More than a year ago, the McKinney Economic Development Corporation bet that startups and other innovation-focused companies would be vital to continuing to grow the northern Dallas-Fort Worth suburb.
Last January, the EDC launched its Innovation Fund, which has attracted more than a dozen companies to the city. Entering its second year, the EDC sees even more interest from the startup community as it looks to position McKinney as a future tech hub.
"Startups are the future of economic development," Danny Chavez, senior vice president at the McKinney EDC, told NTX Inno.
The Innovation Fund provides grants to startups for growth, expansion, and recruitment based on the company's stage of development. With requirements like having a minimum number of employees and keeping your business in McKinney for at least three years, the EDC hopes it will help diversify the local economy and develop a high-density innovation ecosystem. Much like can be seen in Austin's growth, Chavez said the idea is to build out the city's talent pool, growing organically. Eventually, the EDC is hoping bigger players in the tech industry will likely take notice.
"This takes the sophistication level of functioning like an… equity model. Our equity, because we don't take positions in companies, is community and social equity," Chavez said. "We're trying to increase the average salary in the community, as well as bring in those target sector jobs. There's a huge black hole in economic development in figuring out how to recruit tech."
Since the Innovation Fund launched in the first 14 months, the EDC has closed on 15 deals, including cybersecurity startup ContraForce, software startup Alanna.ai and virtual health platform MyTelemedicine. More than 65 companies have applied in that time. Amounts of the grants are not disclosed. Those 15 deals translate to potentially about 1,000 new jobs over the next three years, as well as a real estate demand for nearly 160,000 square feet.
Chavez said one of the keys to the fund's success is its ability to move quickly, vetting and closing deals in less than eight weeks on average – or as he calls it, at "startup speed." He said he is currently gearing up to announce a new wave of deals through the Innovation Fund and expects to close between 20 and 25 by the end of the year, which could mean thousands of more jobs and hundreds of thousands of square feet of new office space coming to the city.
Chavez also notes that the startup's location applying to the Innovation Fund has changed since its launch. In its first year, nearly 80 percent of the companies applying were in DFW, with most of the rest inside the U.S. Now, more applications are from outside Texas (especially New York), and more internationally with applications from Australia, the E.U. and Argentina.
"I do see this being a case study for economic development to change. ... It's a dinosaur industry in some regards," Chavez said.
Chavez said the McKinney EDC's focus on startups allows it to have less competition attracting companies among its Collin County peers. He said while larger companies consider their future space needs, the demand for space is still there for startups. In addition to raising the average wage and helping attract other companies, startups can set the city up to become a future smart city.
The EDC is also working with commercial real estate developers to help them understand the needs of early-stage and high-growth startups. Many of those developments will be along McKinney's Highway 121 Corridor, where plans are underway for 5G technology infrastructure.
With Collin County expected to continue its explosive population growth, McKinney's EDC is hoping the groundwork it lays will position it as a tech hub for the region, connecting its innovation corridor with those in Frisco and Plano along the Dallas North Tollway.
"In Collin County, I think there will always be some type of competition. I don't think that's something that will ever go away," Chavez said. "Our intent is to lead this innovation aspect… to open the innovation economy."
