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Challenges of Launching Your Impact Venture in Rural America...and some good news

March 28, 2022
by
Josef Scarantino
June 16, 2020

I grew up in a small rural town called Dixon, Illinois with a relatively stable population hovering around 15,000 people since the 1970/80's. I wasn't born a digital native, so I didn't necessarily grow up around computers or smart phones, but remember when my father brought home a PC that allowed us to print and play some really basic games. It was a novelty at the time. I was more distracted by opportunities to be outside exploring in nature.

The town of Dixon wasn't small enough that you knew everyone the way that you might see portrayed in movies, but you would get to know many more people than you would ever expect if you stuck around long enough: Getting your haircut by the same barber for 20, 30, 40 years or more. Watching decades of elected officials rotate in and out of office. Looking forward to the annual Petunia Festival and 4th of July fireworks show. Life could have a comfortable cadence to it.

The term 'startup' or 'entrepreneur' wouldn't enter my vocabulary until I was well into my 20's and far removed from Dixon. I was living in California by then and chasing dreams of the "promised land." (I'm able to laugh about that now.) Fast forward twenty years and now I find myself taking a look at the challenges of starting an impact venture, or any venture, in a rural community. Although I'm currently living in Colorado, which has an incredibly strong startup ecosystem along the Front Range, the challenges of starting up in a rural community are no stranger to people in Colorado. Also, the challenges of starting up in a rural community are definitely not exclusive to the United States. They exist in many large and small countries around the world. Thus, the opportunities to serve founders in rural communities exist everywhere you look.

According to Statista, there are roughly 1,572 incorporated cities like Dixon, where I grew up, across the U.S. with populations between 10,000-25,000. Looking at cities with a population of 10,000 or less, and the number quickly balloons to 16,410 cities across the U.S.

Those numbers equate to multitudes of people of all ages starting businesses each year without the attention or resources those of us get who are based in thriving entrepreneurial ecosystems. The caveat here is that while most of those ventures end up being small businesses or sole proprietorships, and not the venture-scale type of startups you read about in Fast Company, they are what power America's employment and those rural communities. They are vital pieces of rural America and provide important local impact, not to mention economic opportunity. This is the imperative of why we should support rural impact entrepreneurs. They are essential.

If you're aiming to support founders in rural America, 1) be humble and avoid taking a prescriptive "big city" view that what worked for us will work for them, 2) openly discuss the challenges and opportunities of starting up in rural America, and 3) always be founder-led and value-driven when thinking about possible solutions to supporting smaller rural entrepreneurial ecosystems. Yes, there are real challenges and we need to talk about them. But, there are also tremendous opportunities for founders. Let's address some of those challenges and opportunities, albeit very briefly, in this post.

Here are some challenges of starting up in rural America:

1. Yes, broadband access is still a problem in the 2020's.
It pains me to type that sentence. But the reality is that 19 million Americans (6%) still do not have access to broadband. In rural areas, this pain is felt the most, amounting to 14.5 million people, or nearly 1/4 of the population. The lack of broadband access is worse in tribal areas with 1/3 not having access to broadband. And, yes, there is a direct correlation of access to broadband and economic opportunity in rural communities.
What this means for startup founders: Building your startup venture involves lots of time watching videos, sending emails/files, uploading content, performing video calls, etc. Imagine this access slowing down to dial-up speeds or disappearing completely and you'll see your dreams of launching a startup begin to disappear. As a startup founder, you just don't have time for daily frustrations related to lack of broadband. You might end up heading to the local library or coffee shop to build your venture, that is, if you even have that resource available in your community. Bottom line, access to affordable broadband is essential.

2. Building a network in rural America can be limiting.
It's true, relationships matter as a startup founder. There is no way around that. You cannot develop your company in a bubble and suddenly expect the world to be knocking at your doorstep. Being plugged in to a growing startup ecosystem is absolutely crucial to the launch of your venture. This is one of the reasons why I chose to live in Denver, Colorado. The startup ecosystem here is incredibly healthy thanks to the pioneering work of Techstars and many others like Brad Feld who have planted roots over decades. In any given week I am intersecting with founders who are always open to sharing best practices over a coffee.
You might be thinking that we're living in a digital age and that location doesn't matter so much with LinkedIn and virtual events. Not true. Location matters and being surrounded by others building ventures is healthy and necessary. Think I'm wrong? Read Brad Feld's Startup Communities: Building an Entrepreneurial Ecosystem in Your City.

3. Finding talent is crucial for startup growth.
A major challenge for growing a venture in a rural location is that eventually you will need to make some hires. Looking for a top full stack developer who has built 20+ apps and isn't already working freelance? Might be tough. Seeking a technical co-founder who has built and launched a venture before but hasn't relocated to a larger city? Think again. The other piece of the puzzle is that getting new talent to relocate to a small town to work for your venture may be challenging, if not entirely impossible. The allure of the city for talent is high when considering salaries and amenities. This only adds to the challenge for rural ventures to locate talent.

