Building a Robust Entrepreneurship Ecosystem in Springfield, Missouri

Transcription

1 Building a Robust Entrepreneurship Ecosystem in Springfield, Missouri Yas Motoyama, Ph.D. Senior Scholar Ewing Marion Kauffman Foundation 1

2 Myths of Entrepreneurship Ecosystem Silicon Valley is the best model of ecosystem Fulfilling the missing elements will help The essential elements are: 1) Venture capitals 2) Incubators / Accelerators 3) University research & entrepreneurship courses 4) Entrepreneurs 5) Skilled labor 6) Supportive culture, social capital 2

3 3

4 Breaking Myths 1: Silicon Valley? Decades of experiments (Saxenian 1994; Lecuyer 2006) Imitating fully developed system is not the answer Do you have to be the next Silicon Valley? Does every ecosystem have to look alike? 4

5 Breaking Myths 2: Venture Capitals Failure of private venture funds o Hard to pick winners; 50% out within 5 years (SBA 2012) o 80% of VCs unable to return 3% / year (Bradley et al. 2012) Failure of public venture funds (Lerner 2009) o Politics overtake investment decisions Alternative methods of finance o Bootstrapping (Motoyama et al. 2013) 5

6 Financial sources of high-growth Inc companies (n=479) Source Count Share Personal savings % Bank loans % Credit card % Family % Business acquaintances % Angels investors % Close friends % Venture capitalists % Government grants % 6

7 Breaking Myths 3: Incubators Failure of incubators (Amezcua 2010) o Likely prolonging dying firms Accelerators? o Competitive application process o Pre-seed investment, with equity exchange o Create a cohort of entrepreneurs, and focus on teams o Connect to mentors No evaluation research yet o Outliers (Y-Combinator, Foundry) o What happens after being funded? 7

8 Breaking Myths 4: University Scientific research, NIH funding, etc. o Little connection b/w scientific discovery & commercialization (Motoyama et al. 2011) Technology transfer office o When lawyers try to maximize revenues to university (Litan et al. 2007; Kenney and Patton 2009) Entrepreneurship course at business school o Beautiful rice cake in picture 8

9 The Biggest Challenge of Most Ecosystems (Brasunas, interview, December 10, 2012) The typical problem I saw with entrepreneurs five years ago was like this: I do this business alone, and I don t know other startups in town. I don t know investors here, and there is only old money from big corporations in St. Louis, so I go to Silicon Valley to find an investor. Then, if you talked to investors, they would say: I don t find any startups in St. Louis, and, in fact, there may not be any prospective startups here, so I go to Silicon Valley to find companies to invest. So somehow, they might find each other in Silicon Valley, but not in St. Louis. 9

10 Then, What Works? Dense connections b/w entrepreneurs where they can: Get constantly engaged with other entrepreneurs Learn to solve a number of problems Find mentors (serial entrepreneurs, angels, capitalists) o Not for getting funds o But for learning how to run companies Tailored to stages and sectors Tailored to you Local 10

11 Connections Observed in St. Louis 11

12 Alternatives 1: Venture Funds & Incubators Reorganize them in order to create connections b/w entrepreneurs and support organizations o Policy Digest #1: Do s and Don ts of Local Entrepreneurship Promotion Provide a space where entrepreneurs get together o (eg.) 1871 in Chicago o Porous boundary (Feld 2012) Host experimental, entrepreneurship-related events o (eg.) Startup Weekend Connect to other experts who can help entrepreneurs 12

13 Alternatives 2: University Reorganize course-based education o Less emphasis on business plan writing o More emphasis on how to implement & how to find resources o To inspire students o To connect with other students with similar minds, different skills Connect students to local startups o Have local startups as the judges for the competition o Send students as interns (but do not exploit them!) o (eg.) Skandalaris Center at Wash U, LaunchPad at Univ of Miami 13

14 Alternatives 3: Toward Firm Growth Nurture startups to high-growth companies Identify successful local entrepreneurs & champions o Not necessarily the leaders of largest local businesses o Entrepreneurial companies; high-growth companies (eg. Inc firms) Connect experienced and growing entrepreneurs 14

15 The Pipeline Program To create the lifelong connections among entrepreneurs (Joni Cobb, Jan 17, 2014). To scale up: Company CEOs of $1 mil sales To connect with peers, mentors, and supporters KC, Wichita, Omaha-Lincoln + St. Louis? 15

16 Inc Firms in Springfield, MO Company Sector Count Altec Solutions Group Advertising & Marketing 1 ECS Advertising & Marketing 1 Marlin Network Advertising & Marketing 3 Elite Promotions Computer Hardware 1 Penmac Personnel Services Computer Hardware 1 Jack Ball and Associates Architects PC Financial Services 1 JMark Business Solutions Financial Services 3 Banta Foods Food & Beverage 1 HealthcareFirst Food & Beverage 5 America's Incredible Pizza Company Health 2 Electronic Check Services Health 1 Wickizer & Clutter Insurance 1 Duck Creek Technologies Retail 1 Interactive Hotel Solutions Retail 1 Intuitive Web Solutions Software 1 Russell Cellular Software

17 Entrepreneurship by stages Seamlessly Startup Weekend 1MC Connecting w/ Inc firms Pipeline 17

18 Alternatives 4: Know who is served in your ecosystem & who is not o Participate in our survey in September? 18

19 19

20 20

21 Other Suggestions Don t look for superhero Don t worry about a company leaving The talent issue? o Retaining and attracting talent? (Lessons from attracting firms?) o Entrepreneurs start where they are located o High-growth companies recruit local talent and train them (Motoyama et al. 2013) 21