The Silicon Prairie

You don’t need a bay or a bridge to foster economic development within the technology industry.  What you do need are innovative entrepreneurs, savvy venture capitalists, and a talented workforce to put it all together as a service or product. Replacing the fog for storms, and exchanging the bay with expansive fields, there rests a burgeoning tech hub in Lincoln Nebraska.  Lincoln and the greater Great Plains area have been attracting significant investment and talent from the tech industry in recent years.  Specifically, the Omaha-Lincoln Nebraska region has experienced an influx of investment into software-application firms from 2011 onward.  The expense and pressure of starting a technology company in Silicon Valley may be pushing innovators and entrepreneurs elsewhere.  The pressures and dynamics of the valley aside, local municipalities and economic development coalitions have also fanned the flames of growth in Lincoln. The result has been the proliferation of tech start-ups in the region.

A more robust and accessible internet has made it far easier for entrepreneurs to navigate the obstacles that come with founding a tech start-up. Entrepreneurs and technologist workers alike are considering quality of life measurements and personal preferences more and more when it comes to establishing a new firm or finding a place to work and thrive.  This has led regional municipalities to work toward attracting nascent tech firms to their areas.  Austin, Des Moines, and Chicago are all in concert with Lincoln in proclaiming themselves a rising tech hub.  Although not front and center, economic development consortiums and public-private development co-ops are both stakeholders involved in Lincoln’s success in technology industry growth. With cheaper cost of living already built in, Lincoln simply needed to seize the opportunity present and provide the needed support to finalize tech firm migration into the county.

This development has brought plenty of opportunity for technology jobs. There has been over a 500% increase in the number of jobs within the software publishing industry in Lancaster County , the county in which Lincoln resides, over the past 5 years. Moreover, the average earnings per job is over $100 thousand annually (Source: Emsi 2017.2).  Private venture capitalists and publicly sponsored angel investment groups like the Nebraska Angels have nurtured young start-up firms like Hudl, a technology firm that provides video recording and editing software for athletes and coaches, and helped them lay a foundation in Lincoln.  Hudl is unique in that it was founded by Nebraska native, David Graff, who worked in the Athletics Department at the University of Nebraska.  Hudl was convinced to stay in Lincoln and is building a new $32 million headquarters after having secured $72.5 million in additional investments in 2015.  The new facility should add roughly 300 jobs to the area by 2018 and the average total annual compensation for employees at the Hudl headquarters will be roughly $60,000.

This sort of economic development is the result of investors working together with municipalities to finalize a valuable deal.  Although appraised at nearly $70 per square foot a few months prior, the land to be developed by Hudl was sold by Lincoln at half the price to ensure their commitmentMore recently, near Omaha, Facebook announced they will be building their next data center in Papillion, Nebraska after negotiating a deal with the Omaha Public Power District that will provide Facebook with the power they need while using renewable energy sources, which Facebook prefers.  This kind of flexibility by the local government is illustrative of what municipalities can do to attract new jobs and promote development.  Both cases required local entities to work toward the greater benefit of the region.  Paul and Stephanie Jarrett, founders of Bulu Box, the online health company that ships samples of health supplements, fled their 500-square foot apartment and headquarters in San Francisco to grow their business in Lincoln to take advantage of the cheaper capital and different kind of professional environment.  Bulu Box was originally just like the sea of young start-ups that reside in the Bay area.  That was until they received seed investment from the Nebraska Angels and the cleverly named Kansas based VC firm, Flyover Capital.

Silicon Valley could be discovering its own capacity for young technology firms and the willing appetites of economic regions abroad are finding ways to take advantage of this overload. Conventionally popular and expensive tech business incubators like San Francisco, Seattle and New York are leaking talent out to the rest of the country.  Local investors and economic development practitioners may mirror the steps taken by those in Lincoln, who have provided support that is customized to fit the needs of new businesses.  Of course, the most effective way the “Silicon Prairie” and Lincoln can continue to attract technology firms and workers from around the country is to rely on its most distinct advantage; it’s not in Silicon Valley.