Supporting Entrepreneurial Communities in Appalachia

Erik R. Pages EntreWorks ConsultingAppalachian Funders Network March 28, 2012

 Rural Entrepreneurs: Slow and Steady ◦ What is Impeding Growth? How can we help spur growth? What else is needed? Linkages to Leading Sectors and Clusters Questions?? Copyright 2012 EntreWorks Consulting March 28, 2012 2

 The Facts!!! Entrepreneurs are your future engines of prosperity. You Have No Choice!! Can’t keep “waiting for Superman.” Entrepreneurs are the backbone of rural America ◦ At least 11% of US adults are trying to start a business ◦ Up to 1/3 of rural workers may be self-employed by 2015 Copyright 2012 EntreWorks Consulting March 28, 2012 3

 Rural start-ups are prevalent and do not look much different from start-ups located in other parts of the US. Most firms – both urban and rural – start small and stay small. ◦ Rural firms are more persistent. They tend to have better survival rates than other firms. ◦ But, survival does not equal prosperity. These persistent firms tend to grow slower, create fewer jobs, and generate less spin-off benefits than their urban counterparts. Rural firms that do achieve fast growth tend to lose any distinctive characteristics. Copyright 2012 EntreWorks Consulting March 28, 2012 4

 Slower rural growth rates seem to result from: ◦ A mix of natural competitive disadvantages  E.g., Smaller home markets ◦ Concentration in lower growth sectors ◦ More restricted access to business growth services  Sophisticated coaching/mentoring/consulting  Diverse equity capital pools  Diverse Peer Networks Copyright 2012 EntreWorks Consulting March 28, 2012 5

 Typical Services:  Growth Services: ◦ Coach Start-Ups ◦ Expand Markets (e.g. exports) ◦ Develop Biz Plans ◦ Stimulate growth sectors ◦ Make Traditional Loans (e.g. clusters) ◦ Help Lower Costs ◦ Link to Global Networks  Incubators (e.g. accelerators)  Tax Credits ◦ Coaching/Mentoring  Training Subsidies ◦ Provide equity finance (e.g. CDFIs, angels, etc.) ◦ Business Model InnovationWhat We Do Now: What We Should Do:Incubate! Accelerate! Copyright 2012 EntreWorks Consulting March 28, 2012 6

 Effective acceleration and growth efforts require similar investments in capacity building that: ◦ Grow More Ambitious Entrepreneurs ◦ Provide Linkages to Growth Opportunities ◦ Provide diverse sources of capital ◦ Develop more local talent—as entrepreneurs and as employees. Copyright 2012 EntreWorks Consulting March 28, 2012 7

 Build Stronger Peer Networks ◦ PIPELINE Entrepreneurial Immersion (KS/NE)  www.pipelineentrepreneurs.com ◦ Maine’s Top Gun  http://www.topgunmaine.biz/ Copyright 2012 EntreWorks Consulting March 28, 2012 8

 Engage Students ◦ Startup Weekend (http://startupweekend.org/) ◦ Awards and Competitions ◦ Community Colleges (NACCE President’s Commitments)  www.nacce.com Engage the 1099 Workforce Copyright 2012 EntreWorks Consulting March 28, 2012 9

October 24,2011 10

◦ Coworking Spaces  A New 3rd Place? ◦ http://wiki.coworking.i nfo/w/page/42355006 /Rural%20Coworking ◦ www.loosecubes.com ◦ www.opendesks.com2011 EntreWorks Consulting December 7, 2011

 Develop and exploit new tools for financing ◦ Angel funds ◦ CDFIs ◦ Crowdfunding Better use of underutilized capital pools ◦ Revolving Loan Funds (EDA, USDA) ◦ SBA 504 Loans Copyright 2012 EntreWorks Consulting March 28, 2012 12

Urban regions get a larger share of 504 loans; Rural areashave higher average loan per number of firms in theregionThere are still capital deserts2008 data Urban Micro RuralTotal number of counties 1,100 688 1,359Counties with 504 loans 738 360 267% of all counties 67% 52.30% 19.70%# of firms in active counties (not# of loans) 4,795,270 406,573 134,720% of firms in active counties 93% 67% 40%Total 504 loan $ million $4,549.0 $441.4 $210.4Average 504 loan/firm $949 $1,086 $1,562

2011 Southeast Angel Deals: HALO Report 19.00% 30.20% Health Care Internet4.80% Software (Non-Internet/Mobile)6.30% Mobile/Telecom Industrial 7.90% Consumer Products/Services Other 23.80% 7.90% Copyright 2012 EntreWorks Consulting March 28, 2012 16

 Link current clusters to business opportunities with local anchors ◦ Food, Energy, Health Care Services Workforce Development as Priority Focus for Clusters Think More Broadly about Sectors Build Rural to Urban Connections ◦ Kansas Opportunity Innovation Network (www.innovatekansas.org) Copyright 2012 EntreWorks Consulting March 28, 2012 17

 Entrepreneursthrive within systems, networks, and interconnected webs ◦ But, these systems don’t happen overnight ◦ And they are regional, national, and global in scope: THINK BIG!! Capacity building begins at home ◦ But, it can’t stop at home! Copyright 2012 EntreWorks Consulting March 28, 2012 18

For More Information: Erik R. Pages EntreWorks Consulting 703-237-2506 Epages@entreworks.net www.entreworks.net http://www.entreworks.net/blog Newsletter Sign-Up:http://www.entreworks.net/Newsletter.php

Supporting Entrepreneurial Communities in Appalachia

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