The Great Recession in the 2000s took a heavy toll on the United States economy. While many cities have managed to recover, other communities, especially rural communities, continue to struggle. In rural communities across America, populations, employment, and entrepreneurship are declining, wages are stagnant, and increasing workforce automation is putting jobs at risk, resulting in a widening opportunity gap between urban and rural communities. Fortunately, there are organizations working to address this gap and transform the story of rural America.
Building a Network of Rural Innovation Hubs
The Rural Innovation Initiative (RII), a program of the Center on Rural Innovation (CORI) and its sister organization, Rural Innovation Strategies, Inc., is an innovative and ambitious program that is creating a network of innovation hubs in rural communities to spark the revival of small towns across America. The technical assistance program is made possible via support from the U.S. Economic Development Administration, and is working to help rural communities kick start their economies by creating digital economy jobs. To do this, the initiative is establishing cohorts of rural communities across the country that are working on rural innovation hubs and entrepreneurial ecosystem building.
The initiative is the brainchild of CORI founder and Executive Director Matt Dunne. A former Head of Community Affairs at Google, as well as Head of Community Strategy at MIT Media Lab, National Director at AmeriCorps*VISTA, and former State Senator and State Representative for the State of Vermont, among other positions, Dunne brings a wealth of experience and knowledge to address the problem of rural innovation and transforming rural economies. In a recent interview, he explained the focus of the program.
“Our focus has been on building new digital economy ecosystems with entrepreneurship at their core,” says Dunne. “The reason for that is that if automation of rural jobs is going to continue, it’s important that we have some distributed ownership over that, and so allowing for digital economy at jobs to take place not just in a few concentrated urban places but across the country is going to be super important to have resilient economies moving forward.”
In addition to the focus on entrepreneurship, a key component of the program is to build new digital economies locally. “In the age of the Internet there should be no limit to where digital economy jobs and startups could be able to flourish,” says Dunne. “Obviously it is a big step to move against what is a common perception right now, that entrepreneurship and innovation can’t happen in rural, which in my own experience, and the experience of people across the country, is just not true.”
A core tenet of the initiative is the need to be intentional about building out the capacity and doing it in a way that addresses the entire ecosystem, not just one piece. “You need to be intentional about building out that new capacity and you need to do it in a way that addresses the entire ecosystem not just one piece because we’ve seen situations where rural communities have been wanting to create future-proof jobs moving forward. They put a lot of money into training full-stack developers and then they move and that doesn’t get you anywhere,” says Dunne.
The initiative’s whole ecosystem approach includes core educational components. “You have to be doing the long term pipeline work of K through 12 computer science education. You need to then be doing the adult education partnerships, like with Flatiron School, which is an online coding academy and uses an income sharing agreement system for allowing easy access for people of all financial means to be able to learn how to be a full-stack developer,” says Dunne.
The approach also addresses entrepreneurship and community building. “You need to be doing the entrepreneurship center with the support and access to capital. And then you need to create the places and spaces where people want to come together, create community, and create density. Because as we’ve all seen in the trajectory of entrepreneurial ecosystems, having those virtuous collisions is important,” says Dunne.
Broadband, Blues, and Beer
Dunne recognizes the need for fundamental infrastructure to be able to convince urban investors to invest in rural communities. Part of that is educating people that an increasing number of rural places have already built out high-speed internet fiber to the home. “We sometimes joke that the real core to rural economic development are the three Bs, which are broadband, blues, and beer. You do need that fundamental infrastructure if you’re going to convince urban oriented investors to actually invest in rural. And it helps to be able to say ‘by the way, they have better broadband than you,’” says Dunne.
The common perception that all rural communities lack high-speed internet is one that Dunne hopes to change. He points out that many rural communities actually have fiber to the home and have faster internet than many urban communities. “The problem isn’t just getting broadband in rural communities, but also changing the perception about innovation in rural America. The problem is the perception outside. So much of the work is just changing the story about the prospects for innovation in rural communities. So if you’re going to be going to investors in San Francisco, or New York, or Boston, it always helps to be able to say ‘and by the way, not only are these guys not on Dixie Cups, they have faster internet than you do, and they have it for $35 a month.’ That infrastructure solves the question of access to their AWS servers and dramatically expands the world of tech talent that big employers can collaborate with virtually. We’re working to correct the perception that these are communities that have their stuff together and have that future-proof ability to do things like film editing or moving massive computational pieces for either geospatial innovation or just big data,” says Dunne.
