The Indiana State Chamber’s Indiana Vision 2025 makes a sobering observation, “Despite economic momentum and new business creation in certain regions of the state, the overall Kauffman ranking for new entrepreneurs declined again – with Indiana’s rank falling from 44th to 47th. This points to the ongoing importance of regional economic development and quality of place initiatives.”
Unfortunately, business creation (the rate of new venture formation) has been on a national decline for many decades. Sadly, Kauffman stated, “In a given month, only three out of every 1,000 people start a business. Moreover, the startup rate is lower for the young and underserved.”
The Kauffman Foundation smartly observed, “Globally, entrepreneurship has become an economic priority, and the U.S. has fallen behind.” I would add Indiana, in particular, is missing opportunities to ensure its economic priorities align with the pillars required for a thriving entrepreneurial community. It takes a lot more than outside capital to build a successful startup. Talent, workspaces and networks are prerequisites for success.
The drivers of the decline in Indiana’s startup formation rate have often been blamed on our low venture capital invested, but this only scratches the surface of the real challenges and barriers to higher levels of new venture formation in Indiana.
Three key things I think you should keep in mind as we focus squarely on the new venture formation rate:
While there isn’t a one-size-fits-all solution, it will take more than regional economic development and quality of place initiatives to solve these many decade-old problems. There needs to be targeted, segmented strategies to leveling the playing field for all interested and motivated business builders based on their unique circumstances, barriers and obstacles. We do a considerable disservice to entrepreneurs by classifying them generally into categories – lifestyle, scalable, growth, etc. versus classifying them by their unique story and needs.
Equally, it is disturbing, to say the least to me that one contributing writer to Forbes magazine concluded, “Now, the class is, even more, a factor in our concept of entrepreneurship.” Entrepreneurship is the best anti-poverty program, and it should be a great equalizer for everyone to participate in economic prosperity. We can’t aspire or settle for less nationally, regionally or locally.
The Urban Institute defines “inclusive recoveries as those occurring when a place overcomes economic distress in a way that provides the opportunity for all residents — especially historically excluded populations — to benefit from and contribute to economic prosperity.”
Consider in 2013 (the latest available data), Fort Wayne ranked 243 out of 274 cities on overall inclusion, 120 on economic inclusion, and 269 on racial inclusion. From 2000 to 2013, Fort Wayne’s economic health rank increased from 165 to 154. The city also became less inclusive, falling from 134 to 243 in the overall inclusion rankings. As a result of this downward trend, not everyone in our community has the opportunity to contribute and benefit from the improved economic health our community has experienced.
We can’t ignore the untapped potential in our pipeline. By fully integrating and engaging all members of our community — especially those in historically excluded populations, we can tap into our talent pool. A 2018 report found that more than 70 percent of startups still have no women on their board of directors, and 57 percent have no women in executive roles. It’s a bit of a chicken-and-egg conundrum. Many entrepreneurial women business owners have shared with me that they don’t need heroes or saviors but opportunities, networks, mentors and relevant experiences to boost their confidence and lift themselves and each other up. This is why our WEOC Women Business Builder Program and Mastermind Program fill such an important role in addressing the gap in entrepreneurial gender equity.
In short, our goal should be to curate and maintain an environment that creates the right opportunities for underestimated founders to participate and achieve their unique human and financial potential fully. If we do so, Indiana’s startup ranking will rise reflecting greater inclusive economic prosperity and higher levels of entrepreneurial energy and potential.