Why do Entrepreneurs Matter? Entrepreneurs… the makers, the doers, the dreamers. Facebook Linkedin Twitter Discuss Entrepreneurs are people who turn ideas into reality, charging directly into the headwinds to create something of value where there was no value before. Entrepreneurs create value in many ways. They start new businesses and grow small companies into big ones. They bring innovative solutions to market and address social and community challenges. They turn their hobbies into side hustles, create our favorite shops on Main Street, and make the products and services we buy everyday. They pursue dreams. They feed their families. They create jobs. They come from all different backgrounds. They represent a wide range of ages and educational experiences. They work across industries and professions. Indeed, anyone can be an entrepreneur. Entrepreneurs drive progress. Human history, in part, is the story of people turning concepts into innovations, sharing them with others, and raising standards of living for all. From the wheel to the airplane, from new restaurants to new nonprofits, each improvement changes our lives and allows other innovations to follow. We celebrate entrepreneurs. The twenty-first century brought significant changes to our economy and, with them, a resurgent interest in entrepreneurship, both in the United States and throughout the world. We are celebrating and cultivating it in many new ways.1 For instance, many successful entrepreneurs today have celebrity status. Books, television, and movies tell their stories. Media follow entrepreneurs, covering their businesses but also their personal lives, investments, and philanthropy. Society is looking for solutions… Governments seek policies to nurture innovators, grow businesses, and lift up economies. Investors hunt for promising new companies to create wealth. Community leaders search for the missing ingredient that will enable them to help more entrepreneurs succeed and lift their neighborhoods. …because entrepreneurship benefits all of us. Entrepreneurship empowers individuals, improves standards of living throughout a community, and creates jobs, wealth and innovation in the economy. In fact, most of the net new jobs in the U.S. are created by new and young companies.2 But there are discrepancies between perceptions and reality. Facebook Linkedin Twitter Discuss The reality is that the entrepreneurial economy is much bigger than the famous entrepreneurs in the media. Entrepreneurship happens every day in our communities – urban and rural. People from all different demographics, sectors, and geographies are entrepreneurs. There is an entrepreneurship deficit. And despite this increase in interest in entrepreneurship, there has been a decades-long decline in entrepreneurial activity. Americans are starting new businesses that employ people at about half the rate they were a generation ago.3 And it’s exacerbated by barriers facing specific populations. The playing field is not level, and certain groups face more significant and more persistent barriers to starting companies – leaving untapped human potential on the sidelines. There are ongoing gaps in economic opportunity and access to resources, particularly for women, people of color, and immigrants. Rural communities, veterans, LGBTQ entrepreneurs, older entrepreneurs, and people with disabilities also contend with economic opportunity gaps. Entrepreneurs in the United States are 80.2% white and 64.5% male – not at all representative of the overall U.S. population. These gaps appear to be due to an opportunity and empowerment divide in our country.4 Women are substantially less likely to start a businesses than men… Facebook Linkedin Twitter Discuss While it is well-known that women earn 80 cents on the dollar compared to men,6 it is seldom acknowledged that women own only 32 cents on the dollar compared to men.7 Furthermore, just 2.7% of all U.S. companies receiving venture capital had a woman CEO,8 and only 0.2% of venture capital goes to African American women9 – despite the fact that African American women founders are the fastest growing entrepreneurial segment.10 …minorities own half as many businesses as non-minorities… Facebook Linkedin Twitter Discuss Minorities make up more than 35% of the population, but they own less than 20% of employer businesses and only 17.4% of businesses with at least one million dollars in revenue. Moreover, minority-owned businesses start smaller and stay smaller.11 …and rural entrepreneurs face an increasingly uphill battle. Facebook Linkedin Twitter Discuss Entrepreneurship largely occurs in urban areas, and while mid-sized metros like Kansas City are winning, small cities and towns in places like rural Kansas are losing. In 1977, more than two out of every ten U.S. startups were in rural areas. Today, just over one in every ten startups is in a rural area.12 As a result, the whole economy suffers. Facebook Linkedin Twitter Discuss Everyone in the system is affected when there is a decrease in innovation, entrepreneurship, and opportunity in our communities, and when unrealized potential is pervasive. Recent research suggests that the entrepreneurship deficit is related to some of today’s biggest challenges: the jobs deficit, slow productivity growth, stagnant wages, and rising inequality.13 To achieve an economic system that realizes its full promise, everyone must be able to participate. The world is shifting… Facebook Linkedin Twitter Discuss We are at a turning point in history. The exponential increase in connectivity and technology is ushering in a new economic era.15 As the Industrial Age comes to a close and a new economic system emerges, we face massive change and uncertainty. But there is also tremendous opportunity to reinvent our economy. …and the United States will see a wave of demographic changes in the next few decades. By 2055, the United States will not have a single racial or ethnic majority.16 People of color will represent 52% of the population (compared to 39% today), comprising the “new majority.”17 This new majority will need to have equal access to entrepreneurship and other economic opportunities for our economy to thrive. In many ways, demographic change is destiny. An opportunity – and an imperative… Facebook Linkedin Twitter Discuss We must make our economy more entrepreneurial, creating more growth, jobs, wealth, and innovation. Communities need to think beyond stealing companies from other jurisdictions and retaining existing companies. Instead, they must concentrate on growing new companies. …for everyone. Entrepreneurial ecosystems can provide a mechanism to improve access to economic prosperity for everyone, regardless of who they are and where they live. We must forge a new American Dream that is more accessible to all – not only to significantly reduce inequality, but also to capitalize on the untapped potential of underrepresented groups and improve our economy. We must make our economy more entrepreneurial, creating more growth, jobs, wealth, and innovation. Communities need to think beyond stealing companies from other jurisdictions and retaining existing companies. Instead, they must concentrate on growing new companies. A study by Silicon Valley-based First Round Capital found that its investments in companies with a woman founder performed 63% better than investments in all-male founding teams.18 Immigrants are about twice as likely as native-born Americans to become entrepreneurs.19 If people of color started businesses at the same rate as their white counterparts, the United States would see 1 million new companies and 9.5 million new jobs.20 A new model is required. Facebook Linkedin Twitter Discuss Traditional methods of helping entrepreneurs aren’t enough. We need to do more than offering more tax incentives, infusions of capital, or access to business incubators. There is no silver bullet that will address the entrepreneurship deficit or the barriers to entrepreneurship that many face. We must address the entire system. We need to change the way we think about helping entrepreneurs. And we need to ensure access and opportunity for everyone. People are the new companies. Many approaches within traditional economic development focus primarily on attracting and retaining existing companies – primarily favoring large incumbent firms. These techniques made sense in the past but seem to have increasingly limited impact today. As our economy changes, our approaches to economic development must also evolve. It’s time for our economic development paradigm to take a human-centered perspective and focus on people who bring ideas to life and create value from scratch: entrepreneurs. Every entrepreneur has distinct stories and unique aspirations. They all face barriers in their own way. Our task is to help them start their businesses and give them the individualized assistance they need to pursue their entrepreneurial dreams. Ecosystems are the answer. Entrepreneurship doesn’t happen in a vacuum. It’s the result of countless complex interactions in a community. No single organization can provide sufficient help to all the entrepreneurs in a community. We have to build the ecosystem that surrounds entrepreneurs. Ecosystems help entrepreneurs thrive at each step. Just as the complex biological system of soil, water, sunlight, flora, and fauna in a rainforest allows individual plants to flourish, so the ecosystem for entrepreneurs is essential to their success.21 Healthy, diverse, and inclusive ecosystems allow talent, information, and resources to flow quickly to entrepreneurs as they need it.