During a peer learning session for city officials, Daria Kuznetsova from Big Society Capital and Paula Hirst from Future Cities Catapult, facilitated a dialogue on how to finance ideas that transform tomorrow's cities. The key question was how city authorities could enable an ecosystem that provided finance and support to city innovation.
The key takeaway was that cities needed to create investment-conducive ecosystems for innovation. This can be done by designing service delivery around users and engaging them in the process; providing support to SMEs; running challenge-based opportunities; and establishing incubators.
Another learning outcome was that cities should become an entrepreneurial enabler that encourages confidence, providing clarity and opportunities. Local authorities acting as entrepreneurs could work with big and small investors; meet directly with all investors and decision makers; co-invest; create guidelines or frameworks; enable external funding through multiple channels and mechanisms; and provide finance to the most innovative ideas.
City officials shared the following ideas on how to finance innovation in cities:
- Pay by result: outcome-based finance mechanisms can support and deliver service innovation. While providers benefit from greater freedom due to public-private shared risk, it might be difficult to negotiate or might face certain regulatory restrictions.
- Open challenges followed by implementation through an innovative process: discovery + prototype + deliver, as well as prize fund challenges providing incentives such as access to capital finance.
- Open city data to unveil assets, encourage ideation, and find out how to quantify future revenue.
- Participatory design providing shares for citizens.
- EU investment and sustainable benefits (e.g. low-carbon programmes, improving waste management).
- Fast-track innovation through procurement.
- Refinance existing service contracts to lower costs in order to obtain funds to invest in city services.
- Venture funds for city service delivery.
- Citizen-led social funding and foundations for innovation.
- Increase diversity of providers and get major suppliers to use SMEs via supply chain.
- Finance cultural activities for the community.
- Social start-up to work for the government.
- Mass market funding, which might involve more risk and have no return, but creates research value.
- Private investment with a long-term return, sponsorship and angel investors.
- Sell shares and invest revenue.
- Rethink taxation systems.
What other ideas could help enable ecosystems that support city innovation? Share your insights below.
From 23-25 June 2014, Mayor of London Boris Johnson hosted Cities Summit | Solutions Worth Sharing together with Citymart and supported by Citi. The Summit brought together city governments, businesses and entrepreneurs with bright ideas to help improve citizens' quality of life. The Summit kicked off with a Peer Learning Session for cities, creating a dynamic dialogue among city officials around four key themes on how to make innovation a tangible reality. Participating cities included London, Barcelona, Dublin, Fukuoka, Heerlen, Kristiansand, Krakow, Lobito, Louisville, Madrid, Malmö, Moscow, Newcastle, Philadelphia, San Luis Potosí, Sant Cugat, Seville, Sheffield, Tampere, Tartu, Valencia, and York.
Next post will cover how to share and scale good solutions among cities.