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Measuring an Entrepreneurial Ecosystem

This paper offers twelve indicators and their sources for measuring the outcomes and vibrancy of a local entrepreneurial ecosystem.

How do you measure your entrepreneurial ecosystem? How should you interpret the data about your startup community? What economic indicators should matter for vibrancy and growth?

These questions come up repeatedly in conversations with entrepreneurs, program heads, event organizers, investors, policymakers, and others. 

The frequency of these queries reflects the phenomenon: With the rapid spread of efforts to build entrepreneurial ecosystems, it’s only natural to wonder what outcomes should be tracked. And, what you track depends on what you’re trying to achieve.

In some places, the desired outcome is simply more: more entrepreneurs, more companies, and more jobs. Other communities design their ecosystem efforts around a particular type of company or type of job. 

Some regions, moreover, see the “entrepreneurial ecosystem” as a marketing effort, and focus on a particular type of individual they hope to attract to their area. For other cities, the only thing that matters is the “exit”—initial public offerings and acquisitions.

These are all worthy objectives, and communities must define their own goals. Yet where most places fail is in reliance on a handful of limited input metrics rather than outcomes. 

To judge the vibrancy of their entrepreneurial ecosystems, many states and regions focus on things like research and development funding at universities, available investment capital, and engineering degrees. 

These may be associated with more entrepreneurial activity, but they are inputs, not necessarily the outcomes to be tracked. 

Other regions focus on patents or technology licenses out of universities—these are a piece of the puzzle, but they’re not necessarily the leading indicators of entrepreneurial vibrancy.

At the other end of the spectrum is the kitchen-sink approach—because every part of an entrepreneurial ecosystem is critically important, you must track everything. 

This approach has the admirable quality of avoiding Campbell’s Law but provides no sense of prioritization or focus for those community leaders involved in the ecosystem. 

There must be some middle ground between trying to capture every dimension of an entrepreneurial ecosystem and overly focusing on only one or two indicators.