Knowing and Nurturing your Entrepreneurial...

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Knowing and Nurturing your Entrepreneurial Ecosystem

FEASIBLE WAYS TO FOSTER ECOSYSTEM RESOURCES AND TRACK PROGRESS

Sarah Lyon-Hill and John Provo Virginia Tech Office of Economic Development

Entrepreneurial Ecosystem [...] a set of interconnected entrepreneurial actors

(both potential and existing), entrepreneurial organizations, institutions and entrepreneurial

processes which formally and informally coalesce to connect, mediate and govern the performance within the local entrepreneurial environment (OECD, 2014)

Why Promote Entrepreneurial Ecosystems?

Among other things…

Small businesses have provided 55% of all jobs and 66% of all net new jobs since the 1970s

The number of small businesses in the United States has increased 49% since 1982.

Since 1990, as big business eliminated 4 million jobs, small businesses added 8 million new jobs.

Sources: Small Business Administration, www.sba.gov BizWorld.org – Teaching Entrepreneurship for Kids!

Why Measure Entrepreneurial Ecosystems?

To increase our understanding of:

how ecosystems function and who they include;

gaps (opportunities) and strengths within an ecosystem.

how ecosystems compare to peers AND how they evolve over time

Source: http://koltai.co/home/six-six

Ecosystems can be measured and understood in different ways

KAUFFMAN ECOSYSTEM INDICATORS

Density

1. Input 2. Direct Outcome 3. Indirect Outcome

DENSITY – Relative density of entrepreneurship

Input R&D Intensity

Direct Outcome Startup Density

Indirect Outcome StatsAmerica Innovation

Fluidity

FLUIDITY – The accessibility and easy flow of resources in an ecosystem.

Density

Input # of Programs and

Participants

Direct Outcome Business Churn (births/deaths)

Indirect Outcome Unemployment Rate

Fluidity Connectivity

CONNECTIVITY – Connections among elements of the ecosystem – its programs, companies and individuals.

Density

Input Program Connectivity

Direct Outcome # of Startups coming from

Programs

Indirect Outcome Income Inequality

Fluidity Connectivity Diversity

DIVERSITY – An assortment of economic specializations, people and opportunities.

Density

Input Industry Diversification

Direct Outcome Businesses by Size & Age

Indirect Outcome Job Growth

Study Area: Blacksburg and Roanoke MSAs

Small and Medium Enterprises (SME) Innovation Driven Enterprises (IDE)

Local and regional markets Global markets

Innovation is unnecessary to the business and its growth

Innovation-driven technology, process or business model is essential to business

Employees are local or regional Employees can be anywhere

Funding: self, bank loans, debt financing Funding: angel and venture capital investment, shareholders

Typically linear growth Business initially loses money but then exponential growth (if successful)

Source: Aulet, B. and F. Murray (2013), A Tale of Two Entrepreneurs: Understanding Differences in the Types of Entrepreneurship in the Economy, Ewing Marion Kauffman Foundation.

When we say different entrepreneur types, this includes…

Research Questions

1. What are the requirements of differing types of entrepreneurs within an ecosystem?

2. How can we identify useful and practical metrics to assess how well ecosystems function to support different types of entrepreneurs?

3. What are the dynamics of ecosystems with a mix of both urban and rural features?

Methods Interviews and Focus Groups

Entrepreneurs (17 respondents) Intermediaries (27 respondents)

Entrepreneur Surveys

146 respondents, 82 of which were completed by entrepreneurs

Review of Secondary Metrics Data

0 5 10 15 20 25

Other Services

Manufacturing

Real Estate

Biology and Biotech

Outdoors Related

Support Services and…

Retail and Artisan

IT-Related

Industry Breakdown of Survey Respondents

Results STRENGTHS WEAKNESSES (OPPORTUNITIES)

“The region is hungry for anything. We’ve gotten a lot of attention and praise.”

• Informal Networking • Quality of Life • Growing Entrepreneurial Resources • Skilled Workforce • Higher Education Institutions

“Friendly and Supportive. Lots of open doors.”

“Much rah-rah, very few successes.”

• Little support to scale up businesses • Lack of interagency collaboration • Need early stage funding and mentors • No culture of risk • Need for more inclusion • More university collaboration

“Sent around everywhere like yoyos.”

Three broad strategies to nurturing your entrepreneurial ecosystem…

Foster an entrepreneurial climate of encouragement and inclusion

Develop resources appropriate for different entrepreneur types and stages

Adopt of Indicators and Inventories

SME Businesses

IDE Businesses

Minority Businesses

International Businesses

Rural Businesses

Urban Businesses

Small Businesses

Scalable Businesses

Financial Resources

Infrastructure

Gateways to Access

Resources

Education

Expertise

Networking and

Mentorship

DENSITY – Relative density of entrepreneurship

FLUIDITY – The accessibility and easy flow of resources in an ecosystem.

CONNECTIVITY – Connections among elements of the ecosystem – its programs, companies and individuals.

DIVERSITY – An assortment of economic specializations, people and opportunities.

Density

Adopt Indicators and Inventories

Three broad strategies to nurturing your entrepreneurial ecosystem…

How can we think more inclusively as we strengthen our entrepreneurial ecosystem(s)? What steps have/might we take?

What role should planners and economic developers play in encouraging entrepreneurship and business growth?

Adopt of Indicators and Inventories How have you examined your own ecosystem(s) and what measures/metrics have you found most useful to collect?

Post Breakout Group Sharing…

1. More collaboration among resource providers.

2. More openness from higher education institutions.

3. Acknowledge tension between emerging entrepreneurs seeking flexibility and innovative approaches to commercialization and more established institutions and actors more focused on the development of physical products.

4. Understand physical barriers that lead to fragmentation within the ecosystem

1. Financial resources.

2. Internet services.

3. Meetups or forums designed for industry-specific businesses/entrepreneurs.

4. Harness the power of successful entrepreneurs with ties to the region by building on quality of life components that attract these entrepreneurs and retain students.

Source: http://www.ianrenert.info/wp-content/uploads/2015/09/entrepreneur.jpg

Adopt Indicators and Inventories

Density

Ways to Collect and Curate Metrics

1. Secondary Data Metrics as method to benchmark with peer regions

2. Primary Data Collection for longitudinal analysis of a region.

Entrepreneur/Business Surveys Service Provider Surveys Collective Metrics Gathering

3. Dashboards, Marketing Websites, Reports and Conferences

Contributors ◦ Maggie Cowell, Assistant Professor in Urban Affairs and Planning

◦ Khushboo Gupta, Ph.D. Student in Planning, Governance and Globalization

◦ Sarah Lyon-Hill, Senior Economic Development Specialist at Virginia Tech OED

◦ John Provo, Director of Virginia Tech Office of Economic Development (OED)

◦ Scott Tate, Associate Director of Virginia Tech Office of Economic Development (OED)

◦ Roanoke-Blacksburg entrepreneurs, service providers and other key stakeholders

Want to know more? For the full report on our research, which includes:

1. In-depth findings

2. A list of over 100 possible metrics to collect,

3. Questions and survey tools you can adapt to your needs

Go to the Virginia Tech Office of Economic Development website, under Entrepreneurship

Or follow this link: http://www.econdev.vt.edu/images/pdfs/Kauffman-Final.pdf

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