The city as startup machine: The urban underpinnings of modern entrepreneurship

Abstract

This chapter lays out the connection between urbanism and entrepreneurship. For decades, it was thought that startup activity tended to cluster in suburban office parks or “nerdistans” like those of California’s Silicon Valley. We argue that tech startups are increasingly clustered in large global cities and metro areas and in denser urban neighborhoods or districts within those cities. In effect, the city stands as the organizing unit platform for entrepreneurial activity, bringing together the talent, knowledge, capital, and other assets required for it to occur. To advance this argument, the chapter marries the literatures on entrepreneurship going back to the seminal contributions of Joseph Schumpeter to the theories of urban clustering and dynamic cities associated with Jane Jacobs, Alfred Marshall, and their disciples. It then arrays a variety of empirical evidence on the location of high-tech startup activity to make this case, including data on the concentration of venture capital investment in high-tech startups in large global cities and in dense urban neighborhoods within those large cities. It also discusses the rise of a new segment of high-technology industry, urban tech, which spans new sectors like ride hailing, co-living, co-working, real estate technology, construction technology, and smart city technology, which has made the city not just the platform for but the object of entrepreneurial startup activity.