A solution to the Greek debt crisis could have devastating consequences for Greece’s economy writes Andrew Chrismer. Recently, Greece’s Central Bank announced a consolidation of public cash reserves from all that country’s municipalities in order to ensure its International Monetary Fund debt repayment. This meant cuts to local police and fire rescue, public schools and universities, hospitals, nursing homes, and many other public services. City and municipal leaders in Greece are finding themselves on the front lines of the debt crisis, and must now find innovative solutions to add jobs and investment into the economy. By tapping into global resources, local leaders can build local entrepreneurial ecosystems to support business creation and economic growth.
Building strong and vibrant entrepreneurial ecosystems in Greek cities would offer entrepreneurs new opportunities for funding, partnerships, global engagement, and market entry. In spite of economic woes over the past several years, many U.S. and European cities have developed new ways to grow businesses and create jobs during economic downturns. Berlin has been a leading city in this respect, fostering hundreds of new startups in sleek repurposed urban spaces. Factory Berlin is one such space that has successfully benefited from support from public officials as well as corporate partners.
Like Greece, Spain was also hit hard during the financial crisis, leading to high unemployment and high public debt. To create local wealth, the economic development council Barcelona Activa has supported entrepreneurial incubators like the Almogàvers Business Factory through partnerships with universities, the European Union, and several other organizations.
These sorts of programs have spun off businesses and new patents, and added hundreds of jobs to the Barcelona region. Many U.S. cities also offer useful examples. Organizations like 1776 in Washington, DC, have been driving forces in supporting investment and entrepreneurship. 1776 serves as a platform connecting budding entrepreneurs with universities, hospitals, local government officials, and private companies, allowing the sharing of ideas and financing opportunities.
Cities in Greece could follow suit by improving the environment for financing, changing difficult regulatory structures for new business ventures, and facilitating dialogue among local stakeholders. Local leaders will also need to find innovative solutions to close the public funding gaps left by the Greek Central Bank, and also help retain international talent. In many cases, if local solutions are not enough, financing options can be found by looking globally. In the face of economic crises, many entrepreneurs around the world have tapped into new digital platforms that connect them to early stage investors anywhere in the world.
Making connections to global angel investors and early stage seed funders would benefit Greece’s startup ecosystems by providing capital to entrepreneurs wishing to start up and scale up, but who lack local networks of financiers. Although global seed funding is still a fledgling idea, emerging platforms are starting to give rise to more options for budding local ecosystems.
For example, more than 200,000 startups and over 45,000 investors have tapped into Gust, a global funding platform for the sourcing and management of early-stage investments managed out of New York City. Gust enables skilled entrepreneurs to connect and collaborate with angel investor networks by virtually supporting all aspects of the investment relationship. Gust and other online platforms offer unconventional ways to think about business creation and finance in the face of adverse situations like in Greece. Local and municipal leaders should leave the debt crisis for the central bankers to worry about.
To get back to growth, Greek cities should start by creating entrepreneurial ecosystems for local businesses to more easily engage with the global economy.
Andrew Chrismer is a program officer with the urban and regional policy program of The German Marshall Fund (GMF). This article was first published by the GMF.
