IS YOUR
ENTREPRENEURIAL
ECOSYSTEM
SCALING?
AN APPROACH TO INVENTORYING AND MEASURING
A REGION’S INNOVATION MOMENTUM
KEN HARRINGTON
Since retiring from Washington University in late 2014, I have reflected on the
15-year evolution of the St. Louis entrepreneurial ecosystem. While at
Washington University, I watched the St. Louis region move its ecosystem
from a nascent dream to what is now mid-stage maturity. This journey was
possible because of a mixture of top-down strategy (economic development),
wealth-seeking initiatives (venture development), and bottom-up efforts
(entrepreneur development). This mixture created an environment of collabo-
ration and cooperation (and sometimes conflict) that resulted in a high level of
momentum that is now sustaining itself as it expands.
The purpose of this essay is to explain and
examine (1) what really happened, (2)
whether the momentum created in the St.
Louis ecosystem will continue, E (3) what
other regions can learn from our experi-
enze. In reflecting on these experiences, IO
have developed the entrepreneurial ecosys-
tem framework that I share here, in three
parts.
The first part of the framework describes an
ecosystem inventory, which is designed to
support an assessment of a regional entre-
preneurial ecosystem. The inventory func-
tions by establishing a baseline that invento-
ries the ecosystem’s parts and relating them
to one another. This baseline can then be
used to measure momentum and growth as
an ecosystem evolves.
The second component of the framework
discusses different approaches to measuring
entrepreneurial ecosystems. Measurement
in this context concentrates on three areas
of assessment: (1) economic outcomes, (2)
cultural and social factors, E (3) ranking
methodologies. It selects one approach to
cultural and social factors that is particular-
ly good for measuring the momentum of a
regional entrepreneurial ecosystem.
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Is Your Entrepreneurial Ecosystem Scaling?
In the final part of the paper, I apply the
inventory and describe our experiences
using the selected measurement approach
in St. Louis. This explains the relevance of
the framework in practice, and how the St.
Louis ecosystem evolved.
These thoughts are intended for municipal-
ities, università, innovation districts,
research parks, individuals, community
leaders, and governments that are develop-
ing or growing entrepreneurial ecosystems
to improve society.
In St. Louis, the players inside and outside
of our ecosystem (support organizations,
aspiring entrepreneurs, active entrepre-
neurs, investors, università, governments,
business people, chambers of commerce,
economic development professionals, serv-
ice providers, and others) frequently com-
mented that it was hard to identify all the
entrepreneurial activity. Some said we
needed to do a better job communicating
the high level of entrepreneurial energy so
that public and philanthropic supporters
could better understand what was happen-
ing and whom to fund. Others felt there was
unrealized potential to attract more entre-
preneurs and funders. We worked on sever-
al ways to accomplish this, including web-
sites, publications, social maps, and year-
end reports. All of them helped, but some-
thing was still lacking, and we needed a bet-
ter way to catalog and measure our
progress.
Many people are involved in creating an
entrepreneurial ecosystem, and it is critical
that they have a common language to
describe the components of a regional sys-
tem to help them understand one other.
This in turn helps to create connections
between players who have common inter-
ests, which results in deeper collaboration
and higher-velocity relationships. When we
began in St. Louis, many pockets of entre-
preneurial energy and activity were dor-
mant or disconnected because the people
involved did not know about one another.
The websites, publications, social maps, E
reports we developed helped, but an inven-
tory approach with more defined measure-
ments would have been extremely useful.
This essay provides such a framework.
INVENTORYING
ENTREPRENEURIAL
ECOSYSTEMS
Figura 1 shows the ecosystem inventory
framework. It is a generic map that presents
12 intersecting sectors that are based on the
stage of activity (from left to right across the
top of the matrix) and the type of develop-
ment (from top to bottom). The stages of
activity include (1) discovery, (2) idea, (3)
startup, E (4) growth, while the types of
development represent the various under-
takings related to the (1) entrepreneur, (2)
venture, E (3) economic development.
The inventory allows a region to position its
ecosystem players and show them their
ABOUT THE AUTHOR
Ken Harrington was the Founding Managing Director of the Skandalaris Center for
Entrepreneurial Studies at Washington University in St. Louis. Prior to joining the university in
2001, he held senior management positions at seven startup technology companies. An author
and speaker, Ken serves on a number of boards of directors.
© 2016 Ken Harrington
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Ken Harrington
Figura 1. The ecosystem inventory framework
roles relative to others. It also makes it easi-
er for aspiring entrepreneurs to find pro-
grams and activities that match their stage
of development. This increases the number
of participants and creates new relation-
ships and collaboration that catalyze ecosys-
tem momentum.
The three types of development in the
inventory are linked to specific ecosystem
actors, and to the type of activity within the
entrepreneurial ecosystem. The first is
entrepreneur development, which focuses
primarily on activities that support the indi-
vidual contemplating taking action on an
idea. The activities that support these
prospective entrepreneurs are typically
offered free or for a nominal fee. No equity
or compensation is exchanged, and the legal
structure is normally a not-for-profit
modello. University education and co-curric-
ular programs can play a large role in this
part of the ecosystem. As seen in Figure 2,
entrepreneur development includes idea
exchange sessions, mentoring services,
grant funding, competitions, internships,
education events, speaker events, startup
weekends, hackathons, and other similar
activities.
The second type of ecosystem development
is venture development, whose primary role
is to create successful companies and
wealth. Support is given to ventures that
have shown enough promise to warrant
finanziamenti, and service providers are compen-
sated with equity or cash. Investors want
winners, thus the funding selection process
is competitive, the goal being to pick not
just good deals but
the best deals.
