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Four Indicators for a Vibrant Entrepreneurship Ecosystem -- C2ER

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Arnobio Morelix
Senior Research Analyst, Kauffman Foundation

April 2016

C2ER (Council for Community and Economic Research) –State Chapter

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Four Indicators for a Vibrant Entrepreneurship Ecosystem -- C2ER

  1. 1. © 2013 Ewing Marion Kauffman Foundation Arnobio Morelix Senior Research Analyst, Kauffman Foundation April 2016 Council for Community and Economic Research – State Chapter FOUR INDICATORS FOR VIBRANT ENTREPRENEURSHIP ECOSYSTEM
  2. 2. © 2013 Ewing Marion Kauffman Foundation Acknowledgments – Research & Policy Team • Alicia Robb • Amisha Miller • Chris Jackson • Dane Stangler • EJ Reedy • Emily Fetsch • Jason Wiens • Jordan Bell-Masterson • Josh Russell • Rob Fairlie • Yas Motoyama
  3. 3. © 2013 Ewing Marion Kauffman Foundation Four Takeaways 1. Understanding inputs versus outputs in entrepreneurship ecosystems 2. What makes a vibrant entrepreneurship ecosystem o Four Dimensions and How to Measures Them 3. Data on Entrepreneurial Outputs o the Kauffman Index of Entrepreneurship 4. Entrepreneurship Ecosystem Toolkit: Data, and Resources
  4. 4. © 2013 Ewing Marion Kauffman Foundation Why measure? “How do I actually know if my city is doing better terms of entrepreneurship?” • Paraphrased here from Paul Glastris, editor in chief of the Washington Monthly. He asked this to me on an entrepreneurship event in St. Louis. • A question we get often here at the often, in all shapes and forms. • We will never be able to fully answer, but we are working on it. Photo by Becas Oea GCUB
  5. 5. © 2013 Ewing Marion Kauffman Foundation 1. Thoughts on Entrepreneurial Inputs and Outputs • Inputs o E.g., • Venture capital • Patents • Labor • Outputs o E.g., • New companies • Employment growth • Revenue growth • Business survival
  6. 6. © 2013 Ewing Marion Kauffman Foundation 2. What makes a vibrant entrepreneurship ecosystem Four Dimensions and How to Measures Them • Density • Fluidity • Connectivity • Diversity o Inputs and outputs
  7. 7. © 2013 Ewing Marion Kauffman Foundation Entrepreneurial Density dimension #1 • Number of new & young companies: by population • Employment share of young companies • High-tech startup density
  8. 8. © 2013 Ewing Marion Kauffman Foundation Entrepreneurial Fluidity dimension #2 • Population “flux” o Inflow and outflow of people o Brain circulation more relevant than brain drain • With people with the un-matched skills are staying, that is bad for them and for your ecosystem • Labor market velocity o Movement (“reallocation”) between jobs and companies • High-growth firm presence
  9. 9. © 2013 Ewing Marion Kauffman Foundation Entrepreneurial Connectivity dimension #3 (probably least studied dimension – knowledge limitation) • Program mapping • Spinoff rate • Peer and mentor relationships
  10. 10. © 2013 Ewing Marion Kauffman Foundation Entrepreneurial Connectivity dimension #3 • Program mapping • More info at o http://www.kauffman.org/blogs/growthology/2015/04/presentation-at-facebook-headquarters-building-a-robust- entrepreneurial-ecosystem
  11. 11. © 2013 Ewing Marion Kauffman Foundation Entrepreneurial Connectivity dimension #3 • Spinoff rates and maps • More at • http://www.heikemayer.com/spinoff-regions.html • http://www.kauffman.org/newsroom/2013/06/new-map-tracks-evolution-of-entrepreneurship-in-kansas-city
  12. 12. © 2013 Ewing Marion Kauffman Foundation Entrepreneurial Connectivity dimension #3 • Endeavor Insights -- Tech Maps o E.g., • Most Inspirational Founders • Employee Spinouts • Mentorship Among Founders • Investor Relationships • More info at o http://nyctechmap.com/
  13. 13. © 2013 Ewing Marion Kauffman Foundation Entrepreneurial Diversity dimension #4 • Number of “specializations” • Social and economic (income) mobility • Outsiders / immigrants
  14. 14. © 2013 Ewing Marion Kauffman Foundation 4) Entrepreneurial Outputs the Kauffman Index of Entrepreneurship www.kauffmanindex.org Startup Main Street Growth
  15. 15. © 2013 Ewing Marion Kauffman Foundation What it looks like
  16. 16. © 2013 Ewing Marion Kauffman Foundation 4) Ecosystem Toolkit: Data • Measuring an Entrepreneurial Ecosystem o http://www.kauffman.org/what-we-do/research/city-metro-and-regional- entrepreneurship/measuring-an-entrepreneurial-ecosystem • Kauffman Index of Entrepreneurship o Startup Activity o Main Street Entrepreneurship o Growth Entrepreneurship • Available at national, state, and metro levels (40 largest metros) • www.kauffmanindex.org
  17. 17. © 2013 Ewing Marion Kauffman Foundation 4) Ecosystem Toolkit: Resources o Entrepreneurship Support Programs • http://www.kauffman.org/what-we-do/entrepreneurship o Growthology (research blog) • www.growthology.org o New Entrepreneurial Growth Agenda (book -- free) • http://www.kauffman.org/neg/ o Policy Digests • http://www.kauffman.org/what-we-do/resources/entrepreneurship-policy-digest o State of the Field (encyclopedia-like summary of entrepreneurship presearch) • http://www.kauffman.org/microsites/state-of-the-field
  18. 18. © 2013 Ewing Marion Kauffman Foundation Challenges • “More entrepreneurship is better” assumption o “more is better” (especially young and growing) is an useful heuristics • New and young firms create most net new jobs • New firm creation is on a historical decline in the U.S. o but at least conceptually not always true • Data lags o Nowcasting? • Inside city (e.g., street level) missing
  19. 19. © 2013 Ewing Marion Kauffman Foundation What are we missing? • What’s missing on the framework? • Which ingredients connect to which “output” indicators? • How to get more granular (e.g., interventions that affect ingredients?) • What are you doing in your region?
  20. 20. © 2013 Ewing Marion Kauffman Foundation Conclusion and questions “if you can’t measure it, it doesn’t exist” - Bill Gates, quoted on the Economist Photo by Steve Jurvetson from Menlo Park, USA
  21. 21. © 2013 Ewing Marion Kauffman Foundation Thank you Four Takeaways 1. Inputs and Outputs 2. Four Indicators of a Vibrant Entrepreneurship Ecosystem 3. The Kauffman Index of Entrepreneurship 4. Tools, Data, and Resources • Arnobio Morelix o @arnobiomorelix (Twitter) o amorelix@kauffman.org o www.growthology.org (entrepreneurship research blog) o www.kauffmanindex.org

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