The Latest in Economic Development
This week’s blog discusses an innovative, localized way to fund local development projects, two regions focused on mutually beneficial cooperation, an NPR story on insourcing, and the startup culture between the coasts. Comment below or send to firstname.lastname@example.org.
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“Why couldn’t people in the community invest in real estate right next door?” This piece in the Atlantic Cities about a pair of DC real estate investors explains that the answer is actually very complicated. After purchasing a property on H St. in the District, the pair (who are also brothers) invited local residents to “invest online in… shares as small as $100, in a public offering qualified by the Securities and Exchange Commission.” But the process was complicated by SEC regulations intended to protect unaccredited investors; so complicated that the brothers went through six law firms before they found out their plan was viable. In essence, the H St. deal used a model similar to crowdfunding, which removed the need for a Wall Street middleman. This democratized the development, which, in the future, may allow for the feasibility of unique projects usually passed over by big developers. Read the whole article. It’s a very good read.
Two groups in the Midwest and Rust Belt are banding together to promote their regions. In the Midwest, Kansas City, Omaha, Des Moines, and St. Louis are trying to promote mutual interests to create a “mini-mega-region” that can compete with larger metro areas. They are focusing on “four key areas: transportation, water, life sciences, and connecting their entrepreneurial communities.” In the Rust Belt, Pittsburgh entrepreneur Kit Mueller started RustBuilt.org hoping to link innovators within the industrial heart of America to “raise awareness of the possibilities to the nation’s coasts and around the globe.” For more on regional cooperation and economic development, check out my recent publication and corresponding blog post.
NPR recently did a piece on GE’s Alliance Park in Louisville, Ky. which explores how companies are experiencing the economic benefits of insourcing. GE found value in locating the different parts of the production chain – previously spread across different countries – to one place: “with workers in different departments physically sharing the same space… cross-interest conversations can happen more easily.” This translated to more efficient production processes without the need to cut the workforce. NPR also highlights a San Francisco hoodie company owned by Bayard Winthrop who has been more than pleased with producing his products here in the US.
It’s not a requirement that great startups be located on the coasts. Small interior cities are producing their fair share as well. In Grand Rapids, MI, Rick DeVos started a venture fund that provides small amounts of seed capital and has a Shark Tank-like system of choosing startups for additional financing. Additionally, investor Ray Moncrief “helps oversee four funds totaling $160 million… in and near Appalachia.” These funds highlight a continued focus on fostering local entrepreneurship instead of trying to land big firms. Because even though it is inevitable that some startups will flame out, “that often creates a virtuous cycle that benefits the local economy.”