Creating an Ecosystem of Ecosystems
CORI and its partners successfully secured an i6 Challenge Grant from the U.S. Economic Development Administration for its innovation hub pilot, the Black River Innovation Campus (BRIC), in Springfield, Vermont, as well as additional funding from the Kauffman Foundation and the Siegel Family Endowment to get the project off the ground. Another opportunity from the EDA led to expanding CORI’s reach to other rural communities. “We were then approached by the EDA to enter into a cooperative agreement because they had not seen a lot of rural places even apply for the funding that they have available. So we have started working with communities across the country that already had this kind of digital economy and entrepreneurial effort in their game plan in order to provide technical assistance and help accelerate their efforts,” says Dunne. “I don’t think anyone believes that a single rural innovation hub is going to be successful, because there isn’t enough deal flow or talent flow to get the interest of investors or large companies to start hiring. But, if you create a collaborative, you then get network value. You can aggregate all of the startups so that investors can be looking at 200, not just the eight that might be in one community. Or the same with tech talent either for larger hiring partners or for folks who are starting up within the network and need that kind of tech talent. So we’re creating in some ways an ecosystem of ecosystems and a community of practice,” says Dunne.
The First Cohort
Following a competitive nationwide search with 130 applicants from 40 states, eight communities were selected for an initial cohort of the Rural Innovation Initiative. These were communities that had already arrived at the same sense of what needed to happen. All of them understood and embraced the importance of building entrepreneurship opportunities in their communities as well as educational opportunities such as computer science education in K – 12, and partnering with higher education institutions to support tech transfer. And, all of the communities had figured out how to build out fiber to the home. Along with Springfield, Vermont, the eight communities in the 2019 Rural Innovation Network include:
- Independence, Oregon
- Pine Bluff, Arkansas
- Pittsburg, Kansas
- Emporia, Kansas
- Red Wing, Minnesota
- Traverse City, Michigan
- Cape Girardeau, Missouri
- Wilson, North Carolina
Dunne and his team recently convened the communities at CORI’s headquarters in Springfield, Vermont. “We have had the leadership of the nine communities come and participate in a two-day intensive retreat to make sure that we understood the value we could bring as an organization to them, whether it’s standing up the seed capital fund to invest in the early stage companies; or the partnership that we have with Venable LLP, which is a large multinational law firm that has volunteered to provide pro bono legal support to the entrepreneurs throughout the network; or even just access to StartupSpace, which is an online software program – we’re covering the cost for the licenses, but it also gives it a back-end for all these leaders of these communities to be able to share content, new opportunities, or be able to identify collaborative opportunities,” says Dunne.
Though their individual approaches may differ and they are all at different stages, each community is exploring innovative ways to transform their economies. “These communities were all led by inspiring folks who have all said that they’re just so happy to know that they’re not alone in trying to build this kind of ecosystem outside of an urban environment. It’s different. It has different challenges. So finding like-minded folks across the country was super important,” says Dunne. “They’re at different stages of that development. So you take Red Wing or Traverse City and they already have full-blown entrepreneurship centers with deal flow. They’re just crushing it and it’s great. All the way through to some that are just in a much earlier stage like in Pine Bluff or even Wilson who just hired their first person. And Emporia is still in their planning phase to get things going. So you’ve got a continuum with folks that are upon this path. They’ve all made the decision on their own to just start down this path in the interest of their own community and economies.”
The Rural Innovation Initiative is bringing the communities together and helping them to bridge resources, expertise, and services. “Our job is to bring them together to make sure that we can provide, as an organization, a group of committed rural people that have had the good fortune to have one foot in national or global organizations and can help bridge resources, expertise, and services to the folks on the ground who are doing the great work,” says Dunne. “We’re going to be getting everyone on-boarded with StartupSpace. We’ll be engaging them at least monthly and sharing new best practices. We’re going to be aggregating startups so that we can help surface them to investors. And we’re going to be looking to them as to what is going to be the most helpful for them to be able to accelerate their progress.”