Entrepreneurs and investors are required to
share wealth, and the legal structures they
establish support wealth-seeking and
wealth-sharing. As seen in Figure 2, Questo
type of development includes self-funding,
friends and family, service provider dis-
conta, angel investors, accelerators, ven-
ture capital funds, government co-invest-
ment funds, strategic partners, and private
equity. Venture-focused technology trans-
fer and corporate innovation initiatives fall
into this part of the ecosystem.
Economic development is the third type
within the inventory. The primary focus
here is on putting into place the assets and
infrastructure needed to cultivate, support,
and mature ventures. Economic develop-
ment is often rooted in public policy and is
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Is Your Entrepreneurial Ecosystem Scaling?
Figura 2. Ecosystem Activity Examples
supported by top-down strategies that often
are led by government economic develop-
ment agencies. In St. Louis, for example,
strong leadership in the city and county
government organized creative public, pri-
vate, and philanthropic partnerships to sup-
port economic development. These part-
nerships developed strategies, generated
incentives, and made considerable invest-
ments in facilities, scientific research initia-
tives, digital networks, capital formation,
workforce development, and similar areas,
all of which are key for the ecosystem.
Figura 2 maps common activities within the
three types of development as examples of
what occurs within an ecosystem.
The stages of ecosystem activity in the
inventory have four phases: (1) discovery,
(2) idea, (3) startup, E (4) growth. IL
discovery stage is described as scientific
research that may lead to a startup idea or
invention, and it is often supported by gov-
ernment, philanthropy, or public-funded
research. An example of research funded by
philanthropy in St. Louis is the Donald
Danforth Plant Science Center, a not-for-
profit scientific research facility founded in
1998. Its mission is to “improve the human
condition through plant science.”1 The cen-
ter has more than 200 employees, including
19 principle investigators in a number of
scientific specialties. A second example is
publicly funded research at universities
such as Washington University, St. Louis
Università, and others, which collectively
receive about $700 million annually in pub- lic funds for research.2 In the entrepreneur development sector, proof of concept funds and events such as hackathons are examples that happen during the discovery stage. The second stage of activity is the idea stage, where a potential entrepreneur has identi- fied a problem or opportunity but has not yet acted on their idea. Come mostrato in figura 2, entrepreneur development has a large number of idea-stage support activities, which are critical to creating a high- momentum entrepreneurial ecosystem. A large amount of entrepreneurial potential will remain dormant if there is no entrepre- neur development support to invite action. The startup stage is the third distinguish- able activity within the entrepreneurial ecosystem. At this stage, prospective entre- innovazioni / volume 11, number 1/2 129 Scaricato da http://direct.mit.edu/itgg/article-pdf/11/1-2/126/705210/inov_a_00252.pdf by guest on 07 settembre 2023 Ken Harrington preneurs commit to founding a venture, allocate time and resources to pursue it, and make a significant effort to refine their ideas. Activities occurring during the start- up stage include selecting a legal entity and structure; developing a proof of concept; implementing intellectual property strate- gies; testing and market validation; team formation; developing financial plans and fundraising strategies; and similar activities related venture. launching Entrepreneurs also begin to connect to ven- ture funding sources. The vibrancy of the startup phase depends on the number of entrepreneurs who become active after they graduate from the idea stage. to a The growth stage is the final one in the ecosystem inventory. It is the stage when the market, customers, and investors vali- date a company and includes activities such as market launch, revenue generation, posi- tive cash flow, competing, additional fund- ing, scaling, and exit. ENTREPRENEURIAL ECOSYSTEMS MEASUREMENT APPROACHES After an ecosystem’s inventory is captured, measurements are needed to track progress and momentum. One aspect of ecosystem measurement relates to the ability to com- pare the effectiveness of different ecosys- tems. It is important that individual regions have a barometer to measure how their spe- cific ecosystem is progressing and its level of momentum. Ecosystem measurement approaches are evolving in practice, as countries, governments, and regions recog- nize the relationship between and impor- tance of innovation and a community’s social and economic health. A vibrant ecosystem is essential to achieve these out- comes, and it is well established that young companies are the primary drivers of job growth and economic vibrancy.3 This ecosystem framework considers three categories of ecosystem measurements: • • • Economic development that focuses on economic inputs and outputs Cultural and social factors that affect innovation capacity Ranking methodologies and indices that compare countries and cities Economic Development Economic development measurements, the most common and mature of the three measurement approaches, track economic inputs and quantify economic outcomes. The U.S. Economic Development Administration (EDA) recommends start- ing with a top-down strategic planning effort to engage the community.4 This includes understanding a region’s competi- tive advantages, selecting regional clusters, calculating innovation capacity, and identi- fying and supporting venture development organizations (VDOs). The EDA also sug- gests identifying levels of distress; develop- ing a strategic plan; building the regional ecosystem and identifying competitive advantages; deciding among competing projects; and following best practices in incubator management. In St. Louis, the first step we took in our activities in the 2000 timeframe used this type of approach. The Regional Innovation Acceleration Network (RIAN) is another approach to economic development measurement.5 RIAN uses four economic outcomes to measure success, including (1) jobs created, (2) wages paid, (3) investments attracted, E (4) revenues earned. They also recom- mend benchmarking that allows a compari- son of different regions so they can assess outcomes and identify best practices to share. Like the EDA, RIAN recommends starting venture development organizations (VDOs) to produce successful ventures as a way to achieve their four economic out- comes. As their name implies, VDOs fall 130 innovazioni / Thriving Cities Downloaded from http://direct.mit.edu/itgg/article-pdf/11/1-2/126/705210/inov_a_00252.pdf by guest on 