A new lens on Urban Tech
By: Nishu Lahoti
Tags: Cities, Smart Cities, Govtech, Urbantech

Cities are becoming digitally interconnected. Photo Credit: Denys Nevozhai

Investment in the Urban Technology industry has grown over 250% in the past five years and yet the term Urban Tech is quite opaque. It can refer to Mobility companies like Uber and Lyft that have transformed how we navigate cities, AgTech companies Bowery Farms that hope to install prefabricated vertical farms in restaurants, and GovTech companies like SeamlessDocs that help civil servants migrate away from endless paper forms. This industry, which aims to redefine life for the 1.7 billion urban residents on the globe, is top of mind for many people, but understood by only a few.

What is Urban Tech?

For reference, Urban Us, an early stage investor in Urban Tech, has categorized the industry by the following verticals:

Built Environment & Real Estate

Infrastructure & Industry

Food, Waste, and Water

Public Health and Safety

Energy and Grids

GovTech and Civic Solutions

Transportation and Mobility

Out of a selfish interest to one day found or invest in a company in this space, I am beginning a publication focused on dissecting Urban Tech. By way of introduction, I am a student in Harvard’s Master in Design Engineering (MDE), an interdisciplinary program focused on complex problem solving. The program has given me a platform to explore cities from an organizational, technological, and political lens, and through my studies I have learned how the public sector has historically been in the driver seat of urban change through development and digital transformation initiatives.

Yet, understanding the bureaucracy and regulation inherent in public sector processes has changed my beliefs — I now believe that technologies advanced by private investments and public markets, in partnership with local government, will be in the driver seat of urban innovation. And thus the focus of this publication will be understanding the capital structures that will fund urban technology and the business models that will most likely improve and disrupt urban life from now until 2050.

Why should you care?

The technology industry — both its physical presence and market solutions — has centered around cities. A recent publication notes that…

“[Cities] are the social and cultural locus of technological innovation that makes businesses and countries winners in the global economy and enables cities themselves to become modern. Since 2010, the need to transform cities into ‘tech hubs’ has become a high priority for government officials and business leaders in places as different as Beijing, Milan, Helsinki, and New York.”

And whether or not the UN’s prediction that 70% of the world population will reside in urban settings by 2050 remains true after COVID-19, the market for technology solutions offering to improve mobility, sustainability, and access to urban information is likely to continue.

An interesting dynamic I hope to explore is which theory of change for urban solutions will prevail. One theory of change is place based — it promotes an active civic life, in which local organizations try to foster grassroots, community development. These initiatives are all about local knowledge creating local good. Citizens as a community are encourage to build both formal and informal coalitions to take charge of their local environment.

Another theory of change is place agnostic, in which new services find their way into the best markets. These are your Ubers and Lyfts, which are incubated with private capital and human resources headquartered in cities such as San Francisco and deployed in communities across the globe. These services have huge community development organizations, but they are not necessarily attached to the needs and wants of the local community; instead, they’re driven mostly by the limitations of local policy and supply & demand economics of the region.

While my heart sits with the place based development, my head sits with the place agnostic services. There are many scholars that explore the value of place based community development, but I am not finding as many exploring the place agnostic solutions. And so much of this research exercise will be to explore the funding and business models driving place agnostic growth.

Publication Goals

Often, the simplest questions are the toughest to answer. And so my mode of research starts from the high level and drills down, hoping more pointed questions will help me arrive at clear ideas about the industry. Throughout this publication, I hope to explore the following questions in order to arrive at a general theory of change or an investment thesis related to Urban Tech:

What is Urban Tech? How did it come to be?

Who is investing in Urban Tech? How big are the funds?

What are the industry verticals? What are their theories of change? How much funding is each getting?

Which startups are at the forefront of these industry verticals? Why?

As a perpetually distracted millennial, I expect the research process will not be linear. So, if I had to guess the tangents and side-quests I may take along the path, they might be:

How are funders “voting with their dollars”? Is funding matching deployment models? How do funders view regulation? And what about the impact on place, space, and community?

What are the unintended consequences? How might the next disruptive technology actually detract from its goal of improving the city?

What criteria do urban technology companies use to evaluate a city to deploy their technology?

What are the meaningful constraints on the economics of this industry? How do existing transportation networks, access to universities, or regional geographies play into the decision to invest in a market?

Lots of questions to answer and a lot more writing to come. Follow me along the journey!

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