How to Rapidly Stimulate a Local Entrepreneurship Ecosystem Daniel Isenberg, Professor of Entrepreneurship Practice

disen@babson.edu @danisen How to Rapidly Stimulate a Local Entrepreneurship Ecosystem Daniel Isenberg, Professor of Entrepreneurship Practice Five Practical Principles for Driving Economic Growth April 16, 2017

First, imagine a regional economy, a medium sized metro area of 1 million people And imagine after three years: Dozens of firms increasing growth rates by 25-50% Manufacturers expanding facilities Local ventures winning first export contracts Banks increasing their loan portfolios, Equity investors making more investments Universities offering new courses on growth Media writing new stories about local firms growing VIPs from around the world coming to see the change There is growth in the air Growth becomes infectious, spirals

What is going on? It is method, not magic.

Five P s Five (of many) Practical Principles on How to Drive Rapid Economic Growth

Five P Practical Principles Place: Choose a specific region, not a country High Potential: Focus on existing ventures with revenues rather than startups, or micro-enterprises, or conglomerates People: Get 15-20 most influential local leaders from different sectors of ecosystem for training, alignment, and planning Purpose: Set specific objectives for firm growth Practicality: Achieve and broadly communicate quick wins

Five P Practical Principles Place: Choose a specific region, not a country

Entrepreneurship ecosystems are hyper-local

Entrepreneurship ecosystems are hyper-local CIC Boston Innovation District

Entrepreneurship ecosystems are hyper-local 29 MILES 29 MILES Boston Innovation District Boston Innovation District

Companies between $1-$10 million revenues 19, 232 companies Greater Milwaukee 5,264 companies 7,963 companies Waukesha Milwaukee

Five practical principles Place: Choose a specific region, usually not a country Nations are not usually good units of analysis Variability within countries Is greater than between.5 million 2 million population (very approximately)

Five practical principles Place: Choose a specific region, usually not a country High Potential: Focus on existing ventures with revenues rather than startups, micro-enterprises, small businesses or large companies

Vast majority of initiatives are focused on new venture creation (startups) Incubators Angel networks Startup movements (Startup America etc.) Equity and other crowdfunding Small business incentives Coaching, mentoring Tax credits Government venture fund creation

Startup and Scale Ups are very different Start High number of new firm registrations High survival rates in startup phase Large numbers of owners Growth High growth rates Competition for talent Low firm registrations Low survival rates in start up phase Startups create jobs misleading for 3 reasons - Startups also shed jobs - Those that do are much fewer than 1% of firms - The jobs tend to be low paying

Scale ups (high growth) create jobs

Scale ups - High growth firms 1% to 6% of all firms which surpass 10 employees or $1 million revenues In basic industries (food, logistics, distribution, finance) Tend to be 15-30 years old Tend to grow in spurts which can be triggered by many events

Five practical principles Place. Choose a specific region, usually not a country Potential. Focus on existing ventures with revenues rather than startups, micro-enterprises, or large companies People. Convene 15-20 most influential local leaders from different sectors of ecosystem for education, alignment, and planning

The Entrepreneurship Ecosystem Policy Markets Finance Growth Entrepreneurship Human Capital Culture Supports 24

Each Ecosystem Domain has Official or Unofficial Leaders Policymakers and public leaders Corporations Financial actors Growth Entrepreneurship Educators and developers of human capital Culture impacters Support organizations, event organizers

Innovation Startups Selfemployment Family business Microenterprise Silicon Valley Technology Getting the leaders aligned is one of the most important tasks

Driving Economic Growth through Entrepreneurship Ecosystems May 11-13, 2015

Five practical principles Place. Choose a specific region, usually not a country Potential. Focus on existing ventures with revenues rather than startups, micro-enterprises, or large companies People. Get 15-20 most influential local leaders from different sectors of ecosystem for education, alignment, and planning Purpose. Set specific objectives for how many firms need to growth more rapidly

Rule of thumb: Policy Markets Finance High Growth Entrepreneurship Human Capital Culture Supports 29

Arequipa, Peru ~10 companies Concepcion, Chile ~12 companies Cordoba, Argentina ~13 companies

Five practical principles Place. Choose a specific region, usually not a country Potential. Focus on existing ventures with revenues rather than startups, micro-enterprises, or large companies People. Get 15-20 most influential local leaders from different sectors of ecosystem for education, alignment, and planning Purpose. Set specific objectives for firm growth Practicality. Achieve quick wins

Examples of quick wins (6 months) Scalerator Program for $1-$10 mio revenue companies Mayor s Entrepreneurship Programming CEO Forum (for larger local corporations) Multi-stakeholder Roundtables Local Case Writing ScaleCorps program for executives and entrepreneurs (not startups) Loan Officer Training

Growth is the Focus in Scale Up Milwaukee

Babson Community : Taking Charge of Change Vini Onyemah Candy Brush Daniel Isenberg Kevin Mulcahy Mary Gale Elaine Eisenman Matt Allen Sofia Stolberg Antonette Ho 4 BEEE Staff Les Charm Angela Sanchez 11 Oriana Torres 13

Scaling up a BEEP program Professional team Governance Markets Policy Growth Finance Entrepreneurship Human Culture Capital Supports Program Pilot Evaluate Scale Integrate Innovate Project manage Project team Programming in all Six domains

Takeaways Rapid economic growth is possible if You conceptualize entrepreneurship as growth You convene a group of leaders, different sectors From a specific location Set specific growth objectives Work quickly to generate evidence of progress The public cost of a BEEP program in a city is <$1 dollar per resident per year for five years.

Driving Economic Growth through Entrepreneurship Ecosystems May 11-13, 2015

President Santos Comments on Manizales-Mas

Thank you Daniel Isenberg @danisen disen@babson.edu