07 settembre 2023 Is Your Entrepreneurial Ecosystem Scaling? within the venture development sections on the ecosystem inventory. They select ven- tures with greater potential and support them with mentoring, entrepreneurs-in- residence (EIRs), financial assistance, facili- ties, and other activities. The Association of Public and Land-grant Universities established the Commission on Innovation, Competitiveness, and Economic Prosperity, Quale, among other things, has created a comprehensive economic engage- ment framework for use by universities. This is “a set of core ideas to help universi- ties focus efforts not only on telling their economic engagement story well, but also growing, improving, and advancing their economic engagement enterprise and there- by accelerating economic development in their regions, nationally, and globally.”6 Cultural and Social Factors Nearly all economic development and rank- ing measurements recognize the impor- tance of the cultural and social factors that impact entrepreneurial ecosystems.7 This section describes one of the most promising approaches to cultural and social measure- ment, and in section three it pairs it with the ecosystem inventory concept discussed in section one. In a 2015 paper, Stangler and Bell- Masterson defined four factors that can be used to measure entrepreneurial ecosys- tems:8 1 2 3 Density—the number of new and young firms, the percentage of total employment in new and young firms, and the high- tech (often a preferred sector) density Fluidity—the fluctuation in population, the labor market reallocation, and the number of high-growth firms as meas- ured by datasets like the Inc. 500 Connectivity—the program connectivity between different ecosystem players, such as investors, entrepreneurs, eccetera., within a specific region, spinoff rates, and deal- maker networks 4 Diversity—economic immigration, and income mobility diversification, The sources Stangler and Bell-Masterson used include the U.S. Census Bureau, Business Development Statistics, National Establishment Time Series, the Internal Revenue Service, Inc. 500, Crunch Base, the Quarterly Census of Employment and Wages, the American Community Survey, and others, all of which can be supplement- ed with information gathered locally. For St. Louis, information that was available from local sources and ecosystem players is avail- able on the Accelerate St. Louis website, and on individual entrepreneur development and venture development websites.9 The Stangler/Bell-Masterson factors are especially useful in measuring the momen- tum of regional ecosystems when used with the ecosystem inventory. Measuring momentum is key, because ecosystem development takes a long time and it is important to ensure that the momentum is continuous and vibrant and does not stall. Ranking Methodologies Ranking methodologies use a number of metrics to compare larger cities or countries across several economic, cultural, and social factors, including surveys and economic datasets that assess entrepreneurial activity and environments. These approaches com- pare the strengths and weaknesses of ranked entities, usually cities or countries. Over time the measures show how a city or coun- try moves up or down in the rankings. The ranking methodologies use various indica- tors and surveys, which are described in the examples that follow. is the One commonly cited ranking Kauffman Metropolitan Index of Startup Activity, which is completed annually.10 It compares three factors for 40 NOI. cities: (1) the percentage of the adult population that innovations / volume 11, number 1/2 131 Scaricato da http://direct.mit.edu/itgg/article-pdf/11/1-2/126/705210/inov_a_00252.pdf by guest on 07 settembre 2023 Ken Harrington become entrepreneurs in a given month; (2) the percentage of entrepreneurs who were not employed before starting their venture; E (3) the number of startup firms per 100,000 adult population. These calcula- tions are drawn from the U.S. Census Business Dynamics Statistics and the U.S. Bureau of Economic Analysis. Another approach for ranking country entrepreneurial activity is the Global Entrepreneurship Monitor (GEM).11 The GEM uses a comprehensive dashboard of 20 indicators, including the perception of social values related to entrepreneurship, individual self-perception in terms of entre- preneurship, entrepreneurial activity indi- cators, and the perceived quality of an entrepreneurial ecosystem. The GEM ranks 62 countries using the GEM Adult Population Survey and the National Expert Survey, and the differences in these rank- ings provide interesting insights. For exam- ple, nearly 75 percent of the adult popula- tion in the Philippines believe entrepre- neurship is a good career choice; in India this indicator is just below 40 percent.12 that uses Entrepreneurship The Global and Development Institute (GEDI) offers an approach the Global Entrepreneurship Index (GEI), which is a framework that compares a mixture of eco- nomic, institutional, cultural, and social fac- tors in 132 countries.13 The 14 GEDI factors are grouped into three categories: (1) entre- preneurial attitudes, (2) entrepreneurial abilities, E (3) entrepreneurial aspira- tions.14 The GEDI methodology provides insights for policy changes that can support entrepreneurship. Per esempio, In 2015 the GEI recommended that policymakers in Europe “help entrepreneurs perceive entre- preneurship opportunities,” while sub- Saharan Africa was advised in the same year to focus efforts on “supporting post-sec- ondary education.”15 The GEI makes similar recommendations for each country. A fourth ranking methodology is the European Digital City Index, which com- pares 35 European cities using ten econom- ic development, cultural, and social meas- ures:16 (1) level of access to capital, (2) busi- ness environment, (3) digital infrastructure, (4) skills, (5) entrepreneurial culture, (6) knowledge spillovers, (7) lifestyle, (8) mar- ket, (9) monitoring and managerial assis- tance, E (10) nondigital infrastructure. Like the GEDI measurements, it provides insights for policy decisions and economic development investments. Generalmente, the rankings methodologies tell us something about the state of entrepre- neurship within a given city or country. Tuttavia, many cities are not ranked, espe- cially small and medium-size municipali- ties. Inoltre, because ecosystems are at widely different stages of maturity, the com- parisons may not be instructional or action- able. For example, what works in Silicon Valley might not be appropriate for St. Louis. Ranking measurements cite the importance of cultural and social factors but do not suggest how a region’s specific ecosystem can improve these critical vari- ables. Stangler and Bell-Masterson offer an approach that can be used to measure social and cultural momentum. In the next section I offer my observations on how St. Louis started and then scaled its entrepreneurial