As the U.S. becomes acclimated to the reality of a new president, something that’s on the minds of Americans is the changing economic landscape. People are fearful of the impact automation and technology has on their livelihoods — it’s estimated that 5 million jobs could be lost by 2020 because of the “fourth industrial revolution,” according to the 2016 World Economic Forum.
Is the solution to all of this simply teaching workers how to code? Obviously not. “Countries will have to invest in transforming their workforce if they want to keep up with the changes and avoid a worse case scenario of ‘talent shortages, mass unemployment, and growing inequality’,” remarked WEF founder and chairman Klaus Schwab at the time.
Los Angeles-based entrepreneurs Christine Lu, Shuchi Rana, and Bret Blount may have a bold approach to solving this eventual employment crisis impacting Middle America. The team has created America Innovates, a program aimed at facilitating the next innovation hub in the U.S., not based in Silicon Valley. Armed with capital from various investors, including some from China, Lu and team work with universities, local governments, area businesses, and other parties to establish districts that will benefit the community.
“It’s about how do we steer investments into communities of America while being inclusive,” Lu told VentureBeat in an interview.
The program is divided into two programs: An opportunity fund and a platform. The former functions similarly to a venture fund, putting money into innovation districts and the startups that operate within them. America Innovates will create dedicated funds for each city it operates in — Lu said Los Angeles, one of the first markets will have $25 million allocated. Other cities being considered include Durham, Austin, Denver, and Atlanta.
As for the platform, America Innovates said it’s launching next month. Its intent is to connect together investors, philanthropists, and companies that are working in the health, education, science, or sustainability spaces.
One way to possibly describe it is being a combination of AngelList and Kickstarter for social impact.
“We’re tired of talking about the political climate,” she explained. “[It’s about] what we can do to be Americans. Job creation is nonpartisan. Investment into local communities and job creation can be nonpartisan.”
An Intuit study estimates that by 2020, more than 40 percent of the U.S. workforce will be made up of freelance workers. The traditional model of employment has changed, and so too must the way business is done. The new workers are innovators, those who spot a problem in the world and believe they have the right solution to change it. So how can communities embrace this instead of having these entrepreneurs flee to Silicon Valley, New York City, and other cities with long-established hubs of innovation?
America Innovates wants to help Middle America stem the talent drain, showing entrepreneurs they don’t need to flock to Silicon Valley. The group’s effort is not about encouraging a big tech company to set up headquarters in a city’s downtown area and calling it a day — it’s steering outside investment to where entrepreneurs and talent comes from. Lu and her team want to facilitate innovation districts, described by the Brookings Institute as being able to “facilitate the creation and commercialization of new ideas and supporting metropolitan economies by growing jobs in ways that leverage their distinct economic attributes.”
While it’s easy to think of America Innovates as being yet another effort to create the next Silicon Valley, Silicon Alley, Silicon Beach, or Silicon Prairie, or even the Downtown Project in Las Vegas — this isn’t the intention. Lu explained that the benchmark is about job creation and impact. “Capital alone won’t make this work,” she admitted, which is why America Innovates is working with multiple parties to get it right. It’s researching which cities are close to universities that could source talent. Additionally, do those cities have a potential and growing real estate market? Lu’s team will also look at the local startup ecosystem to see if it’s flourishing and will form a relationship with the city government to get it involved in this process.
Right now, America Innovates is targeting June as when it’ll launch it’s platform. Then in July it’ll begin inviting founders before bringing on investors in September and formally opening up in beta this October with a innovation district challenge starting in 2018.
Chris Noble, Matchfire chief executive and advisor to America Innovates, said that there are three thresholds that must be reached in order to get started. The first is determining whether a city contains a “healthy intellectual environment in a market.” Does the community possess an expertise in genetics, robotics, or another viable field? “It’s a matter of specialization,” he said. “It can’t be because a company is there.”
The next threshold is determining whether the city has an entrepreneurial climate. If one does not exist, then how can it foster innovation? It’ll remain stagnant without the necessary support and resources. Noble suggested that some places such as Detroit have been convinced that they’re not entrepreneurial, when in fact they are.
Lastly, as it’s a business, America Innovates needs to know that it’s choosing a city where it’ll get the most leverage for its dollars.
More than two years have been spent researching and moving things forward, and it’s easy to think that just throwing dollars at this problem will result in a quick fix. But it appears that Lu’s team is taking a bit of a more strategic perspective and not simply focusing on technology, contrary to those who say more technology is the cure for society’s ills. “You are dealing with technology, real estate, public policy, and socioeconomic challenges,” she remarked. “That’s not easy, and it’s not overnight. It’s not about making a little [minimum viable product].”
America Innovates has identified six elements needed to make these innovation districts a success, some which have already been mentioned — entrepreneurial hubs, education, real estate, and job creation. Additionally, the program looks to include social impact, which means partnering with communities to make sure that nonprofits, students, and charitable groups also reap the benefits of these endeavors. Lastly, any action taken requires a strong investment network, something that Lu’s team will bring to the table.
For more than 20 years, Lu has worked with China-based businesses to make investments in the U.S as well as advising on cross border topics. It’s this experience that led her to start America Innovates, because there was “no shortage of money from China coming in. I saw Chinese money coming into America for real estate that didn’t benefit communities.” Constantly prodded for advice on where investors can put their money, Lu opted to try a different approach, one that doesn’t result in the creation of more low wage jobs, but better ones that will see real estate values increase — hopefully a win-win situation.
While she has a penchant for working with Chinese investors, Lu said that it’s not the only capital that America Innovates is receiving. Right now, the organization has received seed capital for setup and operations, but there’s still more work for it to do before the first building is identified and purchased. But the wheels are in motion and this isn’t a pipe dream — things are said to be happening. “We’re not trying to reinvent the wheel, but accelerate it,” she declared.