from the Kauffman Foundation's, Entrepreneurial Ecosystem Building Playbook (seems like a rather obvious title, doesn't it?)
Showing posts with label ecosystem. Show all posts
Showing posts with label ecosystem. Show all posts
Monday, November 27, 2017
Building an Ecosystem
I've been doing some research into how to build an entrepreneurial ecosystem - something I have been tasked with for one of the many projects I seem to have stumbled into. I came across this great list of values that should be embedded into an ecosystem. But, as I read the values, it really seems like these are good values just for life in general. But, that makes sense, doesn't it? We're all creating our own personal ecosystems and if we want them to work and be successful, well, we need an ecosystem built on good values.
from the Kauffman Foundation's, Entrepreneurial Ecosystem Building Playbook (seems like a rather obvious title, doesn't it?)
from the Kauffman Foundation's, Entrepreneurial Ecosystem Building Playbook (seems like a rather obvious title, doesn't it?)
Wednesday, January 11, 2017
Madworks and SlowMoney and Food and Beverage
First, the important stuff. If you are a food and beverage startup, Madworks Accelerator's spring cohort will be dedicated to food and beverage. YOU SHOULD APPLY. This Spring cohort is in conjunction with Slow Money Wisconsin; the companies participating in MadWorks will also be invited to pitch at the Slow Money Wisconsin Investor Showcase.
OK; with that out of the way, what's going on here?
I have been peripherally involved in both Madworks and Slow Money for the last ... ummm ... I don't really know to be honest. We'll call it the last "few" years. Both are wonderful programs.
Madworks is a seed accelerator dedicated to nascent entrepreneurship. It has changed focus over time with the changing demands of the Madison entrepreneurial community. At first, it was dedicated to true, brand new, nascent entrepreneurship. Today, it focuses a little further upstream helping companies already in the "pipeline" so-to-speak to better understand nuanced governance issues that are demanded of young CEOs with small teams and limited budgets. In other words, these teams don't yet have a staff CFO to generate financial statements; they don't have a general counsel to call shareholder meetings and record board minutes; they don't have sophisticated brand managers to think strategically about marketing plans. So, Madworks helps to get them up to speed - getting them to at least speak the language and understand the obligations that their companies will need to undertake.
Slow Money Wisconsin is a regional network of the national Slow Money organization. It is a non-profit comprising investors throughout Wisconsin that are "dedicated to catalyzing the flow of capital to local food systems, connecting investors to the places where they live and promoting new principles fiduciary responsibility that "bring money back down to earth." In other words, not every business is unicorn. Indeed, to be a responsible corporate citizen you probably shouldn't be a unicorn. By definition, not every company can be a unicorn. More importantly: not only is it probably bad company policy to want to be one, it is better for society and the environment if you aren't.
In startup ecosystems, not aiming to be a unicorn is heresy. Most cogs in the startup ecosystem machine are built on the fundamental premise of delivering the unicorn to investors. I understand that; I'm OK with that. But, hear me out. Unicorns require growth - and not just steady you're-doing-great profitable growth, but crazy, if-you're-profitable-you're-doing-it-wrong growth. In other words, if you are going to be a unicorn, you are, by definition, losing (a lot of) money.
On the other hand, it's possible to take time and grow a company organically - to design a business model that is cash flow positive relatively early on. You can build a company that not just hires people, but makes a point of hiring diversely from your own community thus building capacity in the local employee base. Interestingly, local hiring also has the effect of keeping the money the company makes in the local economy, thus it builds sustainable economies. Agricultural companies can (and should) use regenerative (or at least sustainable) agricultural practices. The effect of building businesses in a fundamentally sustainable way, though, is to depress profitability at the expense of corporate, economic, and environmental stability. Slow Money recognizes that these companies are as important, if not more important, than the unicorns. Investors in Slow Money want to put their money into companies that build stronger systems for overall economic wealth, not just seek to exploit those systems to build shareholder wealth.
So, Slow Money and Madworks are teaming up for a cohort of food and beverage companies. It'll be a wonderful partnership and I can't wait to work with this next class!
OK; with that out of the way, what's going on here?
I have been peripherally involved in both Madworks and Slow Money for the last ... ummm ... I don't really know to be honest. We'll call it the last "few" years. Both are wonderful programs.
