Arturo Castelló, Valencia Innovation Capital: a city as a test bed with the Urban Sandbox

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We are back at the Kurrant studio at
the Smart City Expo World Congress.

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I am here with Arturo Castelló.

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He is the Valencia
Innovation Capital Director,

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and we're going to be discussing

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how can a city, or can a city,
become an active partner in

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developing new technologies
without turning itself into

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a permanent testing ground
and not implementing city?

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So the first thing I would
like to talk about is

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that Valencia has spent
years developing its smart

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city strategy and its
smart city infrastructure.

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And now Valencia Innovation Capital
is positioning the city as a place

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where new technologies, they can be
developed, and they can be tested.

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So what is the next stage of that
strategy, of Valencia's strategy,

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and what are you trying to achieve
that wasn't possible before?

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So the way we see a smart
city strategy from our

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perspective is that in the past year
we have

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invested a lot in creating
the infrastructure of IoT.

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And I like to say that we have
created sort of API for the city.

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So third parties can connect to our
datasets, but also to our assets and

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create new information that can be
used from different perspectives.

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And at the same time, with the
adoption of AI, we realize that tech

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is becoming sort of a commodity
and is going to evolve even faster.

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So what we decided to do is to
create a new tool called the Sandbox.

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Which is an ordinance that helps

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everyone who wants to test
innovation to come to our city,

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use our smart city platform, to test
different technologies and solutions

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that we can maybe scale or they
can use it for something else.

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Okay, so the Urban Sandbox
that you just mentioned

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has launched, I think
it's 48 pilots in 2 years?

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And counting.

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Okay, and counting.

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But how do you determine
whether a project has actually

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created value for the
city, for Valencia,

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rather than simply helping a
company validate their technology?

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Yeah, that's one of the
best questions about this

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because first of all, we
are still in the MVP phase.

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So we've been doing a lot of
work just to implement the tool

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because the tool is basically an
ordinance that allows us as a city

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to create a comfort space, a
safe space for companies to test.

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So that took a lot of work.

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That's public
administration innovation.

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And once that we managed to
do that, now we are seeing

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how it works and we are
bringing a lot of companies,

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startups, corporations,
associations, universities,

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individuals that want to
come to our city and test.

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Some are from the city,
some are from other cities.

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And we have a protocol to see

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what we can do and what we cannot
do based on different criteria.

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One of them is, is this going
to bring value to the city?

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And if not, we don't
really prioritize it.

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And the way we see it's going to bring

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value is because
either we are going to

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scale it into our city, so
it's going to become a service

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for our city, or it's going
to help the ecosystem to maybe

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find a solution for other
companies in the ecosystem.

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Or maybe we can learn,
maybe we are not going

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to use it, but we can
learn of the outcomes.

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And that's how we decide.

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But for instance, if we
see a company that wants

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to get new customers
because they see it as a

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commercial opportunity, we
don't allow them to do it.

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It has to bring the value. Always.

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Perfect.

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And the city, I was mentioning
the 48 pilots in 2 years.

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The city reports that 1 in 4 completed

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innovation has reached the market.

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But commercialization and municipal
adoption are 2 different things.

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How many of these technologies
are being adopted by the

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city itself, and what
determines whether that happens?

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Well, first of all, the criteria
is that it has to bring value.

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Another criteria is that it's
possible to test it with the

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existing assets in the city,
and also that the different

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services within the municipality
are going to be able to

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connect with the innovation
and integrate it in the city.

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And if those 2 criteria are
met, then it's a matter of

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how easy it is for the service
in question to acquire it.

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So it's a matter of procurement.

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We are only 2 years in the project,

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so it's going to take a bit
longer to go all the way.

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Because right now, out of those
42, there's a number of them that

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are being analyzed by the services
to scale it within the city.

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And then we have to
approve the budget,

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we have to do the
procurement and everything.

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Our protocol works,
so we are able to say

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yes or no and to be
very fast about it.

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Now, the last phase
of the process is that

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our city acquires
some of the solutions.

