How urban start-up ecosystems help cities adapt to economic transformations

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Entrepreneurs at mLab East Africa, Nairobi, Kenya. Supported by the World Bank’s infoDev program, this business incubation center provides knowledge and networking opportunities to local digital start-ups. © infoDev / World Bank 

Start-up ecosystems are emerging in urban areas across the world. Today, a technology-based start-up develops a functioning prototype with as little as $3,000, six weeks of work, and a working Internet connection.
Entrepreneurs are not seeking large investments in hardware or office space. Rather, they look for access to professional networks, mentors, interdisciplinary learning, and diverse talent. Cities are best suited to meet their needs, as they provide diversity and allow for constant interaction and collaboration. Thus, the shift caused by the so-called “fourth industrial revolution” makes cities the new ground for organic innovation.
The urban innovation model can be applied in cities in both developed and developing countries. The same trends are driving the urbanization of organic innovation ecosystems in New York City, London, Stockholm, Mumbai, Buenos Aires and Nairobi. This presents a great opportunity for developing countries to build innovation ecosystems in cities and create communities of entrepreneurs to support the creation of new sectors and businesses.
But while some cities have organically developed urban innovation ecosystems, nurturing a sustainable and scalable ecosystem usually requires determined action. Moreover, not all cities are building their innovation ecosystems at the same pace.
To support a local innovation ecosystem and accelerate its growth cities can promote collaboration through creative spaces and support networks, while also hosting competitions to solve local problems. 

Cities are actively fostering collaboration among entrepreneurs by developing creative spaces — including innovation hubs, maker spaces and urban labs  — as well as networks of incubators and accelerators. Numa in Paris, Fab Lab in Barcelona, and iF in Santiago are a few good examples. Furthermore, by hosting competitions that aim to integrate technology into urban life, cities can tap into local communities of entrepreneurs to solve issues that are affecting their urban environment.
These policies can increase the size of the start-up ecosystems and help connect communities domestically and globally. As the case of New York City demonstrates, cities that open and connect their start-up communities can attract more talent and strengthen their competitiveness.
Simply developing these innovation ecosystems is not enough. Other actions are needed to support the transformation of ideas and start-up projects into viable enterprises. To read more about other key policies, click here for the full study, “Adapting to the New Transformation of the Economy.”


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