The document discusses the significance of small businesses and entrepreneurship in economic growth, particularly through Alabama Launchpad, a collaborative initiative aimed at supporting high-growth and technology-driven ventures in Alabama. It highlights the role of small businesses in job creation, accounting for a substantial portion of net new jobs and advocating for programs that foster innovation and mentorship. The document also provides examples of successful companies in Alabama and outlines a business plan competition designed to encourage entrepreneurship within the state's universities.

1. The Importance of Small Businesses and EntrepreneurshipAuburn University Economic & Community Development InstituteJuly 16th, 2009Glenn Kinstler, Director

2. Today’s agendaQuick introduction of Alabama LaunchpadIdeas of Entrepreneurship and the Role of Small Businesses in Job CreationThree High-Growth Examples from AlabamaThe Case for Alabama LaunchpadClosing Thoughts

3. What is ALABAMA Launchpad?Alabama Launchpad is a not-for-profit organization dedicated to the support and promotion of “high-growth” and technology entrepreneurship in Alabama.Alabama Launchpad was formed in 2006 by the state’s public, research universities and the business community.Unique collaboration between business and academiaEffort to advance “The New Economy” in Alabama“Building an innovation economy through collaboration and entrepreneurship”

4. Alabama Launchpad PartnersAlabama A&M University

5. Alabama Launchpad PartnersAlabama A&M UniversityAlabama State University

6. Alabama Launchpad PartnersAlabama A&M UniversityAlabama State UniversityAuburn University

7. Alabama Launchpad PartnersAlabama A&M UniversityAlabama State UniversityAuburn UniversityUniversity of Alabama

8. Alabama Launchpad PartnersAlabama A&M UniversityAlabama State UniversityAuburn UniversityUniversity of AlabamaUniversity of Alabama at Birmingham

9. Alabama Launchpad PartnersAlabama A&M UniversityAlabama State UniversityAuburn UniversityUniversity of AlabamaUniversity of Alabama at BirminghamUniversity of Alabama in Huntsville

10. Alabama Launchpad PartnersAlabama A&M UniversityAlabama State UniversityAuburn UniversityUniversity of AlabamaUniversity of Alabama at BirminghamUniversity of Alabama in HuntsvilleUniversity of South Alabama

11. Alabama Launchpad PartnersAlabama A&M UniversityAlabama State UniversityAuburn UniversityUniversity of AlabamaUniversity of Alabama at BirminghamUniversity of Alabama in HuntsvilleUniversity of South AlabamaThe Economic Development Partnership of Alabama (EDPA)

12. Role of EDPAPrivately funded, not-for-profit organizationPrivate side of economic developmentCreated in the early 90’s to help attract business to AlabamaAssists the state, local and corporate economic development/recruiting agenciesExtensive Existing Industry ProgramEntrepreneurship is Economic Development

13. “Entrepreneurs are society’s rejects, instead of becoming hobos, criminals or professors, they start their own business.” – Henry D. ThoreauEntrepreneurship & Small Businesses

14. Form of Social ResponsibilityEntrepreneurship makes the world betterEntrepreneurs see what can be, not what is Idea of Creative DestructionTwo types of InnovationIncremental: Small improvement to pre-existing products or services that make them cheaper, faster, betterDisruptive: Completely new products or services that transform entire industriesInventors are not always entrepreneurs

15. Interesting StatisticsUS Small Business Administration defines a “small business” as one with fewer than 500 employees.Represent 99.7% of all employer firmsEmploy about half of all private sector, non-farm employeesPay nearly 45% of total US private payrollGenerated 60 to 80% of net new jobs annually over the last decadeProduce 13 times more patents per employee than large firms

16. Who creates more jobs? Small vs. Large“The Role of Small & Large Businesses in E.D.” Kelly Edmiston, Senior Economist at the Federal Reserve of K.C.From 1990 to 2003, 23 million net new jobs were created239 million gross new jobs – 219 million gross jobs lostSmall Business (< 20 employees) created 79.5% of net new jobsMidsize Business (20 – 500 employees) created 13.2%Large Business (> 500 employees) created 7.3%Large firms lose more jobs than they create, but…Statistics are deceiving, more study neededSmall firms become large ones, so the statistics are skewed

17. Size-Wage EffectSource: US Dept. of Labor

18. Another Study“Employment Dynamics: small and large firms over the business cycle”US Dept. of Labor StatisticsStudy attempts to address the skew in past data by dividing firms into many more categoriesFrom 1990 to 2005, small firms (1 to 499) create 64% of net new jobsExpansions account for 83% of all gross job gains vs. 17% for startupsSmall firms had more net job losses in the recession of the early 90s, while large firms had more net job losses in the 2001 recession

19. “In today’s economy…”From April to May: 532,000 jobs lostLarge firms (500+) shed 100,000 jobs – 19% Medium firms (50 to 500) shed 223,000 jobs – 41% Small firms (>50) shed 209,000 jobs – 40% From Jan to May: 2,494,000 jobs lostLarge = 313,000 – 12.5% Medium = 1,098,000 – 44% Small = 962,000 – 38.5% Source: ADP National Employment Report, May 2009

20. Rates of SuccessTwo-thirds of new employer firms survive at least two years44% survive at least four years, 31% survive 7 years.Results were consistent from different industriesResearch found that after four years, the rate of firm closing declines considerably.Source: US SBA

21. Not all small businesses are equal !!Lumping all of these small businesses together is misleadingJust think about the variety of small businesses you see every day!All businesses are important, but special attention should be given to “High-Growth”, innovative companiesOften technology relatedMore efficient than larger firms, more patents tooHigher wagesCreate real wealth in the community

22. Three High-Growth Alabama Examples

23. DigiumDigium is the original creator and primary developer of Asterisk, the industry's first open source VOIP platform.

