Entrepreneurial ecosystems come in myriad forms. To better understand what contributes to vibrant entrepreneurial ecosystems, Kauffman researchers examined 355 U.S. metropolitan areas and found that some factors have a positive relationship to a strong ecosystem, while other factors remain unproven. Though some variables certainly help enhance startup growth, most so-called necessary ingredients often are not statistically significant. Nor do all cities have identical resources and assets.
Not all communities are bustling with entrepreneurial activity, yet as one prominent entrepreneur has said, all cities are capable of a vibrant startup scene. Each community must craft its own unique and vibrant startup community; its own entrepreneurial ecosystem.
MYTH: Without Venture Capital Financing, an Ecosystem Cannot Flourish
FACT: Among high-growth Inc. 500|5000 firms, most entrepreneurs have not relied on venture capital.
MYTH: Incubators and Accelerators Spur Entrepreneurial Growth
FACT: Businesses affiliated with incubators do not perform better than those businesses not affiliated with incubators.
MYTH: Entrepreneurs Need University Research Funding
FACT: College graduation rates are correlated with startup rates. Yet, more scientific research funding does not necessarily lead to more new business creation.
Cities are hard at work to create vibrant entrepreneurial ecosystems. At the Kauffman Foundation’s 2015 Mayors Conference on Entrepreneurship, five cities were given the opportunity to pitch a plan they developed to strengthen their ecosystems. The cities of Knoxville, Tenn., and Louisville, Ky., were awarded funding to increase connectivity between entrepreneurs and support organizations and to improve economic opportunities for minorities and underserved populations through entrepreneurship.
While the idea of entrepreneurship as an ecosystem is not new, the idea that the ingredients matter more than the recipe is relatively novel. Thus, policymakers would be wise to apply the suggestions to their particular community instead of simply using, “an ecosystem-in-a-box” approach. For examples of different ecosystems, see Spigel and Bahmri and Evans.
2016 State of Entrepreneurship Address
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