Growing local economies by scaling entrepreneurship

All too often, the perception of economic development is tied to the decision of large, established corporations relocating to a new metro area or opening a second headquarters in a different time zone. Similarly, the popular take on entrepreneurship is that it’s primarily driven by splashy high-tech innovators who attract large amounts of investors’ cash.

Both generalizations couldn’t be further from the truth.

Away from the attention-grabbing headlines, many economic development agencies have increasingly recognized that new businesses are reliably effective in shoring up the economic foundation of a community or region. More than 95% of those businesses have historically remained small in scope while playing a key stabilizing role in their communities, according to Maria Meyers, founder and executive director of SourceLink, a university program that provides technologies and consulting to communities building entrepreneurial ecosystems.

Consider the Great Falls Development Authority in Montana, which actively supports startups and home-grown enterprises in addition to existing businesses across its 44,000-square-mile service area that borders Canada. Or the Arizona Regional Economic Development Foundation, which operates two business development co-working spaces it established in Sierra Vista, Arizona, adjacent to Mexico. Meanwhile, in urban areas across the U.S., communities are actively seeking to strengthen business-based connections within diverse, high-density neighborhoods, including potentially tapping nearby university resources while emphasizing inclusivity.

“If we develop our entrepreneurship efforts and have successful programs, we will grow our economy, which will support the retention and expansion of those companies,” said Mignonne Hollis, executive director of the Arizona Regional Economic Development Foundation. “Over the long term, that will help us in recruiting others to the area. The model of entrepreneurship development is one that feeds into classic economic development.”

To help further the essential nature of entrepreneurial ecosystems, which also encompass companies that have moved beyond the startup phase, the International Economic Development Council (IEDC) recently partnered with SourceLink to introduce the Entrepreneurship Development Professional (EDP) certification. Consisting of five courses – two of which are new courses in entrepreneurship-led economic development, supported by the Kauffman Foundation – and an extensive exam, the program provides certificants with a solid core of knowledge and support for building out entrepreneur-focused efforts across their service area.

“One of the biggest challenges for an organization like ours is that there are so many things that you can do to support entrepreneurs, it’s hard to know where we can have the biggest impact,” said Brett Doney, president and CEO of the Great Falls Development Authority and early enrollee in the EDP program. “This program is really good at presenting the different approaches and helping walk through what we should do next to increase that impact.”

According to Jeff Finkle, president and CEO of the IEDC, the certification program puts a special focus on issues of race. IEDC, which incorporated diversity, equity, and inclusion (DEI) elements into the curriculum from the start, will ultimately broaden the base of economic development professionals trained in supporting entrepreneurs, with an emphasis on communities where COVID-19 hit people of color hardest. He added that the organization has also reviewed its other offerings and updated them as needed with DEI elements, helped facilitate the delivery of pandemic-related aid to numerous communities, offers a collection of racism and economic development resources, and recently launched an Equitable Economic Development Playbook. Furthermore, its Racism in Economic Development Committee, which was formed in the aftermath of George Floyd’s murder, has swiftly tackled challenges from systemic racism to pocket poverty.

“There are no two economic development organizations alike, so while one may be focused on training entrepreneurs, another may be focused on building community support networks, and yet another may be focused on funding options,” Finkle said. “Who better to handle all of those needs than someone who is certified in entrepreneurship development?”

Finkle’s question echoes similar thoughts that surfaced in conversations four years ago among five highly engaged members of the entrepreneurship development community: Meyers; Dell Gines, lead community development advisor for the Federal Reserve Bank of Kansas City; Steve Radley, president and CEO of NetWork Kansas; Don Macke, vice president of e2 Entrepreneurial Ecosystems; and Penny Lewandowski, founder of Change at the Edges and a former vice president with the Edward Lowe Foundation.

The group swiftly turned its what-ifs into a framework and proposal for the EDP certification program, underscoring an unwavering focus on entrepreneurship that went deeper than a one-size-fits-all approach.

“I think people tend to look at entrepreneurship and business recruiting within economic development as an either-or proposition,” Lewandowski said. “No one form of economic development is a panacea, but it is important for economic developers to be as adept at growing companies as recruiting them. Plus, if you have really strong communities of entrepreneurs and businesses, your community is more attractive when you’re recruiting due to strong a strong support culture and partnership opportunities.”

After IEDC and SourceLink secured the support of the U.S. Economic Development Administration and the Kauffman Foundation, the two newly developed courses – the Introduction to Entrepreneurship-Led Economic Development and Accelerating Growth Through Entrepreneurship-Led Economic Development – followed shortly thereafter. Classes started early this year and the first exam is scheduled for the first week of December.

“Through our work over the years in entrepreneurial communities, we’ve seen that those communities can be rather disconnected, so an entrepreneur finds it difficult to go through the maze of figuring out where to go for funding, mentorship, classes, banking, and those services that help support success,” said Philip Gaskin, vice president of Entrepreneurship with the Kauffman Foundation. “These courses are key in helping understand economic development through the lens of the entrepreneur and reinforcing what entrepreneurs really need to grow.”

Gaskin added that EDP-certified economic developers will potentially have a stronger sense of their community’s entrepreneurship assets, offer a smoother path to services, ensure more equitable access, and sharpen their insights on results, due in part to more robust measurement practices.

In northern Montana, Doney said the learnings and connections he acquired through the EDP-related courses supported his development of a mentor network that fills gaps in his organization’s expertise, while extending the Development Authority’s reach across its vast service area. Doney added that the initiative also allows the organization to build better connections with the region’s diverse populations through mentors who are experienced in working with Native American, veteran, and female entrepreneurs.

Within Arizona’s Cochise County, Hollis sees certification as boosting the credibility of her organization’s entrepreneurship offerings, especially as it implements a recently awarded grant from the Center on Rural Innovation, which advances inclusive rural prosperity through digital economy ecosytems that support scalable entrepreneurship. The grant emphasizes tech jobs and startups and recognizes the cross-sector efforts of the Arizona Regional Economic Development Foundation; the Premier Alliance, which focuses on employment opportunities for individuals with additional needs; and Chicanos Por La Causa, a regional advocacy organization.

Within urban communities, which the Pew Research Center found are 56% people of color, inclusive entrepreneurship ecosystems are a core element of citywide economic development efforts, Gines described in a report he wrote with Rodney Sampson for the Federal Reserve Bank of Kansas City. He and Sampson also proposed in a separate essay for the Brookings Institution that inclusive local tech ecosystems that invest in talent development, entrepreneurship, and seed capital within Black communities help provide a path to racial equity.

“It comes down to understanding a community’s resources and assets and how they work together, whether it’s an urban or rural setting,” said Meyers, who’s been active in building entrepreneurial ecosystems since 2003. “To have a growing cohort of people across the country that has a similar understanding of what’s important and what’s needed will extend the conversation around supporting the job makers that are small business.”