4. Take travel into high consideration.
This one usually catches people by surprise. Is your new venture going to require you to travel considerably, especially in the early days, to close deals with partners? When I was living in Dixon, traveling anywhere by plane meant driving 2+ hours to Chicago just to get to the airport. Add on the lead time you need to be at the airport ahead of your flight. Quite often my flight was shorter than the drive to the airport. It made you rethink how important that trip really was. Doing this on a weekly basis would get old fast, and add up in cost, so take travel into high consideration and map out where you'll need to spend your time before settling down in a rural community.

5. Funding.
For those of you building a venture where you'll be seeking outside (non-debt related) funding from investors, this one could be the biggest challenge next to needing a network. They actually go hand in hand, especially if you want favorable terms. Investors will typically be attracted to areas where startup founders are located. With startup founders being the "hub" of the wheel in the entrepreneurial ecosystem, investors are an important spoke. Not all investors are location dependent, meaning they will invest outside of their physical geography, but being plugged in to a network is critical to attracting the right investors for your venture. Whenever I've spoken to founders with exemplary fast-growth startups located in even medium-sized cities, they have told me about the struggles of obtaining capital (funding) simply because of their location. Again, location matters.

And these are just some of the challenges you would face starting up in a rural location. The list could go on and on.

And now for the good news about launching in rural America...

1. Your funds last longer.
It's no secret that the cost of living in most cities is through the roof. Even relocating from one city to another can mean double-digit cost fluctuations in living expenses, which is crazy to imagine. When I relocated from Washington, DC to Denver, my cost of living dropped significantly. But it also fluctuated rapidly over 5 years. Living in a smaller community can mean a drastically lower cost of living which translates to lower costs for your venture. Lower costs mean you have much longer runway and a larger safety net. Simply put, you can do more with your funding by starting up in a rural community and reduce your monthly cash flow. There's no shame in starting up in a smaller community to lengthen your runway.

2. Work is going remote.
Not sure if you received the memo, but remote work is on the upward trajectory. It's not going away, but growing each year. If you're a startup you're likely already ahead of the curve and going to be more open to working remotely, especially if it means hiring the right talent for your venture. The days of everyone huddled around cubicles are long gone, particularly for younger companies. When was the last time you saw a startup using cubicles? Meetings are going remote and companies are finding workers are more productive (and happier) with flexible work arrangements. Surprise, surprise! Starting up in a rural community means you have options when hiring talent. You're no longer locked in to geography as long as you have a strong trust with your employees and healthy workplace culture. That's a separate post in itself.

3. Rural America places a high value on community and trust, which is good for impact ventures.
If you're building an impact venture, there's a solid reason for starting up in rural America: They simply have a different perspective on the impact of small business. It's about the community. To many people in rural America, being an entrepreneur is a community activity and a difficult one to pursue. When you need help, others readily pitch in. There is a sense of pride in supporting local efforts and the impact those ventures have on the community. Sure, it often takes time to earn the loyalty of the community, but it pays off in the long run when people associate your brand with local impact and authenticity. Long term, this can be highly beneficial for your brand and company culture.

4. Slowing down to speed up.
There is a maxim I've come to like, which is "slowing down to speed up." Many people equate rural living with a slower pace of life, and, it's true, life runs at its own pace when you live in a small town. However, any founder knows that one of the biggest obstacles to running a venture is all of the distractions you face each day and week. In the early days of running a venture you often feel like your "signal to noise" ratio is off balance and that you have to answer every email or take every call or opportunity, attend every event or happy hour. I've found this very true in the city where "opportunities" are to be found everywhere. You can easily get caught up in the busy-ness of life without accomplishing anything at all but a bunch of business cards that get recycled. Living in a rural town forces you into reset mode where you focus only on what matters in your venture without all the noise around you, where 98% of it probably doesn't matter to the success of your venture after all. Slow down and you'll speed up. Refocus on what matters.

There are so many areas to dive into when exploring the challenges of starting up in a rural community, and many others have written extensively about these challenges. The reality of it all is that we're in a post-Silicon Valley age where no one-size-fits-all anymore. Startups are being born all across America in cities of all sizes and founders are finding ways of making it work.

If you are a founder who is really determined to make it happen in a rural community, there's no question the road ahead will be tough. But the support you receive will be tremendous and you'll build your venture knowing there are many others doing the same thing willing to share their stories and best practices.

Further Reading & Support

- e2 Entrepreneurial Ecosystems (formerly the National Center for Rural Entrepreneurship) helps communities and regions connect, learn, and share best practices for building sustainable entrepreneurial ecosystems across North America.

- Center on Rural Innovation (CORI) uses progressive public, private, and philanthropic partnerships and strategies to achieve sustainable economic success in rural America.

- Revitalizing Rural Economies Through Entrepreneurship Development Systems by the Aspen Institute

- Promoting Rural Entrepreneurship and Rural Economic Development by Third Way

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