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2019-034 Tech EntrepreneurshipDate: Feb. 22, 2019 Report No. 2019-034 INFORMAL STAFF REPORT TO MAYOR AND CITY COUNCIL SUBJECT: Alternative strategies to promote and support tech entrepreneurship and tech enabled-business growth EXECUTIVE SUMMARY: This Informal Staff Report was prepared in response to a request for information from Council member Paul Meltzer on the possible strategies to promote user tech entrepreneurs. This ISR provides information on successful tech startup communities/regions in the nation; brief case studies of two communities; and the essential components of an entrepreneurship ecosystem. The report also highlights the current assets and programs already in place in Denton to foster entrepreneurship and tech through: the creation of Stoke, a coworking space and entrepreneurial center, university and DISD’s role in educating the workforce; and the necessary infrastructure to support tech and tech enabled businesses. Finally, the report addresses the current and possible strategies for tech and Science Technology Engineering and Mathematics (STEM) development and growth in our community. BACKGROUND: Tech Communities Staff conducted research on successful tech communities and will highlight some of the main drivers for growth in tech and STEM occupations across the nation. The Praxis Strategy Group looked at job growth of 52 Metropolitan Statistical Areas (MSAs) from 2001 to 2013. The study examined the commonly associated tech industries such as software engineering and computer programing, as well as STEM related occupations. The study found that the four regions that experienced the greatest increase of tech jobs over the 12-year period were not located in the Bay Area, but were found in areas with lower cost of living and business friendly communities. Austin, Round Rock, San Marcos, Texas increased tech employment by 41% and STEM related jobs by 17%. Austin alone, was ranked number 1 for the most recent (2010-2013) period. Raleigh- Cary, North Carolina increased tech sector employment since 2001 by 54.7% and 24.6% increase in STEM jobs. Raleigh is similar to Denton for the major university presence in the community. Nashville, Tennessee’s tech employment rose 65.8%, with a significant increase of 160% in computer system design. This is due to the concentration of hospital management and healthcare related technology. Nashville is similar to Denton for their music presence in the community. San Jose, Sunnyvale, Santa Clara, California have experienced a decrease in STEM occupations by 12%, while Seattle, Tacoma, Bellview, Washington remain strong at 45% growth in tech jobs and a 19.5% rise in STEM occupations. The study found that this was due to the diversity of companies in the region. It also stated that Seattle, Nashville and Houston’s growth could be explained by manufacturing and increased demands for software services. Houston, Sugarland, Baytown, Texas has seen an increase in STEM industries by 24%, due to the “technology- intensive” energy sector in the region. The Houston area was ranked second to Silicon Valley in Date: Feb. 22, 2019 Report No. 2019-034 their concentration of engineers. The study pointed out that the majority of the scientists and engineers in the nation are employed in the manufacturing industry. Case Studies The Chamber of Austin has an economic initiative, Innovate Austin, to develop and grow tech and innovation oriented businesses. They have 85 incubators, accelerators, maker and coworking spaces in Austin. Their strategy is to provide information on five areas that drive innovation: talent, capital, innovation ecosystem, Dell Medical School Innovation District and international investment. The Austin Technology Council (ATC) supports the growth goals of businesses by providing knowledge and access in the following: capital, talent, mentoring, and networking. They advocate for a supportive environment for the success of tech companies through public policy, education and thought leadership. The ATC acts as a navigator for its members to provide a resource and talent channel. The Council was described as a platform for collaboration attracting regional tech and innovation leaders to Austin. The City of Boulder, Colorado has not become a leading tech community overnight. Their path toward technology began in 1950, with the creation of the National Bureau of Standards-Atomic Energy Commission, which acted as a catalyst for other colleges and the University of Colorado to create tech and computer study programs. The education system and investment in the tech sector have created a virtuous cycle where graduates can enter into the tech field following graduation. Some of this investment has come through smaller companies being acquired by larger tech firms. One of the most prominent books in the field by Brad Feld, Startup Communities: Building an Entrepreneurial Ecosystem in your City, focuses on Boulder, Colorado. The book has some interesting insights contrasting government and entrepreneurs. Government is described as not being self-aware, slow to act quickly and precisely, and as a bureaucracy. Networking is key to tech development, which is compared with the governmental hierarchy. The network model has no need for hierarchy, according to Feld. He also states that it is impossible to control a startup community and that this is the most important reason why government should not play a leadership role in the tech community. Entrepreneurship Ecosystem The essential components of an entrepreneurship ecosystem are presented below, courtesy of Don Mack at the Center for Rural Entrepreneurship, The importance of inclusive entrepreneurship ecosystems, according to Mack, requires a different set of skills for the development of this ecosystem. Staff needs to have the abilities to act as a network weaver, collaboration catalyst policy advocate, and cultural transformer, to name a few. Date: Feb. 22, 2019 Report No. 2019-034 Current Assets and Mechanisms to Foster Entrepreneurship and Tech Stoke Denton was ranked number 6 by City Lab as one of America's Top 25 High-Tech Hotspots. One of the catalysts for this growth in high-tech is Stoke, Denton’s coworking space and entrepreneurial center. Hickory & Rail Ventures took over the management of the coworking space in 2018. Their vision for Stoke is to make it the first of many places Denton entrepreneurs can call home. The center currently has 41 member companies. Hickory & Rail Ventures will bring Stoke exclusive partnerships with Denton organizations that will incubate, fund, and support Denton startups. One of the partners that already has committed since the management transition is the University of North Texas, which will offer extended- learning entrepreneurship programs at Stoke. Some other recent examples of their success include: • Flyp – An app that allows users to operate multiple phone numbers from a single smart phone. Flyp will assign users real, working phone numbers from any area code they choose. Users can then text and make/receive calls from those numbers, which each have a unique ringtone and voicemail box. • Upventur – Upventur is a social startup that gives outdoor enthusiasts and hobbyists a place to connect with fellow explorers, service providers, and experts. Upventur also offers athletes a platform to share their passion for their game and to connect with fans and fellow outdoor adventurists.  • Kubos – Kubos is a satellite software company targeting the emerging commercial space industry. It combines quality engineering, modern software development, and mission- critical services to serve the satellite industry better. When asked about what the City and City Council can do to attract/encourage growth of tech and tech-enabled businesses, Heather Gregory stated that she thinks that when government leadership supports the work and understands how to best provide that support, it can be very attractive to companies looking to start/stay or relocate in Denton. She suggested the following: • Attend events - we would love for members of council to join when we have mixers, headshot day, or the forthcoming entrepreneurship conference (or anything else for that Date: Feb. 22, 2019 Report No. 2019-034 matter). Being in attendance at Stoke or TechMill events, meeting entrepreneurs/mentors/investors would be very valuable to everyone. • Consider attending/sending some representation to one of the Kauffman Foundation conferences. Dates haven't been published for 2019 yet, but here are links to the ESHIP Summit and Mayors Conference on Entrepreneurship. • Read the books and/or blogs about the startup revolution and building startup communities. Tech and STEM Education Education is one of the greatest assets our community with the UNT, Texas Woman’s University (TWU) and will soon have a branch campus of North Central Texas College (NCTC), the First State Bank Exchange, in Downtown Denton. • UNT is ranked as a Tier One Research University by Carnegie, has been aggressive in its growth of both graduate and Ph.D. programs, and is considered a leader in computer sciences, video game design, logistics, and design thinking. UNT has been recognized for its work in many different fields, from Advanced Materials and Manufacturing Processes to Logistics Research. • TWU holds a distinctive position as the nation’s largest university primarily for women, and advancing women’s careers and leadership abilities are key elements of its vision, mission, and strategy. In 2017, the State of Texas funded TWU to create the state’s only Center for Women’s Leadership in Business, Politics, and Public Policy. • NCTC is the State of Texas’ workforce training partner in Denton County and has trained thousands of workers in various industries. NCTC is the only Department of Labor TechHire grant recipient in the state. Through this four-year, $4 million grant, NCTC is increasing the tech talent pipeline in Denton and the region. Denton Independent School District (DISD) is one of the fastest-growing public educational systems in the region, and recognizes that coding and development are becoming fundamental skill requirements to prepare students for the workforce. At the K-5th grade level, DISD offers robotics and Minecraft clubs along with coding and Raspberry PI summer camps. Middle school and high school campuses have a computer science course pathway from 8-12th grade, participate in the Hour of Code global initiative, and offer robotics clubs. What’s more, DISD’s Advanced Technology Center provides high school juniors and seniors with professional training and/or high school/university dual credit opportunities, including nine professional computer certifications. Infrastructure The City of Denton wants to foster an environment that attracts the technology industry to Denton and nurtures the growth of new technology companies. Available, affordable, and reliable high- speed broadband is critical to accomplishing those goals. There are a number of internet providers and services offered to business and industry in Denton to include: Charter, Frontier, and Unite Private Networks (UPN). The City also provides free WiFi in the Downtown square and East Hickory corridor. CONCLUSION/RECOMMENDATIONS: Economic Development staff have made strides in the development of tech and tech enabled businesses and industry. Networking and training events are critical areas that the City can Date: Feb. 22, 2019 Report No. 2019-034 continue to foster and will continue to work with Stoke to support their efforts to provide these resources to launch, build and grow tech businesses. Economic Development recruitment efforts will continue to highlight the university, college and DISD tech assets and their ability to produce a high-skilled workforce in Denton. Public private academic partnerships and training programs will also continue to be pursued. Staff will work with the CVB, Stoke, and other partners to encourage a culture and climate that promotes entrepreneurship and tech development. Denton participated in the SXSW Accelerator Pitch Event in Austin, Texas in 2018, had a booth at the SXSW Interactive show in 2016, 2017, and is monitoring the leads from this endeavor. The site location and recruitment process is very competitive and may take a year to several years for a community to successfully recruit a prospect. Staff will examine possible funding sources, tools and mechanisms for new targeted incentives. A grant program that may work well for tech and tech enabled businesses could be job based, since many of these businesses do not have a high capital investment. Staff could also look at the development of an innovation district around Stoke and the Transit Oriented Development in Downtown Denton. Staff has looked at creating and maintaining a diversified tax base. This concept should also be applied to include tech diversification when recruiting. Staff can examine tech and STEM occupations to target for recruitment, similar to the targeted industry sector that are identified in our incentive policy. One of the most prominent books in the field by Brad Field, which Heather Greggory recommended, provided some interesting insights contrasting government and entrepreneurs. Government can still play an active role in the tech community, but should not have a leadership role. After providing the key aspects that promote entrepreneurship and tech/STEM development, government should at times, get out of the way in order for the tech community to flourish. STAFF CONTACT: Caroline Booth, Director Department of Economic Development 940-349-7751 Caroline.Booth@cityofdenton.com