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The UrbanTech Movement is Transforming Cities

Urbanization is a defining process of modern life.

More than half of the world’s population now lives in cities, and the number of urban citizens around the world is projected to rise to 66% by 2050.

In the US, over 80% of the population lives in urban areas with 1 in 7 Americans living in New York, Los Angeles and Chicago alone. From an economic perspective, the 259 largest cities in the United States generate about 85% of GDP. Recently, new “mega-metropolises” are taking shape in Asia, Latin America and Africa. Take China as one extreme example of the trend. As Lazaro Gamio wrote for Axios:

The scale and speed of urbanization in China has no parallel in human history. According to data from the United Nations, China’s urban population in 2000 was about 459 million. In 2015, it increased to about 780 million — that growth is equivalent to roughly the population of the United States moving from the countryside to large cities in the space of 15 years.

Without collaboration between leaders in the public and private sector, the rapid movement to cities will put enormous strain on urban infrastructure. Already, tech companies are having a significant impact on how people interact with the built environment around them. An oft-cited example of this would be the case of Lyft, Uber, and Tesla, companies bringing consumers into the future with better data and, in the near future, autonomous vehicles.

A Chart from the Economist showing the growing % of populations living in cities.

A Chart from the Economist showing the growing % of populations living in cities.

Already companies like Uber can take into account things like traffic signals and bus lanes, routing drivers so they don’t have to change lanes or zigzag across the street to pickup or drop-off riders, thereby increasing public safety and efficiency on streets. The company has also begun opening up some of its data to city leaders with Movement, which allows cities in on traffic patterns based on millions of Uber trips taken over time.

The coming changes with the introduction of autonomous cars will introduce countless second-order effects in urban areas that change the way people live. For instance, the US has roughly four times more parking spaces than vehicles and roughly 6,500 square miles dedicated to parking, a bigger area than the state of Connecticut. As driverless cars increase the number of shared vehicles and the amount of vehicle utilization, fewer parking spots will be needed.

How will cities re-allocate this space and how will startups make these spaces more useful to people within cities? What new modes of transportation have we not even thought about yet? And will startups work with governments to form public-private partnerships to integrate their services in this new reality?

Transportation is only one example of how technology will reshape cities. Long-term trends will drive innovation in other urban tech sectors in cities around the country. A few of these factors include:

  • The decreasing cost of innovation. While breakthrough innovations like self-driving car technology and gigafactories are still incredibly capital-intensive, seed stage founders can utilize other technologies, such as cloud computing, servers and hardware on a SaaS basis, APIs, and SDKs, to launch startups more cheaply and rapidly than ever before.
  • Tech-savvy civic workers. There are an increasing number of chief technology officers in city governments. These civic tech leaders are making sure that city data is open and available while integrating digital products into the core of municipal work. Cities are becoming more comfortable with collaborations with tech companies. A Canadian town just outsourced their transit system to Uber, which is the company’s first full ride sharing transit partnership. And forward-thinking mayors in cities like New Orleans and Berkeley are creating “resilience plans” to achieve sustainability goals. At the federal level, there are also promising initiatives, such as the Smart City Challenge.
  • Shifting market demand from residents and consumers. As IoT technology has improved, people who live in cities have increasingly come to expect smart, connected experiences to permeate throughout their lives. In addition, many unsolved problems related to property development, real estate management, water management, public safety, and more negatively impact the lives of regular people. Solutions to these problems have the potential to positively impact tens of millions of lives. As a result, startups that create compelling products to meet increasing consumer demand for UrbanTech will likely become juggernauts.
  • The moral imperative to respond to global warming. As humanity faces an existential test, tech founders are not relying on governments to save the day. Urban areas are the most vulnerable to climate change, and they are also responsible for over 70% of global emissions. Already, startups are building skyscrapers from sustainably managed forests, creating energy saving technology that adjusts temperature and lighting based on your presence in rooms, and creating gigafactories to wean the world off of fossil fuels.

As you can see, there are many exciting opportunities for startup founders interested in UrbanTech. VCs and angel investors have taken notice too. Venture capitalists invested approximately $2.7B in UrbanTech startups during 2016. That number stands to grow as founders create additional innovative UrbanTech companies. If you want to be part of the UrbanTech wave, you should start thinking about ideas for improving your city right now.
What is UrbanTech?

Dreamit UrbanTech Scales Startups That Make Cities Smarter

Here at Dreamit, we want to propel the startups who will make cities more efficient, liveable, and data-driven. With that in mind, we have built a customer network of construction companies, large real estate developers, and other corporate partners that are eager to work with startups on pilots and as potential customers.

We have partnered with Strategic Property Partners, a partnership between Cascade Investment, LLC (Bill Gates investment arm) and Jeff Vinik, to integrate startups into the redevelopment of downtown Tampa. SPP is rebuilding Tampa “from the ground up” and investing $3B into the downtown area to transform it into a connected, efficient, multi-use smart city. If your startup has a market-ready product to deploy in Tampa, our new “sandbox for innovation,” we want to speak to you.

Learn More about Dreamit UrbanTech and Apply by 6/23.

Written by Charles LaCalle

user Charles LaCalle Urban Tech Investor at Dreamit Ventures

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One thought on “The UrbanTech Movement is Transforming Cities”

  1. Mike Hills says:

    Hi Charles. This is a great post. 85% GDP only shows how progressive cities in the US. Highly urbanize city can really influence the growth. Your example like UBER is rampaging tech enthusiasts and millennials since it is starting to grow unexpectedly.