24. Digium also offers a full range of professional services, including consulting, technical support, and custom software development.Currently employee over 80 peopleLong list of awards and recognitions from VOIP and entrepreneurial publicationsHeadquartered in Huntsville

25. The New Digium

26. DAXKO SoftwareLeading provider of operations and financial management solutions for member-based nonprofits, with a particular focus on the $5.2 billion YMCA market

27. Customers in 48 states

28. Products help customers operate more efficiently and serve their communities more effectively

29. 80 employees; plans to add 20 to 30 more in next two years

30. Average salary more than $60,000

31. Headquartered in Birmingham“DAXKO Culture”

32. ProEthic PharmaceuticalsProEthic is a specialty pharmaceutical company specializing in the areas of cardiology, pain and migraine.

33. Started in 2001 focusing on generic drugs

34. Company focuses its efforts on the acquisition, development, licensing, and marketing of pharmaceutical products.

35. Became anchor tenant in Montgomery Industrial Park

36. Created two spin-off companies that also located in the park

37. Recently acquired by Kowa Pharmaceuticals of Japan

38. Headquartered in MontgomeryOther Alabama ExamplesAdTranHealthSouthQMSBanksRegions, Colonial, CompassBates Enterprises

39. Idea of Entrepreneurial Churn

40. What can be done to support start-ups?Look at programs in other states:Georgia Research AllianceBen Franklin Technology Partners - PennsylvaniaMaryland Technology Development CorporationSpotlight and reward entrepreneursMentoring programsNetworking opportunities for entrepreneursRecruiting success creates opportunities for small businessesMore entrepreneurship education at every levelCommon Theme: Public-Private Partnerships

41. Business IncubatorsIncubators provide:Shared space and overheadExpert advice and guidanceConnections/NetworkingAccess to capitalIntangibles

42. “Writing a business plan is the first step to creating a successful venture. Everything starts with the plan.” – Dr. Bob Kolodney, Harvard Business SchoolGovernor’s Business Plan Competition

43. Business Plan CompetitionCompetition is for technology and high-growth ideasEligible teams must be affiliated with a partner universityCurrent StudentCurrent FacultyOther University EmployeeAlumni of no more than five yearsFormer Faculty of no more than three yearsMust establish and maintain HQ and the majority of business operations in Alabama for 5 yearsUniversities are “Centers of Innovation”

44. Goals of the CompetitionProvide a structured approach to writing a business planTo showcase Alabama’s best start-up ideas and promote the opportunities for entrepreneurship and innovation in AlabamaTo educate and nurture entrepreneursTo create a statewide network of individuals interested in high-growth entrepreneurshipTo provide seed financing to three high-growth businesses on an annual basis

45. Nuts & BoltsCompetition occurs over four phases; Follows academic calendarJudges come from business and venture communitiesFinal event where teams “pitch” their ideas2009 Finale: April 18th at UABOpportunity to bring together government officials, entrepreneurs, university officials, business leaders, economic developers, investors

46. 2008-2009 Registration Figures36 team registrationsIndustry Categories:IT – 6Materials Eng – 5Biotech – 5Medical Devices – 3Consumer Products – 3Pharma/Drug Delivery – 3Auto/Aero Eng – 3Green Tech – 2Ag/Vet – 2Other - 4

47. What do the winners win?Grand Prize: $100,0002nd Place: $50,0003rd Place: $25,000While cash is king, the real prize is the opportunity to connect with members of the venture and angel communities and other business leaders.

48. A few past winners…

49. 2007 2nd Place: Halo MonitoringLed by two UAH MSEE alumniWearable health monitoring system that uses wireless technology to monitor health and lifestyle of the elderly.Caregivers can monitor vitals of subject in real timeFall detection and automatic notification of 911Currently incubated at BizTechSince competition, Halo has received $1.7 million of investment from the Huntsville Angel Network, Greer Capital Advisors and Jemison Investments

50. More on Halo MonitoringFirst sales in early 2009Halo Research goes to Consumer Electronics Show ►Company now has 10 full-time employees

51. 2007 Grand Prize Winner: OcuMedicTeam led by Dr. Mark Byrne, Professor of Chemical Engineering at Auburn Univ.Drug delivery company with a patented technology that creates therapeutic contact lenses for the treatment of ocular diseasesTime releaseUsed much of prize money to file international patent applications and new “field-of-use” patentsCurrently in animal testing at the Auburn College of Veterinary Medicine (FDA process)

52. 2008 2nd Place: SEA DesalinationLed by Ph.D. candidate from The University of AlabamaSun-powered system that removes salt from seawater or pollutants from contaminated ground waterMade from recycled soda bottlesInitial sales are targeted to third world markets and coastal homeowners10 full and part-time employeesCurrently incubated at UA AIME Center