ecosystem to a mid-stage of maturity. Using the ecosystem inventory approach and Stangler/Bell-Masterson measures, I delve into how a city can spur a level of momentum that will help to create a vibrant entrepreneurial culture and pro- duce strong economic outcomes. THE ST. LOUIS EXPERIENCE: SCALING AN ENTREPRENEURIAL ECOSYSTEM Developing a vibrant ecosystem takes a long time, a lot of collaboration, and some luck. Because of my affiliation with Washington University and the Kauffman Foundation, IO 132 innovazioni / Thriving Cities Downloaded from http://direct.mit.edu/itgg/article-pdf/11/1-2/126/705210/inov_a_00252.pdf by guest on 07 settembre 2023 Is Your Entrepreneurial Ecosystem Scaling? was one of many people who supported the entrepreneurial evolution in St. Louis. In this section I describe the three periods of change St. Louis experienced from 2000 A 2016: (1) the early years, (2) the period when the city gained momentum, E (3) how the ecosystem began to scale. I empha- size the important relationship between entrepreneur development, venture devel- opment, and economic development, and show how all are needed to produce healthy economic outcomes. I use Stangler/Bell- Masterson’s measurements to retrospec- tively measure and explain the city’s evolu- zione. Phase 1 (2000-2008): The Early Years The effort in St. Louis began in the late 1990s, following a strategic review of an economic development cluster analysis. The result of this top-down effort, which includ- ed government, philanthropists, universi- ties, industry leaders, and the community, was a decision to create a plant and life sci- ences cluster. By 2005 St. Louis had in place three venture funds focused on life science, two of the nation’s top-ten life science incu- bators, a new plant science research facility supported by philanthropy, a new angel investor group, workforce development ini- tiatives between community colleges and industry, and other assets. The expected economic outcomes were new companies, jobs, investments, company growth, exits, and new wealth. Tuttavia, we were not getting the desired economic outcomes, and local individuals and outside observers told us that we lacked an entrepreneurial culture. One common joke made by entrepreneurs was that “St. Louis is a place where investors have deep pockets but short arms.” We began to ask ourselves why we were not getting strong economic returns. The region had invested heavily, so where were the financial payoff and cultural momentum? What was miss- ing? Company founders complained that they had to leave town to get funding, while investors grumbled that the deals available were not worth putting money into. It is helpful to use the Stangler/Bell- Masterson measures retrospectively to explain what was happening. For one thing, the new firms had little density and a low employment share, and few areas showed economic vibrancy. We also lacked entre- preneur founders and managers and were losing young people and university gradu- ates to other areas. Our new venture funds were investing, but many of their deals were outside St. Louis. Although connectivity was gaining momentum, particularly a new volunteer mentoring service and programs at Washington University, a lot of entrepre- neurs had never connected with one anoth- er and many were not in the strategic focus area. Plant and life sciences were receiving the bulk of economic development resources, thus we lacked diversity within the ecosystem, and many felt they needed to be in plant and life sciences to receive any support. Figura 3 uses the Stangler/Bell- Masterson measures to summarize where we were. At this point our fledgling ecosystem did not yet have the human and cultural capac- ity to deliver economic returns from our economic development investments. For one thing, we lacked entrepreneurs, a sign that our community’s collective entrepre- neurial IQ was low. Concurrent with the top-down venture investments and economic development efforts, we were unwittingly undertaking bottom-up entrepreneur development efforts. Washington University Chancellor Mark Wrighton emphasized the cultural importance of innovation and entrepre- neurship, and in 2001 the university found- for ed Entrepreneurial Studies with a generous gift from Bob and Julie Skandalaris.17 The uni- versity was also named a Kauffman Campuses Initiative University by the Skandalaris Center the innovations / volume 11, number 1/2 133 Scaricato da http://direct.mit.edu/itgg/article-pdf/11/1-2/126/705210/inov_a_00252.pdf by guest on 07 settembre 2023 Ken Harrington Figure 3. Early Years, 2000-2008 Ewing Marion Kauffman Foundation, the goal being to create the next generation of entrepreneurial experiences in higher edu- cation.18 The Skandalaris Center had a fourfold role in the ecosystem: (1) on campus, connect stakeholders interested in entrepreneurship (students, faculty, alumni, administrators); (2) provide a welcoming doorway between university and community entrepreneurs and investors; (3) support all types of entre- preneurial interests, including technology, plant and life sciences, art, progetto, law, social entrepreneurship, and any other areas that students or faculty brought for- ward; E (4) use curricular and co-curric- ular activities to create an inviting starting point for aspiring student and community entrepreneurs who had ideas but had not taken action. Especially active was the idea stage of entre- preneur development. We found that lots of aspiring entrepreneurs were not engaged or taking action. The trick was how to get them involved while maintaining an affordable resource model. We could not mentor everyone who came forward with an idea, so we designed high-energy, low-cost events where a lot of new relationships could be formed. People did in fact mentor and team up with one another without our being in direct control. This approach caught on, and a number of programs in the entrepreneur development sector adopted it. The Skandalaris Center created co-curricular programs with no aca- demic credit to connect students with the community. This included a subsidized undergraduate entrepreneurial summer internship program in which 25 students spent ten weeks working for young compa- nies in the early startup phase.19 Another was IdeaBounce, which connected students and community entrepreneurs in the idea stage with advisors.20 We collaborated with community partners to offer nearly $300,000 in annual funding for business
formation competitions that supported
commercial and social entrepreneurs.21 The
competitions were open to students and the
community to spur connectivity and learn-
ing.
The key to these programs and others was
that we intentionally designed them to cre-
ate a massive number of new relationships.
At a typical IdeaBounce event some 40,000
“second-degree” connections could occur—
to use Stangler/Bell-Masterson’s language,
connectivity was increasing at warp speed.
