I liked this latest post on A 3-Step Guide To Whipping Your City's Startup Scene Into Shape from Billy Warden and Greg Behr that appreared in Fast Company. I am not a fan of the idea that all communities should model themselves after Silicon Valley, but this post has some excellent advice.
Any city or town, no matter how small, can whip its startup scene into competitive shape. To that end, we’ve developed a three-step guide we call R.U.N.:
•Rally Around Risk
•Network Frequently and Widely
It's this last point that I think is the most important. The greatest challenge facing any entrepreneur is the feeling that they are alone, that no one understands what they are doing, and that they have nowhere to turn for help. Creating a vibrant networking scene, that enables entrepreneurs to connect with each other and with the support available to them within larger community, is vital to the success of entrepreneurship in any community.
Communities can offer a corrective by establishing networking activities that connect entrepreneurs to the resources they need. Chambers of commerce, businesses, and grassroots organizations can all contribute here.
To some, an essential piece of networking is a common space--if not an incubator, than a hub where young companies and entrepreneurial support organizations suit up everyday. Nothing promotes the exchange of ideas, skills, and tricks of the trade as quickly as putting like-minded people together in one room.
Keep in mind, the networking imperative isn’t just about amassing resources within your city limits. For best results, think and act regionally.
This is why we created the Business Calendar Network, so that startup communities (read entrepreneurs) can thrive by connecting with the people, resources, and knowledge they need to start and grow their businesses. They don't need to struggle alone and in ignorance. What they need to know, and who they need to know, are both at their fingertips, through networking.
Given that it was Three Kings Day earlier this week, it was nice to read a post by Steve Gary Blank, author of The Four Steps to the Epiphany. Blank recently returned from an extended trip to Chile, and he wrote about his mostly favorable impressions of Chile’s effort to become what Blank termed the “Chilecon Valley.”
[Chile has] been thinking hard and smart about the lessons to be learned not only from Silicon Valley, but with only 16 million people, they are also looking for lessons from other small innovation clusters such as Israel, Singapore and Finland. These countries are great models of countries too small to sustain startups of scale on just domestic consumption yet have managed to create innovation with a global reach.
That said, Blank spent most of his time discussing the challenges that Chile must address to achieve its goals. It struck me that many of these challenges are faced by other countries, states, cities, and regions striving to energize their entrepreneurial ecosystem and become the next Silicon Valley:
Lack of venture capitalists – “Given that great VC’s are much, much more than just a bag of money, this means that startups lack experienced board members with practical experience.”
Weak corporate connections – Having watch the rescue of the trapped Chilean miners, we all know that mining is a huge part of Chile’s economy. Yet Blank reports that the (largely state-run) copper companies import nearly 100% of the technology they use in their mining operations. Blank sees this as a missed opportunity to leverage the country’s strength in helping build the future.
Confusion over Small Business versus Scalable Startup versus Corporate Entrepreneurship – as Blank points out, a business founded to remain as a small family-owned business has different needs than one founded to scale quickly to global firm. Blank relates that Chile is beginning to understand that different types of businesses need different types of support, and that different regions of Chile will want to emphasize one type of business over another.
Inability to attract talent in specific domains – “Saying that you support entrepreneurship and innovation is a start, but the sentence needs to be finished. Entrepreneurship and innovation in what field? Where will Chile establish technical and innovative leadership?” Blank feels that Chile needs to focus definitively on a few specific domains in order to become a global magnet for talent.
A culture that does not accept failure – Much has been said about California’s ability to see failure as simply an opportunity to learn on the way to the next success. Chile, according to what Blank saw, lacks that acceptance of failure. The bankruptcy process, for example, is draconian. More than anything else, Blank sees this inability to accept failure as THE major challenge for Chile's effort to become a powerhouse of innovation and entrepreneurship.
So, what does this say about your own regional entrepreneurial ecosystem?
- Are you connecting entrepreneurs with the VCs and other mentors they need to overcome the challenges they face? (The Business Calendar Network can certainly help with that.)
- Are you leveraging the strength of your larger industries and companies, connecting their buying power with local sources of innovation? (The Calendar Network can help bring them together.)
- Are your entrepreneurial support programs geared for building small businesses, scalable startups, or corporate entrepreneurs? (The Calendar Network can help you understand the gaps your region might have in its support programs.)
- Is your area a magnet for talent in a specific domain? If not, can it be? (The Calendar Network can accelerate your efforts to achieve “critical mass” in a particular cluster or industry.)
- Is your culture accepting of failure? (Well, this is one area the Business Calendar Network might not be able to help you with.)
As much as we love California, it often breaks our heart to hear people compare themselves and their local startup scene to that of Silicon Valley. While California is still a giant in the startup world, we now have the numbers and charts to prove that California is just one place where entrepreneurs are alive and thriving.
Thanks to our friends at Technically Philly, who pointed us to these maps of startup fundraising, put together by FormDs. They show fundraising events for the last year (in the form of Form Ds), broken out by state. Form Ds are filed by startups and growing companies when they raise money. Since nearly all startups file Form Ds, the idea is that you can use Form Ds to track startups as they are created and grow.
So, this first chart shows that California startups do indeed get the lion's share of the money. California startups raised $11.5 billion in the past year, more than four times more than the $2.8 billion raised by Massachusetts (its closest "competitor"). Startups in Texas and New York are getting more money than average, and all the other states are plugging along at under $2 billion in funds raised by their entrepreneurs.
But, California is a big state and Massachusetts a small one. What happens if you adjust the amounts raised by state population? This next chart shows that on a per capita basis, Massachusetts entrepreneurs outraised their counterparts in California, $418 per person to $312. Note also that we start to see some differentiation among the other states, with Colorado, Utah, Washington, Delaware, and Connecticut coming in between $120 to $240.
FormDs has some other charts showing the total number of fundraising events, and the population-adjusted state rankings are also instructive. Massachusetts and Colorado lead the pack here, with California running third. Other states with a healthy number of funding events are Nevada, Washington, Utah, Connecticut, Vermont, New Hampshire, Pennsylvania, Delaware, Maryland, Kentucky, Florida, Texas, Arizona, Minnesota, North Dakota, Montana, and Oregon.