The Emergence of Startup Cities

I am currently on a 1.5-year trip through the Global South. There are many reasons for the trip, but among the main ones is exploring the phenomenon (which at this point is more foreign than domestic) of the “Startup City.” These are private sector efforts to develop urban environments, with the goal being not only to profit, but to test living arrangements that are more innovative than what government-run cities now do. Those interested in liberty-based societies may find in startup cities an alternative to the current governing oligopoly.

Recently I interviewed members of Adrianople Group, an advisory firm that focuses on startup cities, particularly those that have been carved out as Special Economic Zones (SEZs). They published a Startup Cities Map that was helpful in determining my route.

They define Startup Cities based on criteria developed by investor Balaji Srinvasan. 

The first kind is more or less a conventionally-governed city “that attracts startups.” San Jose is an example, due to the multi-decade tech agglomeration that grew around Silicon Valley. 

The second type is another standard government municipality that “acts like a startup”, based on degree of entrepreneurial activity within their administration, drawing on rankings by the Innovation Cities Index. Dubai is one example of this.    

But the third, and most interesting, category refers to cities which are themselves startups.

The key feature of category 3 startup cities, said Ivette Cano, Adrianople’s chief marketing officer, is that it encourages innovation and as such is driven by the profit motive. These usually private cities are distinct from municipal governments, which run on democracy and through publicly-appointed administrators, and even differ from workaday private city governments, such as the homeowner’s associations throughout the U.S.

“[HOAs are] not trying to innovate in any sense,” said Cano. By contrast, a startup city would be something like Culdesac, a master-planned car-free Arizona development that I previously covered for Catalyst. Culdesac counters the conventional pro-car urban model that’s been the U.S. norm for decades. Another category 3 startup city is Prospera, an SEZ that is based in Honduras but will run independently from it, effectively functioning as its own nation.

Other startup city 3 characteristics include a master plan, and enabling both residential and commercial functions. One not included on the map, but that I visited in Guatemala, was Michitoya Pacifico. Although primarily focused on industrial use, it will include housing, schools, a hospital, a toll road, and its own bus network.

Cano points to Ciudad Morazan as another startup city worth monitoring. This project is also located in Honduras, within an SEZ, and strives to house 15,000 people in just .2 square miles, while also providing warehouses, retail and an external bus network. The city is prioritizing private law enforcement as an antidote to the safety issues and corrupt policing of Honduras.

Other recent developments are in Colombia and Nigeria. A private city known as the Cartagena International Commerce Zone is being built near that city by DMCC, a Dubai-based conglomerate. Looking to replicate the Dubai experiment in Latin America, the firm will govern the city according to common law, seeking to provide stability for commerce. 

There are several startup cities happening in and around Lagos, Nigeria; an interesting one is Eko Atlantic, a 10 million square meter project built on reclaimed land. The project has a goal of attracting 300,000 people, and is already seeing some high-rise developments.

However, Cano observes that entrenched government will likely be unfavorable to startup cities. While Honduras adopted an SEZ policy that enabled Prospera and Morazan, recently, the country’s legislature repealed the legislation. According to Al Jazeera, the enabling law faced criticism for allowing land sales to foreign investors. Brazil is another example of a country that effectively forbids such construction. 

While private initiative is a key part of startup city formation, in practice many of these must work with local government. Michitoya Pacifico, for instance, required government authorization to construct its toll roads; Eko Atlantic was made possible by a land reclamation project by the state. 

The key to having more startup cities—and having them be more specifically focused on decentralized, liberty-oriented outcomes—will be by launching more SEZs. These allow communities to form and, to lesser or greater degree, operate autonomously from host governments. 

Not all startup cities are within SEZs, however. They simply need to be doing something unique, innovative, and for-profit, demonstrating how different urban arrangements can work. I’ll look forward to seeing dozens of them on my trip. 

This article featured additional reporting from Market Urbanism Report content staffer Ethan Finlan.