Hundreds of people were learning from
each other as they formed new relationships
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Is Your Entrepreneurial Ecosystem Scaling?
and collaborated, and our community’s
entrepreneurial IQ was rising quickly.
Helping prospective entrepreneurs and
advisors meet each other gave us more
entrepreneurial action at low cost. People
also teamed up to create new entrepreneur-
ial interest areas, and the diversity of ideas
was growing because of new bottom-up
efforts led by people who championed their
ideas. No single group was teaching but we
all were learning.
Most of the St. Louis ecosystem entrepre-
neur development programs were bottom-
su, founded and led by their champions,
marginally
funded, collaborative, E
autonomous. The efforts were affordable
because they had to find their own funding
to prove their value. One was Innovate St.
Louis, a not-for-profit that offered volun-
teer mentoring.22
IL
Skandalaris Center collaborated and, con
help from the Kauffman Foundation, repli-
cated the MIT Venture Mentoring Service
in St. Louis.23 This program, which was
philanthropically funded and started with a
low budget, served all entrepreneurs in the
region and spurred connectivity and diver-
sity, further accelerating our community’s
entrepreneurial IQ.
Innovate and
Innovate St. Louis was also important
because it offered a good lesson in how to
scale the ecosystem, which was first to col-
laborate and form new entities, and then
have those entities become autonomous
and self-governed. We saw that the ecosys-
tem scaled much more quickly when we did
this than if we tried to control things cen-
trally. The trick was to keep the resource
model affordable.
ITEN, another key player, appeared in 2008,
starting as a specialized program within
Innovate St. Louis that mentored tech
entrepreneurs.24 It eventually became so
spun out as an
Esso
successful
autonomous not-for-profit legal entity with
its own funding and leadership. No single
entity was coordinating the bottom-up
entrepreneur development, and we were
Quello
once again scaling by supporting champi-
ons who created new pockets of energy and
interesse.
These efforts were increasing connectivity
and diversity in a big way. Stangler/Bell-
Masterson’s measurement language would
have helped us understand how the non-
economic areas of the ecosystem were
evolving and how critical the social and cul-
tural elements were to economic outcomes.
Phase 2 (2009-2012): Gaining
Momentum
Between 2009 E 2012 we achieved critical
momentum across the three ecosystem
inventory areas. We continued to make top-
down economic development investments,
but the resource model was gradually shift-
ing as part of the investments were being
privately funding. Venture development
and capital were increasing, and bottom-up
entrepreneur development programs were
increasing on many fronts as more champi-
ons naturally appeared. We began to worry
that there was not enough capital to support
the many new young ventures. Another
concern was that all the entrepreneur devel-
opment programs (mostly new not-for-
profits) were approaching the same funders,
who were getting overtaxed and strained.
We began to disagree on whether to focus
on supporting what we had or to continue
to grow by starting new initiatives. Some
people felt we should slow down, plan,
rationalize, and eliminate duplication (top-
down). Others wanted to start more fires
and let the market decide what survived
(bottom-up). So what happened? We con-
tinued to do both while we completed
another regional plan. Figura 4 shows where
we were during that period.
In early 2013, the St. Louis Regional
Entrepreneur Initiative Report was com-
pleted by
the St. Louis Economic
Development Partnership.25 It and other
information provide a good summary of
where we were at that time.
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Ken Harrington
Figura 4. Gaining Momentum, 2009-2012
Density:
•
54 bioscience startup companies; Bio
Generator made 27 new investments, an
increase of nearly 400 percent over the
nei primi anni
•
55 tech companies, 40 In 2011-2012 alone
Fluidity:
•
•
•
•
•
Talent was still lacking and attraction
programs were needed
Students and companies seemed to be
in partenza, citing capital shortage as a cause
Regional entrepreneurship development
programs were needed
Fluidity was shifting, with four Bio
Generator startups coming from outside
St. Louis
The first Ag Innovation Showcase was
held at the Danforth Plant and Sciences
Center26
Connectivity:
•
Needed to create measurement and coor-
dination systems to help monitor and
track what was happening
•
Many new champion-led entrepreneur
development efforts were being founded
Diversity:
•
•
•
1
Inclusion programs for minorities and
women were needed
Better support systems were needed for
tech and other areas
Three factors signaled that our ecosystem
was starting to scale:
New capital appeared naturally as entre-
preneurial IQ increased the quality of
the deals. This included Cultivation
Capital, a group of successful entrepre-
neurs and local leaders who created a new
venture fund; St. Louis University, Quale
formed the Billiken Angels, a fund that
would support university-affiliated ven-
tures; and the state of Missouri chartered
the Missouri Technology Corporation, UN
co-investment fund that provided 50 per-
cent of
to match private
investors.27 The Helix Fund was created
by St. Louis County, and investments
started coming from outside the region.28
finanziamenti
2
Bottom-up entrepreneur development
initiatives grew and new champions
started more programs. Bio Generator
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Is Your Entrepreneurial Ecosystem Scaling?
