Beyond Incubators: Benchmarking Innovation & Entrepreneurial Infrastructure

The Problem with Milken Institute SSTI BenchmarkWhen it comes to innovation, Massachusetts, Colorado, Maryland, California and Washington lead the race to innovation.

That is, when the stats are stacked in their favor.

These five states claim the top spots in the Milken Institute’s 2016 State Technology and Science Index.The STSI report attempts to benchmark states on a composite index that includes five buckets of innovation measures:

1) Research and Development Input
2) Risk Capital and Entrepreneurial Infrastructure
3) Human Capital Investment
4) Technology and Science Workforce
5) Technology Concentration and Dynamism

As one would expect given the measures favoring R&D investments, technology transfer, highly educated workforce / big universities and clusters of high tech firms—spoiler alert—the unsurprising state winners come out to be these five bastions of the aforementioned criteria.

But what caught my interest was how the Milken Institute decided to measure “Risk Capital and Entrepreneurial Infrastructure.”

Putting the Risk Capital portion aside for a moment, the only measure Milken included for their research of the entrepreneurial infrastructure was the “number of business incubators per 10,000 establishments.” 

I must admit, this irked me a bit.

An entrepreneurial infrastructure (or as others in economic development sometimes put it, an entrepreneurship ecosystem) encompasses a whole lot more than members of the International Business Innovation Association (formerly NBIA) per 10,000 firms.  Some of the most well-known and impactful incubator/accelerator programs would not even be picked up using this methodology. Notably, organizations like Techstars and Y Combinator, both not IBIA members.  

More important than the problematic dataset, is the heartburn I get when I see, hear or read about how incubators and accelerators are equated with entrepreneurial infrastructure. 

A healthy, entrepreneurially supportive community, includes so much more than an entrepreneurs’ ability to find space or jump in to an accelerator cohort.  To help illustrate this point, in a sampling of some of SourceLink’s statewide networks, incubators make up less than 7 percent of all the different supporting organizations that have been identified and recruited into their respective resource networks.  In Iowa, incubators make up 4 percent, Louisiana it is 7 percent, Mississippi is less than 3 percent, and Missouri at 7 percent.

This said, I have seen firsthand how an organization can start as a collaboration space or startup accelerator and transform itself into an entrepreneurship infrastructure engineer, something that we help our affiliates do.  Successful examples that come to mind include the Denver Commons on Champa and  NewBoCo in Cedar Rapids.

My call to action: let’s look beyond the given dataset toward the robust resources that build entrepreneurial infrastructures and their ecosystems. Besides incubators and accelerators, what should we be looking at to measure entrepreneur infrastructure? 

I think the answer is to start simple: every community should have a base level of support for each of the four main types of entrepreneurs.  Services should surround resources (more than just incubators/accelerators). They should build networked capital, pipeline of ideas, robust talent and workforce and corporate engagement. And they should include an element of storytelling / culture building.

Once you understand where your entrepreneurial infrastructure is strong or weak, you can work strategically to find gaps and improve access to needed resources for your entrepreneurs. Last year, SourceLink did a similar type of analysis with this approach of resources available to entrepreneurs in the Capital Region of California

I’m curious to hear your take.  How are you (or are you) measuring entrepreneurial infrastructure in your community?