After surveying startups across the region recently, I’ve come to believe more than ever that public policy should encourage startups in cities rather than rural areas.

Successful startups need two primary components — human and financial capital — and no matter how much of the second is available for young companies, the first will always be a challenge.

Rather than trying to fabricate conditions for startups in rural areas, public policy should encourage other forms of entrepreneurship in smaller locations — small businesses, contract workers, co-operatives.

In saying this, I draw a clear distinction between startups and small businesses, admitting there are overlaps.

A startup commercializes new technology with the goal of disrupting established business practices. It will rework and adjust its product until it finds a product that customers will pay for, then it grows quickly, often doubling or tripling in size annually over several years.

A small business is an enterprise with a small number of employees — let’s say fewer than 100. Such businesses are essential to any economy, and the people who run them have all the business acumen of startup founders.

The difference between the two is the talent they have to hire. As a startup grows, it will constantly improve its product, or use its technology to launch complementary products. To do this, the startup has to bring on a range of highly specialized personnel.

Let’s say the company is developing a medical device. It will need medical specialists. It will also need experts in manufacturing, electronics, and software engineering, and probably contract workers in regulatory affairs and design. Given that artificial intelligence is becoming standard in new technologies, the company will need a few artificial intelligence programmers — a rare breed indeed.

A startup can’t find this sort of talent easily in Halifax, let alone the other cities in the region, let alone rural communities.

One hallmark I’ve noticed of startup entrepreneurs in the region is their knowledge of immigration regulations, because they have to bring in specialists who simply aren’t found locally.

At Entrevestor, we’re now analyzing about 480 startups across the region, and two trends are becoming clear. First, size matters. The number of successful companies is disproportionate in the larger cities, with Halifax atop the heap. I believe the prime reason is the availability of talent. The second trend is the growing number of zombie companies — those that haven’t quite died but aren’t quite active. They appear to be more prevalent in smaller areas.

The startup ecosystem should support companies in each province, but I think policies to seed startups in rural areas need to be reviewed. There are startups in rural areas that have beaten the odds and done magnificent things (Halifax Biomedical of Mabou, Cape Breton, springs to mind). And yes, AgTech startups and oceans companies will need rural operations. The emphasis in rural areas should be entrepreneurship — the building of small businesses. Succession is a huge issue in small businesses in the region, and training more young people to take over businesses with existing income streams would be invaluable.

There should also be support for the legion of independent experts, the contract workers who have clients all over the globe. They are scattered around the region and would benefit from formalized support networks. The Hub South Shore in Mahone Bay would be a great model to emulate.

Startups are an urban phenomenon. Entrepreneurship is universal, and policy should reflect that reality.