expanded its EIR program and created
the Bio Generator shared-use Labs.29
ITEN created an EIR program.30 Arch
Grants, a new not-for-profit, began offer-
ing $1 million annually to 20 companies (Di $50,000 each) if they would move
to or were already in St. Louis.31 The
Skandalaris Center provided funding so
Washington University entrepreneurs
could apply for Pipeline Entrepreneurs, UN
growth-stage entrepreneur development
program for high potential entrepreneurs
the Midwest.32 The Missouri
In
Technology Corporation created the
Missouri Building Entrepreneurial
Capacity Program, which offered match-
ing grants for entrepreneur development
initiatives.33 Kauffman’s One Million
Cups weekly entrepreneur meet-up came
to St. Louis and its champions partnered
with the local PBS station to record and
stream the sessions.34 The PhD and post-
at Washington
doctoral
Università
Bio
created
Entrepreneurship Core, a student club
with 400-plus members that was initially
funded by the Skandalaris Center.35 The
Bio Entrepreneurship Development (now
Square) program was created for idea-
stage life science entrepreneurs and out-
placed Pfizer scientists and executives
who wanted to investigate entrepreneur-
ship as a career.36 The Skandalaris Center
received a National Science Foundation
Partners for Innovation Grant, Quale
concentrated on life science entrepreneur
development that focused on university
commercialization by establishing fellow-
ships supported with a 25-person volun-
teer mentor pool.37 There was a great deal
of collaboration, knowledge-sharing, E
engagement through these efforts that
contributed to the ecosystem’s momen-
tum.
students
IL
3
Top-down investments and planning
continued. This included more support
from state and local governments and
community leaders, the expansion of
incubators and research facilities, and the
creation of TREX, our first co-working
space.38 More building occurred at Cortex.
The Helix Center, BRDG Park, and the
Donald Danforth Center expanded.39
TREX deserves comment because it was a
bottom-up bootstrap effort made possible
because the tech-sector density had
become large enough to warrant its own
facility.
Phase III (2013-2016): Scaling
Momentum in St. Louis increased even
more from 2013 A 2016, and we reached a
mid-stage of ecosystem maturity. In
Stangler/Bell-Masterson’s
lingua, we
gained momentum across all four measures,
our community’s entrepreneurial IQ is
higher and continues to grow, and deals are
getting better and easier to make. We’re
achieving solid economic outcomes, COME
shown in Figure 5.
•
The number and size of entrepreneurial
co-working spaces have exploded.
–
–
–
TREX moved to a new location in the
downtown area. It now houses over 150
companies, four accelerators, E
Cultivation Capital.
The Cambridge Innovation Center
(CIC), Boston’s massive co-working
operation, chose St. Louis as its first
expansion city.40 CIC St. Louis grew
rapidly and filled to capacity. It took
over management of the Center for
Emerging Technology, one of our earli-
er life science incubators, remodeled
the co-working space, and is now near
capacity.41 CIC and Cortex host 160
ventures.
Twelve champion-led neighborhood
or interest-specific co-working spaces
opened around the city and in the sub-
urbs. Each has 10 A 50 companies that
offer entrepreneur development pro-
gramming to fit their geography and
interests.
•
Universities continue to increase their
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Ken Harrington
Figura 5. Scaling, 2013-2015
involvement in the ecosystem.
–
–
–
–
Washington University made entre-
preneurship and innovation a strategic
pillar for the institution and it is sub-
stantially increasing its resource com-
mitments and engagement.
St. Louis University continued its
involvement on several fronts.
In
The University of Missouri
Columbia made a larger commitment
to entrepreneurship and connected to
the St. Louis ecosystem.
Other St. Louis universities, including
St. Louis University, the University of
Missouri
in St. Louis, Webster,
Maryville, Harris Stowe, Lindenwood,
and others expanded their entrepre-
neurship activities and curriculum.
•
Entrepreneur development continues to
expand and diversify.
–
Venture Café, the not-for-profit entre-
preneur development arm of CIC,
began operations in late 2014 E
quickly became a new place for connec-
tivity.42 Venture Café’s weekly events
routinely host up to 500 participants,
around one-third of whom are first
–
–
–
timers
investigating whether they
should enter the ecosystem. Much of
the Venture Café programming focuses
on entrepreneur development topics
across a broad spectrum of interests
and venture types.
Pipeline Entrepreneurs
expanded
beyond Washington University entre-
preneurs to serve the entire St. Louis
community.43
The St. Louis Mosaic Project began
with the vision of fostering prosperity
in the region through immigration and
innovation.44
Using the autonomous, champion-led
modello, two new not-for-profits were
created by Washington University
graduate students with support from
the Skandalaris Center. These self-
funded entities increased momentum
and added enormously to the ecosys-
tem’s relationship velocity and entre-
preneurial IQ. Both are now located in
CIC’s co-working space.
–
The BALSA Group is a consulting firm
created by Washington University doc-
toral and postdoctoral students in late
2011 to help early stage life science
startups.45 The students, who wanted to
138
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Is Your Entrepreneurial Ecosystem Scaling?
–
learn about entrepreneurship and busi-
ness, now include 200 unpaid consult-
ants who have completed 128 projects.
The BALSA Group established the
BALSA Foundation in 2015 to provide
funding grants and mentoring to idea-
stage startups, especially those led by
less advantaged entrepreneurs.
