New start-up formation has happened at breakneck speeds over the past few years, thanks in no small part of course to game changing advances in technology and early stage financing, (Amazon Web Services, open source computing, Micro-VC, etc.). And these shifts have given rise to massive innovation across a variety of sectors.
One area that’s particularly interesting is the burgeoning urban innovation sector.Tumml is an accelerator program based out of San Francisco that provides financing and mentorship to companies of a very specific type – ones that develop solutions around urban impact. Said another way, these are companies that are introducing technology based solutions to solve real urban area problems. And unsurprisingly, it’s a sector that venture firms are taking notice to. After all, these are companies addressing major pain points in large and expanding markets.
The following is a transcript of an interview we conducting with the founding team at Tumml, Clara Brenner and Julie Lein. It’s a great read as it provides insight on how technology has and will continue to drive urban innovation in major cities all over the world.
Can you please tell us about Tumml and the inspiration around starting it?
Julie: Tumml is a non-profit urban ventures accelerator with the mission of empowering entrepreneurs to solve urban problems. We’re here to support the next generation Revolution Foods and Zipcars – companies developing consumer and business-facing products and service that solve community problems in cities. Going back several years, Clara and I met when we were at grad school at MIT Sloan and discovered that we both shared similar perspectives on what we’re now calling the “urban impact” Space. Clara had previously worked in real estate and sustainability, and I have a background in local politics and governance. We both cared a lot about the future of our cities and believed startups had an important role to play in making them better – because they are nimble and super scalable, and they are attuned to the needs of their customers (i.e. themselves, as well as their neighbors, friends, family, etc). But we didn’t see many entrepreneurs starting companies in this space. As we started researching this issue more, we found that there are two distinct barriers in the urban innovation space: Funding and Mentorship. So we decided to start Tumml around our personal passion for urban innovation and to address the two major gaps in the market.
Now that you’ve spent a few years providing mentorship and assistance to startups centered within the urban Innovation space, what are the 2-3 dominant themes that you’ve seen emerge in this sector?
Clara: There are urban innovators working on a wide range of verticals, but a few themes that have emerged again and again are transportation, small business services, and workforce development.
In terms of transportation, it would appear that entrepreneurs have been excited by the success of companies like Uber and Lyft and are starting a whole new generation of urban transportation solutions. A great example would be Chariot, which operates a network of commuter shuttle routes in San Francisco that are twice as fast as public buses and about 4X cheaper than taxis and on demand ride services like Uber. For small business services, we are seeing entrepreneurs develop incredibly efficient tech-enabled solutions for the problems small and local businesses face every day – from getting off the ground to managing data entry. A great example would be PopUpsters, whose theory is that all retail businesses should start as a popup (in order to avoid upfront costs and to build customer traction). PopUpsters is an online marketplace connecting vendors, artisans, and makers of all kinds to unique and affordable opportunities to start, pop-up, and grow their businesses. For workforce development, we are seeing a lot of specialized employment tools. A great example would be Akimbo, which is building a more inclusive workforce by connecting individuals who face significant boundaries to employment with professional opportunities in their area via a digital platform.
Why don’t more entrepreneurs start companies that focus on urban innovation? It seems that the market potential is robust for these companies both domestically and globally given the lack of technical innovation in so many of these sub verticals. Are there unique barriers to entry?
Julie: Urban impact entrepreneurs face a number of barriers to entry. The first is seed funding. When you are solving a community problem in a city, you are often times developing a physical product or service – like a bike share. And pulling together the upfront capital to buy a fleet of bikes is tough. Or you are working within the new economy – in which case more institutional investors really want to see that you’ve got a lot of traction before they’ll invest in you. The second challenge is finding assistance and resources. Many urban impact companies face regulatory challenges or pushback from existing players in the space that make it difficult to scale quickly. So we at Tumml have specifically designed our program to help urban impact entrepreneurs overcome these barriers. Because once these startups are able to surmount those barriers to entry, the potential for urban impact on a massive scale is huge.
What are good examples of companies within this space that has achieved mainstream adoption?
Julie: Companies like Revolution Foods, Lyft, and Thumbtack have done a lot to raise public awareness around urban impact entrepreneurship – they are developing consumer and business-facing services that solve community problems in cities (i.e. healthy school meals, accessible transportation, meaningful professionally opportunities for small businesses, etc). And we are excited about many of the newer companies that are also gaining traction in the space, such as HandUp (a crowdfunding platform for the homeless).
VC’s haven’t historically been very active in this space, at least at the early stages. Do most emerging companies within the space typically received funding from non-traditional (at least from a tech perspective) sources such as impact investors?
Clara: Surprisingly, from what we have seen, it has not been the impact investors who have been stepping up to provide most of the seed funding for new urban impact startups. Many of the impact investors we have spoken to are excited about urban impact entrepreneurship, but are not geared to make seed investments. Which is too bad, because these types of investor have a lot of knowledge about potential partners, measuring community impact, etc that they could be sharing with early stage urban impact companies. It has primarily been tech angels and micro VCs who are the early movers in the space – individuals who are compelled by the mission behind these companies, but also their strong traction within the community.