Each community brings its own strengths, resources, and experience and is approaching their economic development in that context. For example, Traverse City is traditionally a tourist community that’s trying to create a real year-round economy. “Look at the places like Traverse City that have been able to find local investors to get involved and support their efforts and they’ve created a healthcare cluster believe it or not,” says Dunne. “Cape Girardeau, in trying to address the pipeline issue, created a coding league for the school systems around them that has just gotten incredible takeaways. Eight hundred to nine hundred kids who are all involved with this great computer science program that they’ve created. They’ve put it into a pretty epic sports-like framework that just has kids rushing to be involved and they’ve done it for a very small amount of money,” says Dunne.
The communities in the cohort are eager to share and learn from each other. “The other communities are super excited to learn what that looks like and to replicate it and Cape Girardeau is perfectly happy to share what they know,” says Dunne.
Impact of the Cohort
Dunne is bullish on the impact that his program will have on the cohort members. “Ideally there is going to be an acceleration of their ecosystem development. That could come in the form of saying, ‘oh we were going to come up with our own curriculum for supporting acceleration within our incubator, but Traverse City has this working over here and they’re happy to share and we’ll just try implementing that and then be able to connect back to the Traverse City person to get advice and refine it as it goes along.’ The other is being able to provide unique legal services to help with things like patent searches for their entrepreneurs and allowing them to be able to skip ahead of where they would have been otherwise, as well as things like the coding leagues and distributed work efforts,” says Dunne.
Additionally, he’s expecting to have an impact in providing easier access to capital. “Eventually we hope to be able to provide more access to capital as well, as we’re able to aggregate the startups and provide those with a clearer technology of where they are and their development as a company to investors who are interested in early-stage companies,” says Dunne. “Most investors, venture capitalists, or individuals have a thesis. And they’re focused on a particular kind of company at a particular stage. And they are unlikely to find that in an eight entrepreneur innovation hub. But, if you’re able to provide them with 200 companies to select from, the chances they can find the two that actually fit their model is much more likely and they’ll take pitches all day from companies that seem to have cracked the code on this particular thing.”
CORI is also working to set up its own seed fund. “We’re in the middle of a raise right now and hoping to raise five million dollars in Opportunity Zone related funding because almost all of these communities are in the Opportunity Zones, which allows for that tax treatment to be incorporated into an early stage investment vehicle,” says Dunne.
The ultimate vision is to have real impact on the communities’ economies. “As well as eventually having real growth of new businesses that are future oriented and can lead to more employment or eventually in an exit, which can provide wealth to that community, that, as we’ve seen across the country, frequently then gets reinvested locally so that you have a virtuous cycle of investment,” says Dunne.
What’s Needed to Advance Rural Economies
When asked what are the most important things that need to happen to advance rural entrepreneurship and rural economies in America Dunne honed in on three ideas. The first is to change the narrative. “I think one big piece is to make it clear that rural places are fantastic locations to do scalable technology-based startups, that there is a history of these taking place, and that more focus on startups going out of rural places can provide more opportunity for investors, as well as a healthier, more distributed American economy. So we’re actually spending some time and energy surfacing those examples, as well as seeding those kinds of examples, whether it’s through access to capital, or just support of their entrepreneurship support apparatus,” says Dunne.
Another key piece is getting investors to be willing to take a risk on rural startups. “I think the other big piece is investors being willing to take a risk on a rural technology entrepreneur rather than dismissing it out of hand and so that comes with the storytelling but it also is going to come with real examples that we can share over a period of time,” says Dunne.
“The final piece is being able to provide centralized resources for rural communities that just don’t have the capacity locally at this point and that that includes support with helping write grants or to know about how to set up your local venture fund that people can participate in small amounts of dollars, or the best practices for building the talent pool on one side, or supporting entrepreneurs, especially entrepreneurs that are going to be likely working with distributed teams by design because they’re in a rural place,” says Dunne.
Expanding the Ecosystem of Ecosystems
Based on the success of their pilot and the first eight communities, CORI is looking to expand the Rural Innovation Initiative. While they recently wrapped up recruitment for the next cohort of communities, Dunne encourages rural communities that might be interested in participating in the future to check out the website and learn more, subscribe to the newsletter, and to keep an eye out for the next open call. Additionally, Dunne encourages people to support efforts to transform rural economies and to learn more about the communities in the CORI network. “Support the kinds of efforts that are looking to bridge that capacity to allow communities to make this transformation. Take a look at the communities that we found in our network. They are just exciting and vibrant and doing excellent transformational work,” says Dunne.