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But we are still there.

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Yeah, still there,
still working on it.

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And when a company tests a solution
using public infrastructure,

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does the city capture any value if
it becomes commercially successful?

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Like preferential access
to that technology,

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lower prices in that
technology, shared data,

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or any other benefits
that might come from it?

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Yeah, so we've been discussing
that a lot, as you can imagine,

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and it's difficult from
a public administration

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perspective to, for instance,
be partners of the company.

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Imagine it's a startup,
they're going to test a

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prototype, they succeed in the test,

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and then the city can be a
shareholder of the solution.

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So that's not possible
from a legal perspective.

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Then the next step will
be to get a better price.

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What we agree with the companies
is that we can do

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testing for a longer
time and not cost.

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So it's a benefit somehow.

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And also we are creating
like a certificate.

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Like if you have tested that in
Valencia and then it has succeeded

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and it has to scale to
other cities, for us,

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saying that it was tested in Valencia,
it's a good promotion for our city.

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So we are also putting
that into the agreement.

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So there are different ways of
capturing the value, and we are still

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deciding which ones we
are going to decide,

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because it's not easy
from a legal perspective.

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And have any experiments,
any testing revealed

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that existing city
rules need to change?

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And how do you decide when
regulations should adapt

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to technology rather than
the other way around?

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That's a very good question, and it's
one of the goals of the Sandbox.

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It's not only allowing
others to test, it's learning

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what we have to adapt to be
able to be more innovative.

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So for instance, anything
related to autonomous driving.

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Yeah, so we are having both

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autonomous driving companies and also

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mobility systems coming to us to test.

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And this is going to help us
to accelerate the regulation

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that is needed to be able
to have autonomous driving.

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So the Sandbox is also
an API and it's also

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an acceleration of
disruption for ourselves.

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You're expanding the
city's innovation strategy

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into areas such as AI,
immersive technologies.

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How do you decide which
emerging technologies deserve

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public investment, especially
when their practical

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value for municipal services
is still a bit uncertain?

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Like, we still don't
know— not every city

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knows how they would
use AI, for example.

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All right, so it's good
to note that we are,

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as Valencia Innovation
Capital, we are a foundation

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which is outside of
the city municipality.

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We are owned by the city, but we are
not the city municipality itself.

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So we like to say that
we do open innovation.

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So in doing that, we
have a limited budget.

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So we have to focus on a
particular set of verticals

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because otherwise we
wouldn't do anything.

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So first of all, we
think about verticals,

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so technologies that have a
direct impact in the citizens.

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For instance, mobility
is a good example.

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But then we also think about
verticals that can create economy,

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a smart economy in our city,
for instance, semiconductors.

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Or maybe defense.

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Every 4 years we decide which
verticals we are going to focus on,

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and we focus on only those,
roughly around 6, 7, 8.

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And sometimes we also focus on
one which is transversal, like AI.

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We realize that AI is going
to be, as in any other city,

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the main focus of our innovation

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strategy because it's
going to impact everything.

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But looking ahead to
2030, what would convince you

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that Valencia Innovation
Capital has succeeded?

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Well, is succeeding.

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So we will look at the number,
the quantity of solutions

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and pilots that have scaled
into the city municipality.

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I think we have the same
challenge as any other cities

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in terms of innovation,
is how we can make the

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city really focus on procuring
and scaling solutions,

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because that's the only
way to reach the citizens.

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We can do a lot of
pilots, we can do a lot

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of challenges, but in
a very small scale.

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We need the city to buy,
scale, and implement.

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So that will be one— how many pilots

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have become real
solutions in our city?

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And the second one would be how
many startups and innovative

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companies have we helped growing in
Valencia and staying in Valencia?

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So we have those 2 missions,
making the municipality more

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innovative and fostering
innovation in the local ecosystem.

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Okay, well, thank you very much.

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I'll make sure that we
stay in touch so that we

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know what pilots are going
on, how it's all going.

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So thank you so much for your time.