Idea Labs was started by MD and PhD
students at Washington University in
2013. Since then they have worked on
more than 200 ideas provided by clini-
cians and engaged 233 graduate and
undergraduate students on 39 teams:46
79 percent of the teams completed
proof of concept prototypes, of which
15 (48%) protected their intellectual
property; 17 (54%) are commercializ-
ing their technology; E 16 (52%) won
awards or funding totaling approxi-
mately $2 million. They have worked with more than 60 physicians, 15 engi- neering advisors, E 15 mentors from the community. Idea Labs is expanding to other cities (Philadelphia, Boston, Minneapolis), where it is collaborating with likeminded university students. • Connectivity and fluidity increased on new fronts. – – – – Ventures started to move to St. Louis from other areas. A number of corporations and service providers rented space in entrepre- neurial co-working facilities because they liked the feel and thought it was culturally important for their innova- tion goals. An increasing number of large and entrepreneurial companies selected St. Louis for their headquarters or expand- ing operations. Global StL was established to attract high-growth international companies to St. Louis.47 – The Ag Innovation Showcase became globally recognized, attracting compa- nies from 12 countries and participants from around the world.48 – Launch Code, a new not-for-profit that trains programmers, was founded in St. Louis at CIC.49 Launch Code “pairs people aiming to work in technology with top level employers through paid apprenticeships and job placement.” • Economic development investments con- tinued with greater private investment support. – – is Wexford St. Louis became increasingly attractive to real estate developers. Of special note and Technologies, which is making large investments in the Cortex District (CIC area) and BRDG Park (Donald Danforth Plant Science Center).50 Science Five new accelerators were formed, each attracting 10 A 15 companies annually. Their areas of interest include financial services, ag-tech, women entrepreneurs, and sports-related ven- tures.51 All are champion-led and self- funded. – Cortex, TREX, the Donald Danforth Plant Sciences Center, and BRDG Park expanded. • More capital appeared than expected. – – – The Bio Generator portfolio nearly doubled to 65 companies. Lewis and Clark Ventures, a $100M-
plus venture fund, was formed and
plans to offer A-Round funding to suit-
able startups.52
The iSelect Fund, a new model for
investors, was founded in St. Louis. It
allows accredited investors to assemble
a diversified portfolio of the Midwest’s
most promising emerging growth com-
panies through their own financial
advisors.53
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Ken Harrington
–
–
–
–
–
–
Established venture funds raised next-
generation funds.
Investments from outside the region
increased.
Cultivation Capital became larger.
Successful exits resulted in more capi-
tal, talent, and investment groups.
Capital Innovators announced the
Lindbergh Technology Fund.54
ITEN reported that tech company
investments grew more than 500 per-
cent, from $28M in 2010 to $176M in
2015. The companies had $8.3 million
in annual revenue and employed nearly
2,000 people.55
•
St. Louis became nationally recognized as
a high-momentum region for innovation
and entrepreneurship.
–
–
–
–
St. Louis was picked as one of the top
cities outside of Silicon Valley and New
York to create a tech startup.56
St. Louis was picked as one of the best
NOI. cities for tech workers.57
St. Louis was named one of the best
college towns for entrepreneurs.58
Missouri ranks fourth in the number of
accelerators, behind California, Nuovo
York, and Texas.59
–
St. Louis was picked as top U.S. startup
city.60
CONCLUSIONS
What’s Next for the St. Louis’
Ecosystem?
My intuition is that there is enough
momentum for the St. Louis ecosystem to
become financially and culturally self-sus-
taining within ten years. To reach this point,
the city will need more exits to produce the
new money and talent that will allow the
ecosystem to become fully market funded
versus being publicly subsidized. In the end,
successful ecosystems only scale when they
become self-supporting, and entrepreneur-
ship becomes a recognized and material
portion of the region’s economy.
Some predict we may be experiencing a
nationwide entrepreneur bubble and that all
regions, including St. Louis, will face
retrenchment or worse if valuations fall and
financing dries up. We will all have to wait
to find out but I am optimistic and feel
entrepreneurial momentum may carry the
day.
Silicon Valley is an illustration of what can
happen when a region’s momentum reaches
critical mass and becomes self-sustaining.
How much potential is there for St. Louis or
other cities? The Silicon Valley ecosystem is
Di 65 years old; St. Louis is 15 or so.
Money Tree reports that Silicon Valley pro-
duced 616 venture-funded deals in the sec-
ond half of 2015, while the entire Midwest
had 192 venture-funded deals for the same
period.61 That gives us lots of room to
expand. Even if momentum and entrepre-
neurial IQ grow at 50 percent a year, it will
take St. Louis a long time to reach the scale
of Silicon Valley. I think St. Louis would be
happy with 50% increase annually in
momentum and growth. Stangler/Bell-
Masterson’s measures and the ecosystem
inventory framework can help us measure
our momentum and track how we are
doing. The key will be to keep the momen-
tum increasing each year.
How Might Other Region’s Use
this Framework and Measurement
Approach?
Regions should measure their innovation
momentum annually. Step one is to com-
plete an ecosystem inventory as a base line
documenting the current state of innova-
tion and entrepreneurial activity in the
region. This should be done for each of the
region’s industry areas. Per esempio, in St.
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Is Your Entrepreneurial Ecosystem Scaling?
Louis, this would be for Life Sciences,
Tech, Agtech, Fintech, Women
Entrepreneurs, Social and the different
innovation areas that are evolving. Step
two is to identify the data and information
sources that are needed to measure the
region’s density, fluidity, connectivity, E
diversity each year. This is becoming easier
as more and more sources are evolving
from Internet-based calendars and
datasets. Step three is to convene annual
discussions about how and where
resources should be used to increase inno-
vation momentum for the region.
1. See Donald Danforth Plant Science Center,
https://www.danforthcenter.org/.
2. Vedere
Jumpstart, “St. Louis Regional
Entrepreneur
Initiative Report,” U.S.
Economic Development Administration, St.
Louis County, Missouri Department of
Economic Development, 2013, P. 4.
3. “The Importance of Young Firms for
Economic Growth,” The Kauffman
Foundation Policy Digest, settembre 2014,
updated September 2015, Ewing Marion
Kauffman Foundation.
4. See United States Economic Development
Administration,
https://www.eda.gov/tools/.
5. See Regional Innovation Acceleration
Network.
6. See http://www.aplu.org/members/commis-
sions/innovation-competitiveness-and-eco-
nomic-prosperity/about/.
7. Hayton, James C., Gerard George, E
Shaker A. Zahra, “National Culture and
Entrepreneurship: A Review of Behavioral
Research,” Entrepreneurship: Theory and
Practice 26, NO. 4 (2002): 33-53.
