Thursday, August 14, 2014

Is there a role for Government in an Entrepreneurial Community?

By Paul Chen

Currently there has been a big discussion within the Krakow startup community about getting government involved.  Some think that the community is self sufficient and can operate well on its own.  While others believe that there is a role for government in the startup community or the entrepreneurship community in general.  However, both parties do agree that government should not totally be involved in the operations.   As Brad Feld stated in his book and posts, the government should not be the leading force in a entrepreneurial community, they are one of the "feeders" or a support.

In a previous post, I said that elections have consequences.  I stand by that statement.  It is election season here in Krakow.  We have many candidates who would like to be mayor.  I don't endorse any one of the candidates but I do support those who would start or continue a serious dialogue with the community to address the issues of concern.  I would also support the candidate who would make starting a business easier, and improve the infrastructure to make it easier to serve the customers.  

Open Data

One of the ways that a city government can help the startups or the local business community is to make all kinds of data publicly available.  The city of Taipei, Taiwan makes most of its data available to the public and allows anyone to start some initiatives to tackle these problems.   Catherine Bracy has also done some great things with her Code for America program when cities opened up their data.

In the current new trend of dealing with big data, clever people who can spot trends and patterns can use this information to develop new products and services to help people or kill some common pains.  It actually helps three segments of population.  It helps the governement get rid of something that was bothering it.  It helps some entrepreneur make a business.  It serves the community and the consumers.  It could also prevent future problems.  

Factories and Warehouses

One of the things that a city does is to give tax incentives to companies to open up shop in the city.  Another are grants and connecting startups with mentors and investors.  Another example is that the Singapore government decided to do something about the physical infrastructure.  Block-71 was the first government experiment to house start-ups. Originally a dying industrial zone, it has been transformed into a place for entrepreneurs to work and grow together. Singapore now plans to expand the Block projects to three buildings and double the number of companies working in the Blocks from 250 to 500 by the end of the year.  

At the present, Krakow startups are opening up shop in old flats, factories, and warehouses.  Startups are using a lot of the money that they raised from investors on office space renovations and/or rent rather than using the money on product and customer development. 
The only way for Polish startups to work in a decent environment is to work in a incubator or accelerator such as Hubraum, Inkubator Technologiczny w Krakowie, or AIP.  Wouldn't it be great to have more nice spaces.  There has been a lot of criticism about the Smolna Entrepreneur space in Warsaw, although being posh, it is underserving the community due to the amount of red tape being a governmental facility.  

Building Bridges

David Cummings stated in one of his posts, that the government can also serve as a bridge between the entrepreneurs to investors and other businesses.  This would help greatly in customer development and testing out the product market fit.  Local businesses, especially larger employers, actively work to maintain strong ties with the government to help keep the region moving forward. These relationships between government and influential employers are perfect to parlay into a “Buy Local” campaign.  Even a tiny percentage of the purchasing power of local businesses has the potential to create more jobs and help successful startups. 

There is definitely a role for either the local, regional, or national government in supporting the Polish startup communities.  It could be through open data, providing high quality spaces, or connecting entrepreneurs to others.  One important thing to remember is that entrepreneurs are supposed to independent and should not rely on the government.  There are some bad European habits of accepting and using EU funds in a unproductive manner.  One should also remember that governments change, unless you live in North Korea, or a district where your congressman is serving double digit terms, people can vote them out.  So they usually have to answer to their constituencies.  Eric Cantor should have remembered that.  

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