Impact Study of Entrepreneurial Dynamics: Office of Entrepreneurial ...
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
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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)
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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!
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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
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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
Index
MET
RICS
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Ecosystems can be measured and understood in different ways
KAUFFMAN ECOSYSTEM INDICATORS
Fluidity
1. Input 2. Direct Outcome 3. Indirect Outcome
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
MET
RICS
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Ecosystems can be measured and understood in different ways
KAUFFMAN ECOSYSTEM INDICATORS
Fluidity Connectivity
1. Input 2. Direct Outcome 3. Indirect Outcome
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
MET
RICS
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Ecosystems can be measured and understood in different ways
KAUFFMAN ECOSYSTEM INDICATORS
Fluidity Connectivity Diversity
1. Input 2. Direct Outcome 3. Indirect Outcome
DIVERSITY – An assortment of economic specializations, people and opportunities.
Density
Input Industry Diversification
Direct Outcome Businesses by Size & Age
(%)
Indirect Outcome Job Growth
MET
RICS
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Study Area: Blacksburg and Roanoke MSAs
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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…
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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?
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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
10
5
8
12
13
4
2
6
9
14
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
SME
IDE
(51)
(31)
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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.”
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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
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SME Businesses
IDE Businesses
Minority Businesses
International Businesses
Rural Businesses
Urban Businesses
Small Businesses
Scalable Businesses
Foster an entrepreneurial climate of encouragement and inclusion
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Financial Resources
Infrastructure
Gateways to Access
Resources
Education
Expertise
Networking and
Mentorship
Develop resources appropriate for different entrepreneur types and stages
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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.
KAUFFMAN ECOSYSTEM INDICATORS
Fluidity Connectivity Diversity
1. Input 2. Direct Outcome 3. Indirect Outcome
Density
Adopt Indicators and Inventories
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Three broad strategies to nurturing your entrepreneurial ecosystem…
Foster an entrepreneurial climate of encouragement and inclusion
How can we think more inclusively as we strengthen our entrepreneurial ecosystem(s)? What steps have/might we take?
Develop resources appropriate for different entrepreneur types and stages
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?
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Post Breakout Group Sharing…
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Foster an entrepreneurial climate of encouragement and inclusion
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
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Develop resources appropriate for different entrepreneur types and stages
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
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Adopt Indicators and Inventories
KAUFFMAN ECOSYSTEM INDICATORS
Fluidity Connectivity Diversity
1. Input 2. Direct Outcome 3. Indirect Outcome
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
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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
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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