilCap Communities wants this to happen, that’s why they are bringing together entrepreneurs and investors to make it so.
“Each of those communities has committed at least $50,000, some have committed more, to peer-selected investment,” said Cusak. “So we’ll have more than $1 million committed in the US to this new methodology that we’ve been using for awhile, but has only been ours. Now, we have a lot of other groups committed and that represents angel investors, early-stage folks, accelerators and other community leaders, that are committing capital to put behind entrepreneurs in their own community.”
In any walk of life, being part of a community matters. This is especially relevant to entrepreneurs, whose very success depends prominently on having access to all of the people, resources, and feedback that a business needs to bloom. Can communities like this thrive outside of already established startup hotspots? VilCap Communities believes so and in 2016, they’re committed to making it happen.
“At the core of Village Capital’s work over the last seven years is this idea of peer-selected investment,” said Cusak. “This is what we’re trying to do with VilCap Communities, help bring together communities of startups in different cities across the country and help them share resources, share networks, to help them compete with a place like New York or Silicon Valley. We see that there are plenty of unique local strengths that will help cities get there.”
Published 2/9/2016
