There are many ways to engage in economic development. Recently, a few mayors across the nation are putting entrepreneurship at the center of their local economies as they focus on homegrown efforts. Betsy Hodges, former mayor of Minneapolis, commented in a blog in Kauffman’s Currents, “Growing your own [economy] through investing in entrepreneurs is an economic development imperative for mayors and their cities. Entrepreneurs grow the cities they live in. The money stays in their community. They hire local. This leads to an upward spiral of success for the city.”
Recently the Indiana GPS (The Path for Growth and Prosperity in our State) Project partnered with the Brookings Institute to create the State of renewal: Charting a new course for Indiana’s economic growth and inclusion report. While this report focused on a high-level assessment of the state’s advanced industries, they found vulnerabilities across the state in job growth and pay rate. One of the strategy recommendations that came out in this report includes promoting favorable job creation and worker transitions to allow for a beneficial “rewiring” of the economy.
Homegrown entrepreneurs may be one way to promote job creation and worker transition, but not without community support. The Kauffman Mayors’ Council is comprised of former mayors who are focusing on entrepreneurship and are using their leadership skills and problem-solving experience to push for local, sustainable change. This group sees supporting entrepreneurs as a viable path to local economic growth, contributing to a city’s reputation.
One example is found in Oakland, California, where support for startups in green tech as a community effort has paid off. Support in Oakland includes green-focused Venture Capitalist, a nonprofit called Inner City Advisors that assists in business guidance and business plan development. PacificCoast Bank is committed to funding local-based ventures. While the imperative was touted by local governmental leadership, the actual support comes from a network of community partners all focused on growing their own entrepreneurs.
Kauffman Foundation recommends providing the following support in order to encourage homegrown entrepreneurship.
- Give entrepreneurs a seat at the policy table. Many times programs to benefit entrepreneurs are created without their input. By asking entrepreneurs to identify processes and ordinances that are hampering businesses, unnecessary requirements can be eliminated and progress can move forward.
- Leverage resources. Cities can steer institutional knowledge from various experts, including economic development, corporations, and utilities, which can help startups. In Oakland, CA. there is a requirement for business developments to include affordable ground-floor retail and office space for small and new businesses; in return, the developers can get a zoning variance to build higher-density buildings.
- Invest in underrepresented entrepreneurs. In Madison, Wisconsin they have found ways to leverage capital from city resources, such as creating a revolving grant for underrepresented entrepreneurs. The public fund pools money from the city, state, and nonprofits to support startups operated by women and people of color.
Attention to homegrown entrepreneurship is a global development strategy. Here in the western world, entrepreneurial economies are lending to more flexibility provided by smaller firms and the emergence of a creative class. Thus it is expected that entrepreneurship will contribute to growth and employment creation which, according to a recent book published by the United Nations University World Institute for Development Economics Research, will require collaboration and support from the state.
While the Brookings Institute’s State of Renewal report focused on broader industry, startup initiatives offer a viable option for job creation and job transition in our area. Investopedia and Rahul Baijal agree:
- Entrepreneurs create new businesses. They create new goods and services, which result in new employment. They stimulate related businesses and sectors that support the new venture, which further adds to economic development.
- Entrepreneurs add to national income. Entrepreneurial ventures generate new wealth by creating new markets. The cascading effect of increased employment and higher earnings contribute to better national income through higher tax revenue and government spending.
- Entrepreneurs create social change. They typically break away from tradition and indirectly support freedom by reducing dependence on obsolete systems and technologies. This then results in an improved quality of life, greater morale, and economic freedom.
- Community development. Entrepreneurs nurture other entrepreneurial ventures by like-minded individuals. They invest in community projects and provide support to local charities.
Locally, several initiatives have been supporting and cultivating an entrepreneurial spirit in our region.
- INVANTI is focused on growing our own entrepreneurs. They start with people who have thoughts about things. At INVANTI, they help participants figure out what they are passionate about then create solutions that evolve into startups.
- Scaling Up! is a partnership between the City of South Bend and 37 Oaks University, focusing on the revitalization of the Sample Street urban corridor. This program that launched earlier this year provides 15 product-based entrepreneurs with access to technical resources to help educate them on establishing supply chains and growing their businesses. Participants will also become eligible for subsidized commercial space at the Sibley Center, a multi-tenant makerspace, through the end of this year. In an article in Inside Indiana Business, Santiago Garces, the executive director of the Department of Community Investment, said, “whether it’s hot sauce, whether it’s t-shirts or any other product, we recognize that a lot of people have these types of businesses. They’ve been selling on Etsy and they’ve been selling on other platforms. But we really want to be able to provide resources for them to help connect to efforts that we have.”
- Scaling Up! is a great example of focusing on growing and sustaining entrepreneurial endeavors and helping ensure small business owners have access to the information they need to be successful.
- HustleSBE offers minority-owned business owners support and new solutions for their customers, generating new ideas and shoring up current business practices to create a solid foundation for growth. Since being founded, HustleSBE has helped over 20 small businesses, even providing them access to capital.
According to the Small Business Administration, 99.9% of minority-owned businesses with employees are small businesses and on top of that there are 8.2 million minority-owned businesses with no employees. However, (Black, Indigenous and People of Color (BIPOC)-owned businesses receive half the amount of investments compared to white-owned businesses which traditionally causes barriers to their success. These challenges however do not hinder the growth of minority-owned businesses which outpaced non-minority owned businesses in growth of employees by 27% according to the Minority Business Development Agency. Programs like HustleSBE, focus on the challenges faced by minority entrepreneurs by providing them tools and a community of other small-business owners in their region.
- America’s Seed Fund includes the federal government’s Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) which provides a diverse portfolio of startups and small businesses across technology areas. Over the past five years, our region has averaged four America’s Seed Fund recipients with the average total of all awards being $725,000. This funding was made possible through support and encouragement from the University of Notre Dame and the IDEA Center at Notre Dame.
- IDEA Week offers a great intensive one time a year event for all entrepreneurs. This innovation festival provides entrepreneurs with practical knowledge, creative inspiration, and the social foundation needed to innovate within the community.
- Startup South Bend – Elkhart x Elevate Ventures Partnership provides opportunities for tech-enabled, scalable startups in the South Bend – Elkhart region. They host events, provide funding opportunities to catalyze ideas, and connect startups to investors and mentors.
When we regard entrepreneurship as a viable option to increase the job market and rewire the economy, we acknowledge the importance of creating communities focused on cultivating entrepreneurial endeavors. Communities that build capacity to engage entrepreneur-focused economic development are often the most successful. In their article, Creating entrepreneurial communities: Building community capacity for ecosystem development, Markley et al., points out success requires a systemic approach that provides a bridge between a business development approach that focuses exclusively on the individual entrepreneur and a community development approach that focuses on the place. They explain connecting community development practices with entrepreneur development practices in an integrative and reinforcing way will yield valuable results for both community and economic development.
Through the various programs and initiatives outlined, the South Bend – Elkhart region is beginning to see the economic impact of growing our own entrepreneurs and will continue to realize the positive impact for years to come.