© 2014 Ewing Marion Kauffman Foundation
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Building a Robust Entrepreneurship Ecosystem
in Springfield, Missouri
Yas Motoyama, Ph.D.
Senior Scholar
Ewing Marion Kauffman Foundation
© 2014 Ewing Marion Kauffman Foundation
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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
© 2014 Ewing Marion Kauffman Foundation
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© 2014 Ewing Marion Kauffman Foundation
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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?
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Breaking Myths 2: Venture Capitals
• Failure of private venture fundso 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 financeo Bootstrapping (Motoyama et al. 2013)
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• Financial sources of high-growth Inc companies (n=479)
Source Count Share
Personal savings 322 67.2%
Bank loans 248 51.8%
Credit card 163 34.0%
Family 100 20.9%
Business acquaintances 57 11.9%
Angels investors 37 7.7%
Close friends 36 7.5%
Venture capitalists 31 6.5%
Government grants 18 3.8%
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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 yeto Outliers (Y-Combinator, Foundry)
o What happens after being funded?
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Breaking Myths 4: University
• Scientific research, NIH funding, etc.o Little connection b/w scientific discovery & commercialization
(Motoyama et al. 2011)
• Technology transfer officeo 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
© 2014 Ewing Marion Kauffman Foundation
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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.
© 2014 Ewing Marion Kauffman Foundation
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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
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Connections Observed in St. Louis
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Alternatives 1: Venture Funds & Incubators
• Reorganize them in order to create connections b/w
entrepreneurs and support organizationso Policy Digest #1: Do’s and Don’ts of Local Entrepreneurship Promotion
• Provide a space where entrepreneurs get togethero (eg.) 1871 in Chicago
o Porous boundary (Feld 2012)
• Host experimental, entrepreneurship-related eventso (eg.) Startup Weekend
• Connect to other experts who can help entrepreneurs
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Alternatives 2: University
• Reorganize course-based educationo 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 startupso 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
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Alternatives 3: Toward Firm Growth
• Nurture startups to high-growth companies
• Identify successful local entrepreneurs & championso Not necessarily the leaders of largest local businesses
o Entrepreneurial companies; high-growth companies (eg. Inc firms)
• Connect experienced and growing entrepreneurs
© 2014 Ewing Marion Kauffman Foundation
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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?
© 2014 Ewing Marion Kauffman Foundation
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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 2
16 26
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• Entrepreneurship by stages
• Seamlessly
Startup
Weekend
1MC
Pipeline
Connecting
w/ Inc firms
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Alternatives 4:
• Know who is served in your ecosystem & who is noto Participate in our survey in September?
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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)