8. Stangler Dane, and Jordan Bell-Masterson,
Measuring an Entrepreneurial Ecosystem,
Ewing Marion Kauffman Foundation,
Marzo 2015.
9. See http://acceleratestlouis.org/.
10. See Kauffman Index Startup Activity,
http://www.kauffman.org/microsites/kauf
fman-index/rankings/metropolitan-area.
11. Kelley, Donna, Slavica Singer, and Mike
Herrington, “Global Entrepreneurship
Monitor Report (2015/2016)."
12. Kelley et al., “Global Entrepreneurship
Monitor Report: Tavolo 1: Ranking of
Societal Values of Entrepreneurship by
Region,” Global
Entrepreneurship
Research Association, 2015.
13. Acs, Zoltan J., Laszlo Szerg, and Erkko
Autio, “Global Entrepreneurship Index
(2016),” Global Entrepreneurship
Development Institute.
14. Acs et al., “Global Entrepreneurship Index
(2016),” p. 19.
15. Acs et al., “Global Entrepreneurship Index
(2016), Executive Summary.”
16. “European Digital City Index Report,"
Nesta, 2015.
17. See “Global Entrepreneurship Index
(2016),” http://skandalaris.wustl.edu/.
18. See Kauffman Campuses Initiative,
http://www.kauffman.org/what-we-
do/programs/entrepreneurship/kauff-
man-campuses-initiative.
19. Vedere
http://skandalaris.wustl.edu/training/intern
ship/.
20. See http://ideabounce.com/skandalaris.
21. See http://skandalaris.wustl.edu/funding/.
22. See Innovate St. Louis,
http://innovatestl.org/.
23. See MIT Venture Mentoring Service,
http://vms.mit.edu/.
24. See ITEN https://www.itenstl.org/.
25. Jumpstart, “St. Louis Regional
Entrepreneur Initiative Report,” U.S.
Economic Development Administration,
St. Louis County, Missouri Department
of Economic Development, Primavera 2013.
26. Vedere
http://www.agshowcase.com/about/event-
history.
27. See Cultivation Capital, http://cultivation-
capital.com/; Billiken Angels,
http://www.billikenangels.com/; E
Missouri Technology Corporation Idea
Funds,
http://www.missouritechnology.com/com
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Ken Harrington
mercialization-programs.
48. Vedere
28. See Helix Fund,
http://www.helsixcenter.com/helix-
fund.html.
29. See http://biogenerator.org/;http://biogen-
erator.org/about/our-team/?filter=entre-
preneurs; E
http://biogenerator.org/our-
approach/infrastructure/.
30. See https://www.itenstl.org/grow/entrepre-
neur-in-residence/.
31. See Arch Grants, http://archgrants.org/.
32. Vedere
http://www.pipelineentrepreneurs.com/.
33. See Missouri Technology Corporation,
http://www.missouritechnology.com/mis
souri-building-entrepreneurial-capacity.
34. See One Million Cups, http://www.1mil-
lioncups.com/stlouis.
35. See Bio Entrepreneurship Core,
https://gradpages.wustl.edu/bec.
36. See http://www.bedprogram.com/.
37. Vedere
https://www.nsf.gov/funding/pgm_summ
.jsp?pims_id=504708.
38. See TREX, http://downtowntrex.com/.
39. See Helix Center,
http://www.helixcenter.com/; CORTEX,
http://cortexstl.com/; and Donald
Danforth Plant Science Center,
https://www.danforthcenter.org/.
40. See Cambridge Innovation Center St. Louis,
http://stl.cic.us/.
41. See Cambridge Innovation Center St. Louis,
http://stl.cic.us/.
42. See Venture Café,
https://www.vencafstl.org.
43. Vedere
http://www.pipelineentrepreneurs.com/w
p-content/uploads/2012/08/Pipeline-
STL-Announcement_final.pdf.
44. See http://www.stlmosaicproject.org/.
45. See Balsa Group http://thebalsagroup.org/.
46. See Idea Labs,
http://idealabsincubator.org/.
47. See http://dev.globalstl.org/
http://www.agshowcase.com/about/event
-history.
49. See Launch Code, https://www.launch-
code.org/.
50. See Wexford Science and Technology,
http://wexfordscitech.com/our-portfo-
lio/representative-projects/cortex-innova-
tion-community/.
51. See http://www.sixthirty.co/;
http://www.theyieldlab.com/;
http://www.prosperstl.com/;
http://www.stadiaventures.com/.
52.
See Lewis
http://lewisandclarkventures.com/.
and Clark Ventures,
53. See iSelect Fund,
http://www.iselectfund.com/iselect/.
54. See Lindbergh Technology Fund,
http://www.bizjournals.com/stlouis/blog/
biznext/2014/12/capital-innovators-ceo-
creates-new-tech-fund.html.
55. ITEN, “St. Louis Tech Startup Report 2015:
Year in Review,” February 2016.
56. See Datafox,
http://stlouis.cbslocal.com/2015/12/15/st-
louis-ranks-high-again-as-a-start-up-
city/.
57. Vedere
http://www.bizjournals.com/stlouis/blog/
biznext/2015/09/st-louis-ranked-among-
best-cities-for-tech-workers.html.
58. See Princeton Review, http://www.bestcol-
legereviews.org/50-best-college-towns-
america/
59. See Seed DB,
http://www.bizjournals.com/stlouis/blog/
biznext/2014/10/missouri-home-to-
more-startup-accelerators-than.html.
60. See Popular Mechanics, “Best Startup
Cities. Available at http://www.popu-
larmechanics.com/culture/g1859/the-14-
best-startup-cities-in-america/.
61. PWC MoneyTree, “MoneyTree™ Report,
Q4 2015,” PricewaterhouseCoopers,
National Venture Capital Association,
2015.
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