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20131126   dc entrepreneurship and innovation v slideshare
 

20131126 dc entrepreneurship and innovation v slideshare

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    20131126   dc entrepreneurship and innovation v slideshare 20131126 dc entrepreneurship and innovation v slideshare Presentation Transcript

    • Building Washington’s Startup Ecosystem Existing challenges and a framework for solutions November 26, 2013 @maxwellelliot
    • Executive Summary Despite prominence of high potential technology firms to the story of DC growth, the region lacks a robust startup ecosystem • Like most nascent ecosystems, DC lacks capital, talent, and liquidity opportunities • Data invalidates many analogies to the technology hubs of the United States To overcome these issues, regional leaders must acknowledge challenges and engage in non-traditional maneuvers to differentiate or jumpstart development • Offering incubators and streamlined permitting systems should be considered “par for course” with most other major cities engaging in the same reforms • Differentiation will be easiest building from our competitive advantage in government, cyber security, and systems integration In discussing potential solutions, policymakers should address fundamental deficiencies in: • Capital availability, Talent acquisition, Liquidity facilitation, & Entrepreneurial risk the forum for growth and innovation 1
    • Since 2007, the pace of entrepreneurship has increased rapidly throughout the US Companies with at least one round of VC by founding year (outside of CA, MA, or NY)… 15% …followed closely in suit by companies founded in DC, MD, and VA 11% However, this increase in early stage activity doesn’t necessarily translate to competitiveness Source: AOL Crunchbase data, Team analysis. the forum for growth and innovation Note: Biases and incomplete data are intrinsic to the private market data. Observations are better thought of as directional accuracies as opposed to strict realities 2
    • Despite early stage gains, survival is less common outside of technology hubs Percentage of companies receiving a second VC financing, by founding year 16% fewer businesses have made it to subsequent funding in DC, MD, and VA than in CA, MA, and NY For entrepreneurial firms to create jobs, they must progress well beyond the seed stage of activity Source: AOL Crunchbase data, Team analysis. the forum for growth and innovation Note: Biases and incomplete data are intrinsic to the private market data. Observations are better thought of as directional accuracies as opposed to strict realities 3
    • In reality, talent, capital, and liquidity events are scarce in the District relative to traditional hubs No DC, Maryland, or Virginia school ranks in the top 10 universities producing venture backed entrepreneurs from 2010-2013 BEST SCHOOLS IN REGION #19 University of Maryland #25 Johns Hopkins #38 University of Virginia Venture capital in CA, MA, and NY outweighs DC area 16:12 Population is only a factor of ~4.4:13 DC area businesses are not active buyers1 Percentage of Companies Acquired InState vs. Percentage of Total Companies Companies based in DC, Maryland, and Virginia have only acquired 11 businesses since 2006 Assets Under Management 2012 Many tech jobs exist in DC, but raw talent is limited1 BEST SCHOOL IN WASHINGTON #94 GW University Source: 1) US News and world Report, BLS 2) NVCA data 2) US Census Estimates, 2012 4) AOL Cruncbase Data Note: Biases and incomplete data are intrinsic to the the forum for growth and private market data. Observations are better thought of as directional accuracies as opposed to strict realities innovation 4
    • Few local IPO’s mean lack of watershed events for investment in subsequent companies Active angels who have sold companies by state of sale1 Low numbers of Angels with relevant experience suggests capital may come from less credible investors 400 1 Exits create cash rich investors, with deep knowledge of industry problems 2 Successful founders provide connections to venture capitalists and potential acquirers 3 Investors with relevant experience can find talent and develop channel partnerships 350 300 250 200 150 100 50 ~50% Longer to raise initial funding outside of SF Bay ~2x more likely to exit with savvy angels 1 0 Source: 1) AOL Crunchbase data, Team analysis. the forum for growth and innovation Note: Biases and incomplete data are intrinsic to the private market data. Observations are better thought of as directional accuracies as opposed to strict realities 1 5
    • None of the top 10 Alma Maters for VC funding are in the greater DC area Schools by number of founders backed from 2010-2013 200 180 160 140 120 100 80 60 40 20 0 Source: Pitchbook analysis the forum for growth and innovation Note: Biases and incomplete data are intrinsic to the private market data. Observations are better thought of as directional accuracies as opposed to strict realities 6
    • 4 categories should be considered as policy makers consider government’s role in support Programs run in differing geographies (not comprehensive) Summary Capital Availability Capital can be made more readily available through matching, tax policy, and more Talent Acquisition Localities must reduce friction for growth companies to recruit and hire relevant talent Liquidity Facilitation To drive ecosystem growth regions should work to bridge buyers and sellers of high growth businesses Risk of entrepreneurial endeavor An opportunity exists to derisk the act of entrepreneurship to drive business creation • • • • • • • • Virginia’s CIT GAP funds offers early stage financing within a less active state to drive entrepreneurship Texas offers policy incentives in order to drive investment and business location within the state Chicago is forgiving student debt for technologists who work for the city Stanford partners with institutions like Accel Partners to retain STEM talent with fellowships Michigan’s Coolhouse Labs imports advisors and investors to its location in Harbor Springs Washington DC’s Acceliprise flies its entrepreneurs to Palo Alto in order to generate interest in early stage businesses Investment in school systems, public transit, connectivity, process simplification, and more all contribute to de-risking entrepreneurship PPPs with firms interested in bringing in startup experience could create secure jobs for founders the forum for growth and innovation 7