Commentary: Fort Worth’s economic recovery should emphasize startups and entrepreneurs
Fort Worth, Texas – More than half of the companies in today’s Fortune 500 were started during a recession or a bear market, according to research by the Kauffman Foundation.
Locally, American Airlines, Bell, Galderma and Alcon all were started during recessions. Technology companies like Airbnb, Github, Slack, Uber, WhatsApp, Square and Stripe all were started during the recession of 2008-2009.
Combined, these seven companies now have a cumulative market capitalization of $153 billion, which is larger than the combined values of Lockheed Martin, Alcon, American Airlines and Bell. For perspective, these companies employ more than 42,000 people, which is similar to the total employment of locally based BNSF.
How should Fort Worth approach the current path toward recession, and what lessons can be learned from the last recession to plan for future economic prosperity?
In short, the answer is startups. We wholeheartedly believe our city leadership should focus on inventing Fort Worth’s future by investing time and financial resources in our startup community.
Recession can catalyze the formation of startups because people unexpectedly lose their jobs and decide that it’s finally time to start a company and pursue a passion. Sometimes founders can utilize severance packages as seed capital, or even cash in an IRA to get a company off the ground.
But there has to be a community of resources to support these efforts or they will fail or leave the city.
It is widely understood in the Texas startup community that Fort Worth is significantly behind its peer cities when it comes to supporting entrepreneurs and startups. What can Fort Worth do now to close this gap and accelerate a boom of startup activity in the aftermath of COVID-19?
First, Fort Worth must expand its existing entrepreneurship resources that are already working on new company formation.
Tech Fort Worth, Accelerate DFW, the Business Assistance Center, and others, would benefit tremendously from additional financial support. Currently, the City of Fort Worth spends 1.4% of its total budget on economic development and most of those funds are spent on corporate incentives for existing companies. Very little time or money is spent on new company creation. It’s time to step up and promote entrepreneurship in our city.
Second, our city needs to address critical gaps in its entrepreneurial ecosystem, the lack of entrepreneurial support programs. Fort Worth only has only one true incubator (Tech Fort Worth) and no startup accelerator programs.
For reference, Denver, a city smaller than Fort Worth, has 12 accelerator programs. Recent 2018 data shows that entrepreneurs raised eight times more venture capital funding in Charlotte, North Carolina, 35 times more in Columbus, Ohio, and 120 times more in Austin compared to entrepreneurs in Fort Worth.
How do we change this?
New programs and matching funds should be started in Fort Worth to fill education, acceleration, and funding gaps in our city.
Third, city leadership should increase focus on developing a tech workforce to fill the jobs of the future. According to a study led by the Information Technology and Innovation Foundation and the Brookings Institution, between 2005 and 2017, five metropolitan areas (Boston, San Diego, San Francisco, Seattle and San Jose) accounted for 90% of all U.S. high-tech job growth.
Fort Worth can attract and retain tech talent due to our low cost of living and favorable regulatory climate.
Finally, the most successful startups operate in a well-connected, well-funded ecosystem.
Supporting our startups is not solely the responsibility of our government and economic development organizations; it is up to all of us to get engaged. Big companies, investors, family offices, non-profits, retirees and foundations all have a role to play in seeding and growing the local companies of the future.
Our community needs to rally around the innovators and job creators to help build the employers and wealth creators of the future.
We all have a part to play in this process of reinventing our city so that we are well positioned for the future. It’s time for this to be part of the real conversation in this city.
Cameron Cushman is director of Innovation Ecosystems at The University of North Texas Health Science Center at Fort Worth and host of the Innovate Fort Worth podcast.
Les Kreis is a managing partner and co-founder of Fort Worth venture capital firm, Bios Partners as well as Principal at Steelhead Capital Management.