Investing for Impact: Creating inclusive, functional, and resilient cities
Stanford GSB Impact Fund: Our 2022 Urban Development Thesis
The world is moving to cities. Indeed, by 2050, more than two-thirds of all people will call a city home. The rise of cities has been driven by their promise as centers of convenience, connection, innovation, and prosperity. Realizing these promises will be essential to human thriving as more and more of the world population decides to build their lives within them. We know that decision makers have a strong incentive to propel cities towards excellence but sometimes lack the tools to unlock their cities’ full potential. Our team is focusing on the next generation of enterprises that will make cities compelling, elegant, and human-centric.
Much ink has been spilled writing about a handful of the world’s most advanced and economically strong cities. For example, McKinsey & Company developed a report designating 50 cities “superstars” in a broader writeup of sector leaders. While we appreciate the strength of the world’s mega-cities, we realize that these cities represent less than 8% of the world population — a paltry number relative to the 60+% of the population already hailing from cities. Furthermore, while the North American Bos-Wash corridor accounted for 4 of the 50 superstars, only one (Chicago) occurred in the Mid-West or Mountain West, and 0 were chosen from the African continent. Our vision for impactful urban development centers the cities that are often overlooked, or are emerging, but will, soon, account for more than half of the world population.
Within the Urban Development team, our priority is to invest in scalable companies that create inclusive, functional and resilient cities. Below are our perspectives on a few key themes we will be exploring this year within each of these topics.
INCLUSIVE
Emerging Cities
The ongoing rise of cities is occurring primarily in developing countries. Indeed, in the aftermath of the COVID-19 global pandemic, Americans are increasingly leaving urban cores for homes better suited to working from home and infrequent in-person interactions with colleagues, clients, and customers. Larger homes and extra space appear to be demanding a premium relative to urban vitality, which remains somewhat dampened after two years of pandemic operations.
Our team is particularly excited about the urbanization of Africa. We believe that the next generation of great cities will see a number of members from Africa and that these cities, building out major urban infrastructure for the first time in many cases, provide unique opportunities for investment in convenient, environmentally conscious, and human-centric design from the ground up.
Forgotten Cities
In more developed areas of the world, our team is interested in the great cities that are still finding their footing in a rapidly changing and increasingly global economy. For example, in the United States, these overlooked cities, scattered across the Northeast, South, and “Rust Belt,” have many promising indicators for future vitality, including high rates of home ownership, strong rates of educational attainment and local educational resources, and relatively inexpensive costs of doing business. They also, in aggregate, represent a larger share of the population than their more prominent peers.
History shows that cities always have had the opportunity for reinvention as centers of innovation and prosperity. We believe that solutions that democratize access to economic opportunity and wealth creation across the breadth of cities can be particularly impactful. Making overlooked cities attractive places for investment, innovation, and daily life can be foundational to this process.
FUNCTIONAL
Lived Experiences
Cities are growing because people believe living in them will be enriching. This does not mean that everyone can have his or her dream job, vast wealth, or unlimited opportunity. But it does mean that people believe that cities provide a pathway to building a life of dignity and opportunity that is not available elsewhere. Cities need to deliver on that promise.
In addition to providing escalators to economic opportunity, cities can enrich the lives of their residents by making life more convenient, more interesting, and more pleasant. We elevate life in cities both by increasing access to the benefits of cities and by limiting drawbacks like crime and pollution. All of our enterprises are evaluated for the holistic impact they have on the lives of city residents, particularly the oft-overlooked residents at society’s margins.
Mobility within Cities
The value of cities is heavily predicated on their ability to bring together a wide array of people, ideas, and economic opportunities. The ability for resources to interact is inherent to the colocation facilitated by proximity within cities, and is expanded when people are able to move quickly and conveniently throughout cities.
We are exploring how to make existing ways of moving through cities more efficient, elegant, and environmentally sustainable while also exploring innovative new ways of moving people and resources across dense urban areas. Solutions that can reinvigorate transit and movement within aging cities, and solutions that introduce novel ways of moving in new cities, are of particular interest.
RESILIENT
Quality of Construction
A shared challenge for legacy and emerging cities is access to quality affordable housing. Perhaps nowhere in the developed world is this challenge more evident than in our home state of California, and we know that emerging cities will need to construct significant new inventory of housing to meet projected demand. Additionally, our communities are increasingly challenged with new climate disasters such as wildfires, drought, inundations. We are exploring enterprises that provide not just affordable homes, but ones that contribute to resilient communities and do so in aesthetically pleasing ways.
Just as beautiful and resilient homes can elevate the human condition, so can well planned and designed public spaces and commercial buildings. Our focus extends beyond affordable housing to other areas of innovative architecture and prop-tech, again with a focus on building cities that will serve humanity well, stand the test of time, and minimally impact our shared environment.
Deep Tech for Cities
The world’s leading cities increasingly rely on deep tech to become more responsive to human needs, less burdensome for the environment and predictive of climate events. Sensors can regulate deployment of energy, dynamically update traffic signals, and otherwise customize conditions to best serve users. We are particularly interested in intelligent technologies that elevate and protect the human experience within cities.
Emerging technology is also unlocking opportunities for cities to efficiently engage, at a micro-level, in energy generation, food production, and other historically sub-urban and rural sectors. Such innovations bring production nearer to end consumers and deliver end products with minimal environmental strain.
Sustainability
While deep tech will doubtless play a role in making cities more sustainable, many solutions, including those based on more conventional technologies, must be implemented to realize the needs of our increasingly urbanized world. The foundational systems of our cities: refuse collection districts, power grids, water and waste systems, gas lines, and telecom networks will all be reshaped as we move towards a more environmentally conscious future.
While we are committed to making cities more sustainable, we also must ensure that they continue to elevate the human experience, particularly for the least resourced members of society. We are particularly excited about solutions that improve environmental conditions without creating unreasonable financial burdens for basic services.
If you, or someone you know, is building solutions for the next generation of great cities, please connect with us. You can reach the GSB Impact Fund’s Urban Development team at timjr@stanford.edu or by messaging any of our team members via LinkedIn. Learn more about the GSB Impact Fund here.
Urban Development Team: Abhi Arora, Naunidh Bhalla, Rob DeWitt, Mason Gunter, Louise Hannecart, Hannes Harnack, Jackson Morton, Tim Rosenberger, Sylvia Wang, Justin Ziegler
