© 2013 Ewing Marion Kauffman Foundation

Arnobio Morelix

Senior Research Analyst, Kauffman Foundation

April 2016

Council for Community and Economic Research – State Chapter

FOUR INDICATORS FOR VIBRANT ENTREPRENEURSHIP ECOSYSTEM

© 2013 Ewing Marion Kauffman Foundation

Acknowledgments – Research & Policy Team

• Alicia Robb

• Amisha Miller

• Chris Jackson

• Dane Stangler

• EJ Reedy

• Emily Fetsch

• Jason Wiens

• Jordan Bell-Masterson

• Josh Russell

• Rob Fairlie

• Yas Motoyama

© 2013 Ewing Marion Kauffman Foundation

Four Takeaways

1. Understanding inputs versus outputs in entrepreneurship ecosystems

2. What makes a vibrant entrepreneurship ecosystemo Four Dimensions and How to Measures Them

3. Data on Entrepreneurial Outputso the Kauffman Index of Entrepreneurship

4. Entrepreneurship Ecosystem Toolkit: Data, and Resources

© 2013 Ewing Marion Kauffman Foundation

Why measure?

“How do I actually know if my city is doing better terms of entrepreneurship?”

• Paraphrased here from Paul Glastris, editor in chief of the Washington Monthly. He asked this to me on an entrepreneurship event in St. Louis.

• A question we get often here at the often, in all shapes and forms.

• We will never be able to fully answer, but we are working on it.Photo by Becas Oea GCUB

© 2013 Ewing Marion Kauffman Foundation

1. Thoughts on Entrepreneurial Inputs and Outputs

• Inputso E.g.,

• Venture capital

• Patents

• Labor

• Outputso E.g.,

• New companies

• Employment growth

• Revenue growth

• Business survival

© 2013 Ewing Marion Kauffman Foundation

2. What makes a vibrant entrepreneurship ecosystemFour Dimensions and How to Measures Them

• Density

• Fluidity

• Connectivity

• Diversity

o Inputs and outputs

© 2013 Ewing Marion Kauffman Foundation

Entrepreneurial Densitydimension #1

• Number of new & young companies: by population

• Employment share of young companies

• High-tech startup density

© 2013 Ewing Marion Kauffman Foundation

Entrepreneurial Fluiditydimension #2

• Population “flux”o Inflow and outflow of people

o Brain circulation more relevant than brain drain

• With people with the un-matched skills are staying, that is bad for them and for your ecosystem

• Labor market velocityo Movement (“reallocation”) between jobs and companies

• High-growth firm presence

© 2013 Ewing Marion Kauffman Foundation

Entrepreneurial Connectivitydimension #3

(probably least studied dimension – knowledge limitation)

• Program mapping

• Spinoff rate

• Peer and mentor relationships

© 2013 Ewing Marion Kauffman Foundation

Entrepreneurial Connectivitydimension #3

• Program mapping

• More info ato http://www.kauffman.org/blogs/growthology/2015/04/presentation-at-facebook-headquarters-building-a-robust-

entrepreneurial-ecosystem

© 2013 Ewing Marion Kauffman Foundation

Entrepreneurial Connectivitydimension #3

• Spinoff rates and maps

• More at• http://www.heikemayer.com/spinoff-regions.html

• http://www.kauffman.org/newsroom/2013/06/new-map-tracks-evolution-of-entrepreneurship-in-kansas-city

© 2013 Ewing Marion Kauffman Foundation

Entrepreneurial Connectivitydimension #3

• Endeavor Insights -- Tech Mapso E.g.,

• Most Inspirational Founders

• Employee Spinouts

• Mentorship Among Founders

• Investor Relationships

• More info ato http://nyctechmap.com/

© 2013 Ewing Marion Kauffman Foundation

Entrepreneurial Diversitydimension #4

• Number of “specializations”

• Social and economic (income) mobility

• Outsiders / immigrants

© 2013 Ewing Marion Kauffman Foundation

4) Entrepreneurial Outputsthe Kauffman Index of Entrepreneurship

www.kauffmanindex.org

Startup Main Street

Growth

© 2013 Ewing Marion Kauffman Foundation

What it looks like

© 2013 Ewing Marion Kauffman Foundation

4) Ecosystem Toolkit: Data

• Measuring an Entrepreneurial Ecosystemo http://www.kauffman.org/what-we-do/research/city-metro-and-regional-

entrepreneurship/measuring-an-entrepreneurial-ecosystem

• Kauffman Index of Entrepreneurshipo Startup Activity

o Main Street Entrepreneurship

o Growth Entrepreneurship

• Available at national, state, and metro levels (40 largest metros)

• www.kauffmanindex.org

© 2013 Ewing Marion Kauffman Foundation

4) Ecosystem Toolkit: Resources

o Entrepreneurship Support Programs

• http://www.kauffman.org/what-we-do/entrepreneurship

o Growthology (research blog)

• www.growthology.org

o New Entrepreneurial Growth Agenda (book -- free)

• http://www.kauffman.org/neg/

o Policy Digests

• http://www.kauffman.org/what-we-do/resources/entrepreneurship-policy-digest

o State of the Field (encyclopedia-like summary of entrepreneurship presearch)

• http://www.kauffman.org/microsites/state-of-the-field

© 2013 Ewing Marion Kauffman Foundation

Challenges

• “More entrepreneurship is better” assumptiono “more is better” (especially young and growing) is an useful heuristics

• New and young firms create most net new jobs

• New firm creation is on a historical decline in the U.S.

o but at least conceptually not always true

• Data lagso Nowcasting?

• Inside city (e.g., street level) missing

© 2013 Ewing Marion Kauffman Foundation

What are we missing?

• What’s missing on the framework?

• Which ingredients connect to which “output” indicators?

• How to get more granular (e.g., interventions that affect ingredients?)

• What are you doing in your region?

© 2013 Ewing Marion Kauffman Foundation

Conclusion and questions

“if you can’t measure it,

it doesn’t exist”- Bill Gates, quoted on the Economist

Photo by Steve Jurvetson from Menlo Park, USA

© 2013 Ewing Marion Kauffman Foundation

Thank you

Four Takeaways1. Inputs and Outputs

2. Four Indicators of a Vibrant Entrepreneurship Ecosystem

3. The Kauffman Index of Entrepreneurship

4. Tools, Data, and Resources

• Arnobio Morelixo @arnobiomorelix (Twitter)

o amorelix@kauffman.org

o www.growthology.org (entrepreneurship research blog)

o www.kauffmanindex.org