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The problem with Seattle's startup initiative

Guest Opinion: The Startup Seattle initiative made its way into the city's annual budget last month. One council member says it needed more careful review.
Councilmember Nick Licata responds during a forum

Councilmember Nick Licata responds during a forum Flickr: Holy Outlaw

Recently, a Seattle Times editorial lauded the City Council for requiring clear goals, measurable outcomes, effectiveness and accountability standards for funding projects in our 2014 budget.

For the most part, we accomplished that this year. But one exception struck me as failing to meet all of those criteria. It was not a big request, requiring only a $151,000 ongoing yearly expense plus inflation. Nevertheless, the project's demonstrated need for city funding was weak. There were no measurable public benefits listed and, in the past, it had been provided by the private sector.

I'm talking about the Startup Seattle Initiative. The initiative is a new effort, by the City’s Office of Economic Development (OED), to support the growth of Seattle’s startup high tech sector. As one of the project's proponents described it, Startup Seattle provides a concierge service for startup businesses to help themselves find the resources they need to stay in Seattle rather than leave for greener pastures.

It includes $126,000 for a new staff position to manage maintaining a website and developing marketing materials and $25,000 to cover various program costs.

The Office of Economic Development officially launched Startup Seattle this year with the $20,000 purchase of its website domain from a private entity that could no longer afford to operate it. The website, www.startupseattle.com, includes event listings such as weekly meetings of Open Coffee, where early stage investors and entrepreneurs can socialize and network.

It also notes job opportunities. Staples.com, one notice announced, was number two in e-commerce and seeking individuals to join their development team. The average annual salary for startups jobs in Seattle is $84,000, according to Simply Hired, a technology company that operates job search engines in 24 countries.

It’s important to keep these good paying jobs in Seattle. But if success is measured by the number of startups forming, Seattle is already a success.

Last July, GeekWire ranked us the second of three top U.S. cities for startups. Austin, Texas was number one and Boulder, Colorado number three. This summer, Entrepreneur Magazine ranked Seattle number five in its list of the 25 best U.S. cities for tech startups. The problem is not that we need to attract more startups. We need to retain more.

Retention of startups is a challenge. A number of cities have seen startups purchased by larger companies and relocated. Last year, the Philadelphia Tribune noted that since 2007, four companies, which made up more than $1 billion of Philadelphia’s startup economy, had left the city in search of investment capital — something beyond the scope of Startup Seattle.

If Startup Seattle does not address the problem of long-term investment, it is also programmatically vague. There are several basic questions left unanswered by the initiative: Why are we using public funds for this project? What are our measurable results?

For example, another similar OED project funded by the city budget this year, a business assistance service for restaurants, was designated $130,000. In that case, the city required that certain conditions be met by the OED before funds were spent: The chair of the Council’s Committee on Economic Resiliency and Regional Relations had to file a certification with the City Clerk that the OED had developed a sustainable, long-term business plan to diversify funding beyond city coffers.

That’s something that was lacking in the Startup Seattle Initiative proposal and is why I initially suggested we drop Startup Seattle from the budget until it could be justified to the council.

Without enough support for that approach, I offered an amendment requiring that before OED receive any money for Startup Seattle, it had to satisfactorily answer council questions about the Startup Seattle initiative and Seattle's existing early stage technology sector; present a sustainable, long-term plan for maintaining Startup Seattle and identify possible 2014 funding commitments from non-city partners. Only councilmembers Jean Godden and Tom Rasmussen voted for that amendment.


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Comments:

Posted Fri, Dec 6, 1:07 p.m. Inappropriate

Screw this tech startup stuff. There are PLENTY of venture capitalists.

I'm more concerned about long existing small businesses being booted out, and often booted out of business, through no fault of their own. There needs to be an anti-displacement effort for neighborhood businesses.

Sure -- when it's all built and dense there are more customers -- for some others. But, our photo lab or our barber shop is long gone, because the cost of even moving nearby could be too much.

Posted Sun, Dec 8, 12:52 a.m. Inappropriate

Apparently, someones on the city clowncil knows a deserving yuppie who needs $126,000 a year. The rest is dog food, and I'm not talking pets.com. How stupid and corrupt are these people, anyway? Wait, better not answer that.

NotFan

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