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Didn’t Win $50 Million to Improve Urban Mobility? Turn to Startups.

David Zipper

Managing Director, 1776

Last Saturday, U.S. Department of Transportation Secretary Anthony Foxx whittled a crowd of 77 cities down to seven when he announced the finalists of the Smart City Challenge. The Challenge, which has attracted a tremendous amount of media and industry attention, will ultimately allot $50 million to one American city that offers a transformative vision to improve urban mobility through transportation technology.

The spotlight is now on the seven finalists, but it would be a squandered opportunity if the other 70 applicants abandoned their Smart City Challenge proposals to collect dust on a shelf (a common fate for unsuccessful grant applications). Even without a multi-million dollar award, cities can make significant headway improving urban mobility through ridesharing, electric vehicle adoption, and many other areas.

What is the easiest way for cities to make progress without the $50 million? Embrace mobility startups.

1776 has been deeply involved with the Smart City Challenge for several months, including providing letters of support for three of the seven city finalists. Earlier this month, 1776 hosted Secretary Foxx, White House officials, and hundreds of urban transportation leaders from across the country for a startup-oriented workshop at our Arlington, Virginia campus. During the workshop, eight 1776 startups pitched the audience about innovations ranging from low-cost ridesharing at airports to technology that converts a mobile phone into a driver-safety tool.

Over the last several years, 1776 has worked with hundreds of mobility startups through our campuses and global Challenge Cup competitions, and we have invested in several of them through our seed fund. We have learned that only a small minority of mobility startups rely on government funding to launch in a new city; instead, most offer products direct to consumer that are either free (like Ridescout, which lets urban residents choose between ground transportation options for a specific trip), purchased (like EverCharge, which offers electric vehicle charging stations to residents in apartments and condos), or sold to businesses (like TransitScreen, which partners with building owners to provide real-time way-finding tools to residents and visitors).

That is not to say that government has no role in attracting mobility startups — on the contrary, government is essential. Still, many city officials erroneously assume that the only way they can woo mobility startups is by dangling large sums of money.

Here are some simple, affordable steps that urban transportation leaders can take in order to increase their cities’ appeal to transportation entrepreneurs:

  • Offer low-cost pilots: Traditional city request for proposals (RFPs) are generally a triple whammy for startups: the RFPs are too complex for the startups to complete, take too long to be awarded, and are too slow in providing payment to the winning bidder. Therefore, cash-starved startups may rationally decide to forego city contracts entirely even when they can offer a superior and innovative product. A solution: cities can create simplified processes for startups to pilot their projects at lower price points that do not trigger cumbersome RFP requirements. This is how Seattle Department of Transportation brought TransitScreen to Seattle — the chance to expand in a major city was far more valuable to the startup than the relatively small amount of money that the city provided.
  • Create a clear front door for startups: Mobility entrepreneurs have limited time available to figure out how to enter a new market. If they fear bouncing between a mayor’s office, DOT, and other agencies trying to get answers about regulation or local tax policy, they are likely to take their businesses elsewhere. A city can become more startup friendly by identifying a person or a team dedicated to helping startups navigate the city’s regulations and internal structure. This role could be held by a chief innovation officer, modeled on those in cities like Washington, D.C. and Louisville, Kentucky, or it could be similar to Boston’s Startup Manager. The title is not important, but the position is.
  • Provide transportation data that is reliable, not just open: While most transportation agencies today make their data open to the public, they sometimes fail to appreciate the importance of that data being consistently reliable and available. For example, one major transit authority recently shifted its arrival and departure data across websites without proactively letting the public know. Mobility startups learned of the move only when their customers started complaining about inaccurate arrival and departure times. A situation likes this makes both the startups and the transit agencies look bad, and it drives people away from the startups’ products. A simple fix is for transit agencies to have a person who is at least partially responsible for making sure that transportation data is not just available to the public but also easily accessible and accurate.

Early in the Smart City Challenge application process, I spoke with a midwestern city leader who confided that she did not know “how to work with mobility companies other than the small handful that are always asking for multi-million dollar contracts.” Her uncertainty is understandable since mobility startups historically have flocked to a handful of coastal megacities, rather than launched in the mid-sized cities that were eligible for the Smart City Challenge.

The suggestions above provide starting points, but they require a city’s commitment to lower barriers that drive entrepreneurs away from city hall. I believe it’s well worth the effort. Regardless of the fate of a city’s Smart City Challenge application, there is no easier way to pursue a more efficient, safe, and environmentally friendly transportation network than by engaging with compelling mobility startups.

David Zipper

Managing Director, 1776

David Zipper leads 1776’s work in the Cities and Transportation sectors, including venture investments into startups as well as strategic relationships with corporations, associations, and local governments worldwide. Prior to…