One company provides storage space in ceilings; another helps large commercial real estate holders reduce water bills; a third ships breast milk and nursing supplies around the country. It’s not obvious what connects these as investment opportunities, but for Clara Brenner MBA ’12, who cofounded venture capital firm Urban Innovation Fund, each of these startups is shaping the future of cities. Brenner’s co-founder is Julie Lein MBA ’12.
For most people, the phrase “shaping cities” conjures transportation or utilities sectors. Brenner sees much more: “When we say ‘urban,’ we mean startups that are tackling the problems that mayors’ offices across the country have prioritized, but haven’t necessarily been able to address efficiently on their own,” she explained in a recent appearance on the Leading Voices in Real Estate podcast. From her perspective, urban opportunities include addressing challenges of living space or the expanded population of working mothers.
Started in 2016, Urban Innovation Fund holds roughly $22.5 million, which it disburses in pre-seed and seed stage rounds of funding. (The fund also follows its investments over multiple rounds as businesses grow.) In the podcast, Brenner discussed the value of political acumen, the limits of the private sector, and the rocketing value of curbs.
Regulation as competitive advantage
Alongside financial backing, a central piece of Urban Innovation Fund’s work is providing regulatory support to the companies in which it invests. That’s a must when so many of the startups operate in both the digital and physical worlds. “They face issues of either directly being regulated, or perhaps dealing in a space where the regulation isn’t clear,” Brenner said. This reality creates enormous complexity across the patchwork of states and municipalities. “When you figure out how to operate successfully in San Francisco, then you go across the bridge to Oakland … it’s like starting again,” she said.
Brenner actually views regulatory support as a kind of competitive advantage. She pointed to Chariot, a commuter shuttle service in which Urban Innovation Fund was an early investor. When Chariot launched, it wasn’t the only bus startup out there and many others were better funded. But the competition routinely failed by misunderstanding or sidestepping regulation. Chariot went on to be acquired by Ford in 2016.
“First and foremost, you have to be a good startup. Your technology has to be good,” Brenner said...read the full story on MIT Sloan.