Report

Startup / Research universities, venture capital firm offices, or government funds are not drivers

How does a newly formed nonprofit organization tasked with helping entrepreneurs across America effectively serve startups that are in different places, in different industries and with wildly different needs? Region by region.

This is the central lesson found in “The Start Uprising,” a white paper released today by the Ewing Marion Kauffman Foundation that examines where the Startup America Partnership started and where it is now. It is a story chock full of lessons for anyone interested in being a catalyst for entrepreneurship.

Launched at the White House in January 2011 as a demonstration project by the Kauffman Foundation and the Case Foundation, Startup America Partnership initially focused on helping entrepreneurs get their companies off the ground by delivering free or low-cost services and connecting them with large corporations.

By mid-2012, however, the initiative’s leaders had discovered that what startup entrepreneurs need most is the mentorship and fellowship of other entrepreneurs who can help them avoid missteps and point them toward customers, funders and talent. This learning shifted Startup America Partnership’s focus toward becoming the catalyst for a movement of entrepreneurs, by entrepreneurs, through startup regions.

Pivoting to regional hubs was a response to what the Startup America Partnership team learned was a lack of connectedness among entrepreneurs and is consistent with Kauffman research that challenged misconceptions about where high-growth companies start and what entrepreneurs need to succeed.

The startup regions strategy now has become the central work of SUAP. It has become the organizing principle for what remains of SUAP’s three-year mandate.

Forget your assumptions about startups

The field of entrepreneurship is rife with misconceptions. Though self-confidence often is seen as a virtue, it also can lead to stubborn, and dangerous, forms of ignorance. For example, a Kauffman Foundation report on the geography of American entrepreneurship published in September 2012 concluded that we need to rethink the “where” of fast-growing firms. By studying Inc. magazine data on high-growth firms, the Foundation’s researchers found that the metropolitan area with the highest number of fast-growing firms was Washington, D.C. Second was Salt Lake City. Only then did more familiar names come in: Austin, third; San Francisco, fourth; and Boston, fifth.

There also were high scores for cities not often associated with high-growth firms: Indianapolis, Buffalo, Baltimore, Nashville, Philadelphia, and Louisville. Only a quarter of Inc.’s firms are in conventional high-tech sectors, such as IT, health, and pharmaceuticals. The industrial sector is wide and deep, comprising business services, advertising and marketing, government services, construction, and all the rest.

Different cities and regions have different specialties: Washington has government services, New York City has advertising and marketing, Chicago and Atlanta have business services. Innovations can come from all kinds of sectors and regions.

John Doerr of investment firm Kleiner Perkins Caulfield Byers once said that “Silicon Valley is not a place, but a state of mind.” But the popular conception of startups only happening in certain places has proved hard to shift.

The Kauffman report challenges some other basic assumptions. Having a highly educated workforce matters much more than having a research university, which hardly matters at all. The presence of research universities, venture capital firm offices, or government funds, which may be supportive of new and growing firms, are not drivers of entrepreneurship. The training and teaching of a potent workforce matters much more than research does. State and local governments need to do more than glance over these lessons, which challenge some of the most dearly held tenets of economic development.

 

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via Learnings from Startup America Partnership’s first 18 months show networks and resources critical for startup growth should begin at the regional level 

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