Incentivizing Entrepreneurship: Insights from Chattanooga

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This is a recap from Big Ideas for Small Business, NLC’s national peer network helping local governments accelerate effort to support small businesses and encourage entrepreneurship. To learn more, email

Half a century ago, the city of Chattanooga’s reputation was more closely tied to pollution than to innovation. Now, after significant focus on building a strong startup scene since 2010, the city is rated one of the best locations to start a business and a top small city for young entrepreneurs. Chattanooga’s approach to cultivating a new ecosystem provides useful insight into how cities can incentivize entrepreneurship by investing in infrastructure and housing, coupled with strong political leadership.

Chattanooga, TN
Chattanooga’s grassroots entrepreneurial ecosystem has grown exponentially during the last five years. (photo: The Enterprise Center)

Ken Hays, President and CEO of The Enterprise Center, joined a conversation with NLC’s Big ideas for Small Business network to discuss the city’s transformation, particularly about how the city’s grassroots ecosystem has grown exponentially during the last five years. Below are the key takeaways from the conversation and recent news about Chattanooga.

Invest in the city’s technical and physical infrastructure. A turning point for Chattanooga was the launch of the municipally-owned fiber internet network — often referred to as “the gig” — that delivers high-speed broadband internet access to businesses and residents. Access to internet speeds that are about 200 times faster than average attracts new startups to the area, particularly tech-based businesses. A new GIGTANK accelerator program caters exclusively to these new startups that are “developing ultra high-bandwidth business applications” that can take advantage of the gig’s lightning speed connection.

The city’s plans for a new, 140-acre downtown innovation district will also expand the startup community by providing the physical space for incubating new businesses, mentorship exchanges, and other avenues for collaboration and connectivity between new business ventures. (More information from the Brookings Institution and NLC’s Brooks Rainwater on innovation districts is here).

Leverage community infrastructure, too. Local non-profits and foundations are a critical thread in the fabric of the startup ecosystem in Chattanooga. The Enterprise Center serves as an umbrella organization for knitting together the public, private, education and non-profit players who all play an important role in supporting the local startup scene. Case in point, several years ago, the Lyndhurst Foundation in Chattanooga granted new startups with funding needed to relocate to the city as part of the Innovate Here initiative.

Employees need an affordable and exciting place to live. Chattanooga knows that attracting entrepreneurs isn’t just about providing office space, it also requires offering a good quality of life, and affordable housing options. The city plans to develop new downtown housing, and a local venture capital firm is backing the creation of a new micro-housing building called the Tomorrow Building. The innovation district plan also integrates a holistic approach to building up a neighborhood with restaurants, coffee shops, and transportation options.

Political leadership is the most important catalyst.  It certainly takes a village to incentivizing entrepreneurship, but having the political support from the mayor has accelerated Chattanooga’s transformation. As an early adopter of economic development initiatives like Startup in a Day and TechHire, Mayor Andy Berke is on a mission to make his city a magnet for new businesses, both small mom-and-pop shops and larger startup venures. A successful initiative from his first term is the Growing Small Business Incentive, which provides local small businesses with $500 per new employee hired within a 12-month period. As many in the city will attest, the support and coordination from the mayor catalyzed Chattanooga’s emergence onto the entrepeneurial scene.

About The Enterprise Center: The Enterprise Center is establishing Chattanooga as a hub of innovation, improving people’s lives by leveraging the city’s digital technology to create, demonstrate, test, and apply solutions for the 21st century.

Robbins_small (2)About the author: Emily Robbins is the Senior Associate of Finance and Economic Development at NLC. Follow Emily on Twitter: @robbins617.