Madworks is a seed accelerator dedicated to nascent entrepreneurship. It has changed focus over time with the changing demands of the Madison entrepreneurial community. At first, it was dedicated to true, brand new, nascent entrepreneurship. Today, it focuses a little further upstream helping companies already in the "pipeline" so-to-speak to better understand nuanced governance issues that are demanded of young CEOs with small teams and limited budgets. In other words, these teams don't yet have a staff CFO to generate financial statements; they don't have a general counsel to call shareholder meetings and record board minutes; they don't have sophisticated brand managers to think strategically about marketing plans. So, Madworks helps to get them up to speed - getting them to at least speak the language and understand the obligations that their companies will need to undertake.
Slow Money Wisconsin is a regional network of the national Slow Money organization. It is a non-profit comprising investors throughout Wisconsin that are "dedicated to catalyzing the flow of capital to local food systems, connecting investors to the places where they live and promoting new principles fiduciary responsibility that "bring money back down to earth." In other words, not every business is unicorn. Indeed, to be a responsible corporate citizen you probably shouldn't be a unicorn. By definition, not every company can be a unicorn. More importantly: not only is it probably bad company policy to want to be one, it is better for society and the environment if you aren't.
In startup ecosystems, not aiming to be a unicorn is heresy. Most cogs in the startup ecosystem machine are built on the fundamental premise of delivering the unicorn to investors. I understand that; I'm OK with that. But, hear me out. Unicorns require growth - and not just steady you're-doing-great profitable growth, but crazy, if-you're-profitable-you're-doing-it-wrong growth. In other words, if you are going to be a unicorn, you are, by definition, losing (a lot of) money.
On the other hand, it's possible to take time and grow a company organically - to design a business model that is cash flow positive relatively early on. You can build a company that not just hires people, but makes a point of hiring diversely from your own community thus building capacity in the local employee base. Interestingly, local hiring also has the effect of keeping the money the company makes in the local economy, thus it builds sustainable economies. Agricultural companies can (and should) use regenerative (or at least sustainable) agricultural practices. The effect of building businesses in a fundamentally sustainable way, though, is to depress profitability at the expense of corporate, economic, and environmental stability. Slow Money recognizes that these companies are as important, if not more important, than the unicorns. Investors in Slow Money want to put their money into companies that build stronger systems for overall economic wealth, not just seek to exploit those systems to build shareholder wealth.
So, Slow Money and Madworks are teaming up for a cohort of food and beverage companies. It'll be a wonderful partnership and I can't wait to work with this next class!
Thursday, December 22, 2016
Thursday, August 20, 2015
Some Interesting Articles About Entrepreneurship (or, why it's not surprising that Madison isn't on these lists)
There are two new fascinating articles that look at entrepreneurship: Tim Berners Lee's article on Vox.com that highlights how Today's Tech Boom Is Different From the 1990s and another article from Stepanie Walden at Mashable that looks Beyond Silicon at the Top Emerging Startup Markets in the US. Unsurprisingly, it's bad news for Madison and Milwaukee in both articles; somewhat more surprisingly, Chicago doesn't get a nod, either. Indeed, it's more of the same arguing that (Colorado aside) it will continue to be the coasts that are the centers of entrepreneurial activity for the near future.
Read together, both articles highlight the Ouroboros that is entrepreneurial growth in its current formulation in the United States. The bent of Mr. Lee's article is that today's startups are no longer funded by the public; the "public" being defined as "not rich people." Mr. Lee points out that in the 1990s startup activity was funded primarily by the Initial Public Offering ("IPO") which provided a mechanism for "regular people" to support entrepreneurial activity. Of course, entrepreneurial activity is inherently risky. One of the fallouts of the 1990s IPO boom was public wariness of such risky activity. Regular people lost their appetite for supporting yet another failed (internet or pharmaceutical) enterprise. But they also lost the gains that come from "betting" on the right horse, too. If you invested $1000 in Microsoft when they went public in 1986, by 1996 you would have made a 10x return on your money ($100,000)!
IPO activity is (way) down and private equity is scooping up those big returns. By Mr. Lee's math, if you invested in Facebook you will have already doubled your investment, but the most valuable company in the world (Apple) is only a 7x return on Facebook. Of course, this has "de-risked" the IPO market for entrepreneurial startups, but it has also stratified the investment pool. Private equity, venture capital, and super angels - rich people - are seeing the fruits of their investments and sucking up the gains in the growth, leaving mostly matured companies for the public.
