TechStars

An open letter to venture capitalists frustrated with the federal government shutdown

Posted on by Luke Fretwell
Photo: <a href="http://www.flickr.com/photos/michaelreuter/4068776519/">historilla</a>

Photo: historilla

Lately, what’s happening between both ends of Pennsylvania Avenue is starting to catch the ire of some venture capitalists who, like many Americans already, are starting to publicly vent their frustrations.

Two in particular stand out.

TechStars founder Brad Feld:

And Y Combinator founder Paul Graham:

As a fellow citizen, I couldn’t agree more with their sentiments, however, I’m equally embarrassed by the VC community’s inability to focus its attention on entrepreneurial ventures that matter and could play a vital role in changing all of this.

Y Combinator, Silicon Valley’s darling startup incubator, has a long list of funded companies, none of which have a significant pitch on democratizing the political process or offering much-needed technology solutions to the bureaucracy.

Likewise, TechStars’ portfolio of funded ventures has not one civic-focused startup. According to its own official stats, the average company funding amount is $1.5 million. With 28 companies having failed, that’s a good $30 million dollars that could have easily gone into worthwhile, perhaps less-risky, civic ventures.

From grassroots campaign tools to fixing the bureaucratic minutiae of government procurement and everything in between, there are civic entrepreneurs chomping at the bit to get a fraction of funding in the range of just those losses.

If you’re a VC frustrated with the federal government shutdown, here’s my advice:

  • Fund 10 percent of your portfolio to civic-focused ventures aimed at solving bureaucratic technology issues or the campaigns and elections process.
  • Pivot your expectations for these ventures. The civic vendor market has a much longer sales cycle than those in the private sector. You’ll need patience, but estimates place the government IT market at $140 billion.

Unlike your average citizen (or furloughed public servant), VCs like Feld and Graham can have a huge impact beyond voting or voicing concerns to elected officials. They can play a major role in disrupting markets and if there’s one industry that could use some disruption, it’s the government services industry.

Pundit (amongst many other other notable accomplishments) Vivek Wadhwa effectively summarizes Silicon Valley’s sentiment in a recent Washington Post column “Silicon Valley shrugs off Washington shutdown“:

Perhaps it is best this way. Rather than fighting unproductive and destructive battles about budgets and health insurance, our innovators are chugging along inventing technologies that will make industries more productive and reduce the cost of healthcare. They are doing what they do best—looking forward, competing, and collaborating. Someone has to save the economy after all. Our politicians certainly won’t.

While I couldn’t agree more with Wadhwa on the “chugging along” part, more entrepreneurial and VC energy needs to focus on problems that will solve the state of our civic affairs. Saving the economy is important, but if all we’re left with is another mobile advertising platform or photo sharing social network, are we really better off as a country?

The good news is, appropriately, Democracy.com, a “global social platform for participatory democracy and political engagement,” launched this week with $2 million in seed funding. Other companies, too, have found funding to make a go at it, such as NationBuilder and SeeClickFix.

My intention isn’t to single out Feld or Graham. I have much respect for both of them. They have created amazing communities of innovators and inspire and mentor entrepreneurs everywhere beyond just their work with Y Combinator and TechStars.

I’d just love to see them and their peers take a meaningful lead on leveraging their influence and capital to change the entrepreneurial focus of the startup community. The best way they can do that is to start funding ventures that directly impact foundational aspects to a stronger civil society.

Yes, it will take some serious VC pivoting, but if you care about your country, it’s worth the investment.

Let democracy be your exit strategy.

Building civic ‘Startup Communities’

Posted on by Luke Fretwell

Startup Communities

I’ve been thinking a lot about the importance of a more structured approach to community with respect to the civic technology movement, which is why I picked up Brad Feld’s ‘Startup Communities: Building an Entrepreneurial Ecosystem in Your City.’

Feld, a successful entrepreneur and venture capitalist, brings a huge dose of humility to his writing and genuinely seems to live up to his “give more than you get” mantra. He’s the founder of TechStars and is a big influence on Boulder’s emergence as a hub of technology entrepreneurs and startups, having organized regular meetups of various kinds to bring the community together.

I loved this book and spent the final pages reading it as I walked through SFO after just getting off a cross-country flight. Feld’s advice is comprehensive, concise and inspiring.

One relevant aspect of the book is a dedicated chapter on government, “Contrasts Between Entrepreneurs and Government,” that highlights the obvious differences between the two, and essentially designates government’s role more as a “feeder,” rather than leader, in fostering startup communities (a feeder encourages others to be part of the community).

His assessment is representative of how most entrepreneurs, especially civic entrepreneurs, see government:

Entrepreneurs often focus on the micro, that is, specific things that need to get done or will have impact. In contrast, government focuses on the macro. When I talk to leaders in government, they use words like global, macroeconomic, policy, innovation, and economic development. These are not words that entrepreneurs use; entrepreneurs talk about lean, startup, product, and people.

And here’s one that nails the traditional approach to government innovation:

Government is an instigator of feeder control. Although this happens at a federal, state, and local level, it’s most obvious at a state level. A new governor is elected. After the typical six-month settling-in process, he and the recently appointed head of economic development declare that innovation is a key driver of economic growth for the state and they convene an “innovation council.” This innovation council takes another six months to get going while it recruits the appropriate high-profile members. It then creates a set of high-profile public events to spread innovation across the state.

While other chapters include commentary and advice from others, the government one simply identified the obvious problems (which is a great first step, but I finished the chapter wanting ideas and solutions as was provided in others).

Feld has a great deal to offer the nascent civic technology community (especially civic startups), and I hope he follows up at some point on specific ideas and advice for government. His long-range approach to building community is aligned with the pace the public sector moves, and he would be instrumental in helping move the needle on the changes happening in government.

While there are a few semi-formal, regular civic technology communities emerging, like what we’ve started with CivicMeet and what Code for America is doing with CfA Brigade, there’s still not a heavy focus on building core communities beyond the hacker set.

For those in the civic technology community, having more leaders focused on bringing people together with regularity is much-needed and will be key as the movement goes forward. Feld’s book can help us get there.

Whether you’re in government or generally interested in building community, I highly recommend ‘Startup Communities.’

Watch the book’s trailer:

Startup Communities Book Trailer – Brad Feld from Simplifilm on Vimeo.