New Paper Offers Model for Building a Nurturing Entrepreneurship Ecosystem

Kauffman Foundation study examines connections and relationships that help communities maximize job-creating potential of young and growing companies

(KANSAS CITY, Mo.) Sept. 10, 2014 ­– Entrepreneurial hubs ­– vital to the U.S. economy and individual communities ­– spring up and thrive when they are buoyed by support networks. Yet, little study has been dedicated to understanding what it takes to establish these favorable local ecosystems.

"Examining the Connections within the Startup Ecosystem: A Case Study of St. Louis," released today by the Kauffman Foundation, reports on the elements necessary for creating a nurturing entrepreneurial environment. Most important, it found, are the connections and relationships that pull support organizations, new entrepreneurs and experienced entrepreneurs together in a way that helps founders get the mentoring and information that most benefits the company at its particular stage of development.

"Many regions would like to replicate the enviable culture that Silicon Valley and a few other areas of the country have created," said Yasuyuki Motoyama, senior scholar in Research and Policy at the Kauffman Foundation. "This study points to the most effective infrastructure being one that allows startup company founders to learn from their peers and from experienced entrepreneurs within a highly evolved and interconnected system of support organizations."

The study focuses on the startup ecosystem in St. Louis. While the region isn't well-known as an entrepreneurial hub, its business landscape has undergone a substantial transformation in recent years. Both the public and private sectors have invested heavily in promoting entrepreneurship, and many new entrepreneurship support organizations have launched in the last few years.

The investigation focused on four key connections within St. Louis' startup ecosystem: connections between entrepreneurs; connections between support organizations; connections between entrepreneurs and support organizations; and miscellaneous support connections, such as the availability of entrepreneurship-oriented events.

"Entrepreneurs clearly learn best from interacting with other entrepreneurs," said Karren Watkins, a research associate at the Skandalaris Center for Entrepreneurial Studies at Washington University in St Louis. "A strength of the St. Louis startup ecosystem is the extent to which entrepreneurs are connected with others – both peers in similar industries and stages of growth, as well as experienced entrepreneurs who can serve as mentors."

Inevitably, there will be gaps and overlaps of services, and entrepreneurship support organizations have to maintain constant communication and collaboration to adjust. The study also recommended that they court involvement from experienced entrepreneurs and selectively connect these individuals with startup owners.