The result of this ever-increasing reliance on private money (private equity, venture capital, etc.) is that entrepreneurial activity has become concentrated in the areas where the money is - the coasts. Not surprisingly, Silicon Valley, Boston, and New York top most startup lists. Ms. Walden notes that a full three quarters of all venture capital investment occurs in just three states: California, Massachussets, and New York.
But the interesting note that Ms. Walden makes is that entrepreneurial communities don't just happen, they tend to spring up where established businesses and universities are. By that logic then, it's not surprising that the "hottest" emerging entrepreneurial markets are places that are dense in large(-ish) companies and universities: Colorado, Florida, Texas, Washington, and Oregon.
Given this data and these trends, it's not surprising that Madison and Milwaukee aren't on these lists. While we have a fantastic, world-class University (that our fine state is trying to gut), our share of Fortune 500s is low - we only have 9; Minnesota has 19, Illinois has 31. Interestingly, Oregon and Washington between them only have 11, while Colorado has only 9 as well. However, Colorado has 5 Division I universities tightly packed in the 90 mile corridor between Boulder and Colorado Springs. The same with Oregon and Washington that have multiple Division I schools in a small geographic area. Madison has only 1, while Milwaukee, 80 miles away, has another; the remaining D-I schools in Wisconsin are spread throughout the state.
However, there is reason to be optimistic. While the broader trends point towards continued frustration for Wisconsin, there is better news in niche industries. Wisconsin has a unique opportunity to be a global leader in several, related, niche markets: (value-added) agriculture, (fresh) water, and biotech. These are tremendous areas of focus that fit the natural talents of Wisconsin and the Universities that make up Madison and Milwaukee. We have a density of businesses in these areas and we have a density of students in this areas that few other states can match. As a result, we have an investment community that understands these industries. So, I am optimistic that while Wisconsin will continue to lag in generalized entrepreneurial activity that you can expect greatness in these industry niches.
IPO activity is (way) down and private equity is scooping up those big returns. By Mr. Lee's math, if you invested in Facebook you will have already doubled your investment, but the most valuable company in the world (Apple) is only a 7x return on Facebook. Of course, this has "de-risked" the IPO market for entrepreneurial startups, but it has also stratified the investment pool. Private equity, venture capital, and super angels - rich people - are seeing the fruits of their investments and sucking up the gains in the growth, leaving mostly matured companies for the public.
The result of this ever-increasing reliance on private money (private equity, venture capital, etc.) is that entrepreneurial activity has become concentrated in the areas where the money is - the coasts. Not surprisingly, Silicon Valley, Boston, and New York top most startup lists. Ms. Walden notes that a full three quarters of all venture capital investment occurs in just three states: California, Massachussets, and New York.
But the interesting note that Ms. Walden makes is that entrepreneurial communities don't just happen, they tend to spring up where established businesses and universities are. By that logic then, it's not surprising that the "hottest" emerging entrepreneurial markets are places that are dense in large(-ish) companies and universities: Colorado, Florida, Texas, Washington, and Oregon.
Given this data and these trends, it's not surprising that Madison and Milwaukee aren't on these lists. While we have a fantastic, world-class University (that our fine state is trying to gut), our share of Fortune 500s is low - we only have 9; Minnesota has 19, Illinois has 31. Interestingly, Oregon and Washington between them only have 11, while Colorado has only 9 as well. However, Colorado has 5 Division I universities tightly packed in the 90 mile corridor between Boulder and Colorado Springs. The same with Oregon and Washington that have multiple Division I schools in a small geographic area. Madison has only 1, while Milwaukee, 80 miles away, has another; the remaining D-I schools in Wisconsin are spread throughout the state.
However, there is reason to be optimistic. While the broader trends point towards continued frustration for Wisconsin, there is better news in niche industries. Wisconsin has a unique opportunity to be a global leader in several, related, niche markets: (value-added) agriculture, (fresh) water, and biotech. These are tremendous areas of focus that fit the natural talents of Wisconsin and the Universities that make up Madison and Milwaukee. We have a density of businesses in these areas and we have a density of students in this areas that few other states can match. As a result, we have an investment community that understands these industries. So, I am optimistic that while Wisconsin will continue to lag in generalized entrepreneurial activity that you can expect greatness in these industry niches.
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