Wall Street Journal
Video: Will St. Louis Become the Next Silicon Valley?
06/11/13
St. Louis is in the early stages of an entrepreneurial boom. The city's experience may carry lessons for the country as a whole, which has become less enterprising in recent decades. WSJ's Ben Casselman reports.
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Wall Street Journal
Cities Hunt for Startup Magic
Entrepreneurial Culture Seen as Growth Key; $100 Million Seed Fund in St. Louis
06/11/13
Creative director Rasheed Sulaiman, left, and co-founder Gabe Lozano of the sports-themed social network LockerDome.
ST. LOUIS—This city, which sponsored Charles Lindbergh's flight across the Atlantic and served as the starting point for Lewis and Clark's westward expedition, is trying to recapture its risk-taking spirit.
Stung by the takeover of iconic local companies such as Anheuser-Busch, which was sold to Belgian brewing giant InBev in 2008, and by the failure to recruit big employers to replace them, locals are trying a new approach: building the next generation of businesses from the ground up.
On Thursday, a coalition of local leaders from both the public and private sectors will unveil plans to raise $100 million over five years to invest in and support local startups. The effort is the latest in a series of steps intended to revive an entrepreneurial culture that even local boosters acknowledge has faded over the generations.
"St. Louis has a pretty deep history, and it's built on entrepreneurs and risk-takers," said Judy Sindecuse, chief executive of Capital Innovators, a two-year-old early-stage investment firm, and one of the leaders of the nascent local startup scene. "Now we need to redevelop that."
In similar moves, in recent years cities and states across the country have established venture funds, tax incentives and other programs meant to encourage new businesses. Such efforts have been especially popular in cities such as Pittsburgh, Detroit and Cleveland that have seen their industrial economies decline in recent decades.
The focus on entrepreneurship comes at a time when job growth has been slow and rates of business formation are falling nationally. Economic research suggests a possible connection between the two trends: Harvard economist Edward Glaeser, among others, has found that cities with high rates of entrepreneurship experience faster job growth.
But it isn't clear how cities can best foster entrepreneurship—or even whether it's possible to do so. Even success stories haven't necessarily been the result of government policies, Mr. Glaeser said.
"It's not at all obvious that governments know how to promote entrepreneurship," Mr. Glaeser said. "The theory is sound. Whether or not they're actually going to be able to produce this is much less sure."
St. Louis is hoping it has history on its side. Once the gateway to the western frontier, the city emerged in the late 19th and early 20th centuries as a commercial and industrial hub. Anheuser-Busch, pet-food company Ralston Purina, aircraft maker McDonnell Douglas and other local firms grew into national and even global brands.
But the region's frontier spirit gradually gave way to a reputation for business conservatism. One by one, the city's iconic companies were sold to out-of-towners, and few others stood in line to take their place. When Anheuser-Busch was sold in 2008, many locals saw the deal as the end of an era, even though the brewer has retained a significant presence in the city.
"It absolutely was such a crushing blow to St. Louis because that is the global brand that identifies St. Louis," said Rick Holton Jr., a local financier who traces his lineage to both Budweiser co-founder Adolphus Busch and explorer William Clark. "People started saying, 'The party's over.' "
Now Mr. Holton and other local leaders are trying to revive the risk-taking spirit. In the past two years, a web of independent but intersecting efforts has sprung up to support local companies. Among them: Ms. Sindecuse's firm, Capital Innovators; Cultivation Capital, an early-stage venture-capital firm in which Mr. Holton is a general partner; and Arch Grants, a nonprofit group that has in the past two years awarded 35 startups with $50,000 apiece in financing.
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