They were correct when they state that economic opportunity looks and acts different, even significantly different, mere blocks between two or more locations, let alone between local neighboring cities or states within our nation. But it’s the Kauffman Foundation’s (KF) push for a “new capital model” for startups which seems to include more access to more money to grow businesses. In fact, this is probably the least of most startup’s issues and should rarely be an entrepreneur’s first path to KF’s “growing from the inside” approach to growing a community’s entrepreneurial ecosystem.
KF started a new pilot program, Capital Access Lab, which “is not a typical fund – the Capital Access Lab will provide early capital to innovative, emerging funds that make investments directly to underserved entrepreneurs” [emphasis added]. Does that mean they won’t be looking for the typical “30 over 30” up and coming entrepreneurs and will be looking instead for the “60 over 60” crowd? There’s an inherent problem with looking for the “underserved” approach to raising capital. Not unlike a recent discussion I had with an executive pastor of a church, they defunded a number of their non-profits because there was no ROI for their donated dollars. Same goes with investing and borrowing money for your business, at some point if you’re not making sales, the bill will come due when the money runs out.
Evidence of this occurs when you see a startup community celebrate raising money from angel investors and venture capitalists rather than celebrate making money by selling their products and services. Nearly every entrepreneur I talk with can always spend $1,000,000 of someone else’s money, including some who state, “I’m not going into debt” for their business. But most entrepreneurs don’t see the need to makes sales and earn revenue first before they hunt for investments.
KF did a great job with their “3 + 997 = 1,000” commentary and seeing each community as an entrepreneurial ecosystem. That says that three out of 1,000 people became new entrepreneurs each and every month. But it also means that there should be 997 people who should be willing to support the three in their search for finding a successful business model and becoming profitable.
Kim Lane, CEO of the Conductor (ARConductor.org), “is a public-private partnership with the University of Central Arkansas and Startup Junkie Consulting driving innovation, entrepreneurship and economic empowerment in Central Arkansas” made an interesting observation. Her comment concerned building trust for startup entrepreneurs (32:05), especially when one of the three is a single mother with four kids on food stamps who wants a better life who is looking for some in their 997 network to be supportive. After a year of being in business, she had won an industry award, hired her first employee, and was buying her first house. It’s this, “showing up and helping” part of the 997 that makes the difference for the three startups.
Kansas City, Missouri Mayor Sly James gave one of the best examples of an “AHA” moment (29:00) in their quest to become Amazon’s HQ2 for their location and the bounty of 50,000 new jobs for their area. “Most think,” Mayor James said, “We did not get anything out of losing the HQ2 bid.” He stated if it weren’t for their quest to bid for HQ2, the “knowledge we did not have and would not have had” would have never been brought to light. It was the bringing together of people, the “out of the box” thinkers and their “building up of an infrastructure of collaboration” within the city that they found their weaknesses in their economic development game that they had not paid particular attention to in the past. Their inability to supply Amazon a workforce to be able to handle their job requirements showed them they did not have the workforce infrastructure to provide for their local businesses either. But most important, Mayor James said, “out of that problem solving comes opportunities for businesses and entrepreneurs.”
Christine Lai, community activator, Los Angeles, California, expanded on the issue of co-developing and co-designing of various projects happens when you bring many disciplined approaches to problems so that each person brings their varied talents and experiences to the project table to solve issues which accelerates the project’s results. In the end, it is rarely a top-down approach to solving problems, but “street level” talents, experiences, and efforts which are brought together which work best and provide the best results.
James said it correctly. To every entrepreneur, everyone they meet is a potential “something” to them, regardless of what their basic business is to others. “Everyone is a possibility.” Not only is everyone a possibility, whether you’re just starting out with where you are as one of the three, but also some of those who are of the influential 997 can offer some quick kudos via social media to drive new business to a just-opened business which can provide a needed marketing boost.
In the end, KF did have some good advice for entrepreneurs and all of their local communities.
“Too many communities concentrate on attracting businesses from afar instead of growing them at home. In a thriving ecosystem, entrepreneurship empowers individuals, improves standards of living, and creates jobs, wealth, and innovation in the economy. But the success of an entrepreneurial ecosystem can’t be bought; it has to be built.”