The Hidden Architecture of Startup Cities: How Real Ecosystems Outperform Hype

What if the problem isn’t that cities can’t build startups, what if the problem is they’re building the wrong kind of systems?

In the frenzy to claim, “innovation district,” many regions forget the fundamentals: connections, capital-fit, customer access, and context. In a recent panel for Founder Institute, I brought together three ecosystem practitioners, Levi Velez Reed (Seattle/Bellevue), Elizabeth Packer (Washington, D.C.), and Hunter McFarland (Tulsa), to dig into what really works and what should in startup ecosystems throughout the world.

What emerged wasn’t more accelerators or photo-op pitch nights. It was collaboration, coalition, and infrastructure (social, financial and institutional) that’s built intentionally. Let’s walk through their insights, consolidate the evidence, and surface what you, as an economic-development leader, VC, or founder, should actually act on.

Tune in to our event here and then read on as I ramble through my intro:

Bellevue/Seattle: Capital in the Shadows

Levi Velez Reed knows the Seattle region has enormous technical wealth and corporate density, yet he starts from the ideal foundation for in any community, we can do better. He notes:

We have a real lack of very early-stage investors. Most of our high-net-worth individuals made their wealth as corporate executives … They want to invest on pre-seed terms with seed-stage traction.

In other words: the money is there, but not the risk posture. Reed’s program, Startup425, works at the public-sector interface, supporting businesses “of all sizes” rather than only chasing unicorns.

He points out that Bellevue is punching above its weight:

Out of the roughly 18 unicorns based in the Seattle area, about half are headquartered in Bellevue … The city’s administration is more forward-looking.

Which means a suburban-adjacent locale is gaining the startup halo while regional capital remains locked in conservative patterns.

Why does this matter? Because research shows that venture capital and innovation activity are heavily concentrated in very few places. A Brookings Institution report (July 2025) found “30 metros (with San Francisco and San Jose central)…” dominate the emerging AI economy. Without active investor education and risk-capital diversification, even regions with strong assets lose founders to other cities.

Tulsa: Retention-Oriented, Not Just Attraction-Oriented

Tulsa, not traditionally viewed as a “startup mecca,” is playing a more strategic long game. Hunter McFarland frames it this way:

Tulsa is doing a lot of amazing things. It’s one of those ecosystems where everyone is one coffee away.

He’s referring to the mindset: intimacy, connection, trust. Build in Tulsa, supported by local foundations and state resources, helps founders “from ideation to scale, through both non-dilutive and equity-based funding programs like TechStars.”

We probably have five true VC firms,” he said. “We need people to invest in our companies and not take them away.

Here’s why that mindset matters: a region that incentivizes retention of companies, not just their launch, flips the conventional model. The infrastructure is less about spectacle, more about durability.

McFarland’s point, that early-stage capital is only half the issue; the rest is aligning incentives for founders to stay, spotlights an often-overlooked metric of ecosystem health.

Washington, D.C.: When the Public Sector Picks Up the Venture Playbook

Elizabeth Packer is rewriting the script for D.C. as a tech ecosystem more than the nation’s capital.

Five years ago, D.C. wasn’t really thinking about tech as a driver of our economy … Now, we’re focused on growing our private sector as a generator of jobs.

There they launched the D.C. Venture Capital Fund to support early-stage companies that commit to staying and hiring in the region. They added an international “soft landing” program for non-U.S. based startups.

“Cybersecurity and fintech are booming because companies want to be close to where decisions are made,” she observed. Yet she also recognized the headwinds:

Maryland and Virginia often offer more competitive incentives … We see founders who want to stay in D.C., but affordability pushes them elsewhere.

This mirrors international findings: the Organisation for Economic Co‑operation and Development (OECD) finds that strong ecosystems require not only resources but structure: networks, institutional quality, regulation and culture.

What the Evidence Says: Ecosystem Health Isn’t About Hype

• The OECD emphasizes that the health of regional entrepreneurial ecosystems depends on “access to finance, talent and skills, networks and institutions.”

• The Kauffman Foundation shows persistent gaps in access to capital for certain groups: “gaps in entrepreneurial activity… Barriers can prevent people from ever becoming entrepreneurs or slow their decision to start up.

• Brookings finds that while “capital exists,” it is geographically concentrated, leaving many regions underserved.

In plain English: you can’t fix a city’s startup ecosystem simply by planting co-working spaces and hiring a “Chief Innovation Officer.” You must fix the plumbing underneath: Who’s investing? How are they investing? Are there real customer pathways? Is government a helpful or hostile actor?

What Cities & Investors Should Do

1. Investor education is indispensable. Seattle has capital; what it lacks are investors willing to seed risk. Training, networks and structure (like angel groups) change investor behavior.

2. Retain the companies you help launch. Tulsa’s emphasis on keeping founders local isn’t romantic, it’s smart. Regions that lose scaling firms lose the brain-capital loop.

3. Public agencies must learn to move at startup speed. D.C.’s shift to venture investment and collaborations such as Penn West, show government can adapt, but only if they treat founders like stakeholders, not recipients of grants.

4. Customer-first, not funding-first. As Hunter put it:
   “A lot of our companies have early funding but no customers … They realize their ideal customer isn’t here, so they move.”

5. Measure ecosystem health differently. Instead of counting accelerator graduates, ask: How many local startups raised follow-on rounds? How many founders stayed city-based? How many jobs created from local firms?

Don’t Ask If Your City Can Be Silicon Valley

Ask: can your city be what your city is for entrepreneurs?

If you’re imitating coastal models without adapting to your culture, resources, and realities, you’ll build a mirror image of someone else’s problem.

Levi’s candid summation:

We need more sophistication and understanding among early investors… It’s not just about writing checks; it’s about being a value-add beyond capital.

And Hunter’s reminder: “We need people to invest in our companies and not take them away.”

Stop modelling ecosystems around what looks good. Model them around what actually works. Every region has its niche. Entrepreneurs don’t need more theatre, they need a system that makes them visible, fundable, and sticky.

So, if your region were a startup, would you invest in it today?

Couple of ways we can accelerate your change to better impact entrepreneurship

1. Making investors available is easy when you appreciate that it isn’t local. We can solve a big part of the infrastructure need for you. Learn more here.

2. Through my work in Startup Economist, let’s better map your ecosystem and uncover opportunities, I’ve done so for Bellevue (Seattle), Washington D.C., and many more, if you want to be next, let me know.

What’s your region’s biggest bottleneck right now: Capital? Founders? Retention? Investor sophistication? I’d love to hear your view.

Another great event upcoming for City Leaders, Economic Development Offices, and Ecosystem Builders: How to Unlock Your Region’s Entrepreneurial Potential for Economic Growth, to explore how data-driven infrastructure can make it happen - Register to Attend Here