Lighting the beacon that will draw startups
In 2010, venture capitalists poured $21.8 billion into 3,277 new business ventures across the United States. Eighty percent of their capital funded innovations in software, biotech/medical, clean tech, energy and Internet. Most interesting is the fact that 61 percent of this money was invested within three regions: Silicon Valley, Boston and New York Metro.
While many organizations are grappling with how to attract small businesses into this region and spawn job creation, we may be overlooking what’s already here. Northern Nevada has an enormous array of assets.
The Ewing Marion Kauffman Foundation reports that from 1980-2005, all net job growth in the United States occurred in firms of less than five years old and startups created two-thirds of all new jobs. This is an amazing statistic! Obviously, if we are to effectively impact job growth, we need to focus on entrepreneurs and startups. It is risky? Yes, but the rewards are proven and the formula is well known. Besides, what is the downside in following almost 30 years of history?
For sustainable growth to occur, we must set positive expectations and thus, startups need to know they can obtain: money, talent (i.e. skilled new hires) and knowledge (i.e. mentors and advisors). Correspondingly, investors need to see startups with: Coachability (is the team teachable?), marketability (will someone buy their product?) and scalability (will the market buy sufficient volumes to generate significant revenue?).
If we look closely at Silicon Valley, Boston and New York Metro, we will discover that they have aggressively leveraged their assets to position themselves for meeting the needs of the entrepreneurial marketplace and thus benefitting from significant job growth, even when times are tough. If you envision entrepreneurs as sailing in a sea of darkness, which is not far from the truth in many cases, any beacon that offers a safe haven becomes a magnet. Are Silicon Valley, Boston, and New York Metro unique? No, but, they chose to take the risk and act.
Access to human and capital resources and the subsequent flow of resources into fundable deals makes the difference. Small businesses and startups will thrive in an environment that includes academic involvement, entrepreneurial activity, local government support, service-provider interactions, investment community scrutiny and incubation encouragement.
If we agree that we need to aggressively position ourselves to meet the needs of the entrepreneurial marketplace, then do we have the right assets? In my opinion, we have most of what is required. We need to architect our resources into a concerted focus, add the elements we lack and then choose to act. I will talk about specific resources below as examples with the knowledge that I unfortunately can’t mention every asset in the region.
The core of any startup is creativity and innovation, which is born within entrepreneurs and nurtured by our academic institutions. We have tremendous assets in UNR, TMCC, SNC, WNC, DRI and Nevada Inventors Association. We have professors, students and inventors who are developing technology that is world-class, and offers creative thinking that rivals any university in the country. As an example, Michael Birdsell from UNR/DRI’s Tech Transfer Office is as highly skilled as anyone I have seen and diligent in his efforts to bring these innovations to the marketplace. Inventors, innovators, entrepreneurs, creative thinkers all continue to find solutions to everyday problems and some not-so-everyday issues.
Our local governments (city, county and state) are energizing themselves to make a difference. For example, Washoe County Commissioner Kitty Jung chairs the Regional Jobs Team that has brought together members of the community with a focus of collaboration. EDAWN’s new Innovative Growth Initiative promotes and leverages the strengths within the area. NNDA has aggressively built an infrastructure to direct and funnel business opportunities to the optimum resource. Mayors of Reno and Sparks and numerous City Council members have been supportive of the entrepreneurial motivations. The landscape is changing.
Every startup needs legal, accounting, banking, administrative, operational, manufacturing, technology, and many other services as they build their companies and without hesitation, many service providers have stepped forward to meet the needs of startups. Companies such as Basin Street Properties, SilverSky Group, Charles Schwab Bank, Evco Plastics, Diamond Printing, IT2GO, Eye-Com, Sage International, Alice Heiman LLC, Q&D Construction, Vortex IP, and many others recognize the importance of startups to this community and have given beyond what was asked to support the region in the development of a startup-friendly environment.
Historically, 87 percent of funded startups have a successful exit from incubation when adequate mentoring and support is provided. The Center for Unique Business Enterprises (CUBE) is a business incubator in downtown Reno and provides a nexus for investors, service providers and entrepreneurs. Although the CUBE is supported by 18 advisors, six management team members and six experts-in-residence and collaborates with other entities in the community, such as REA250, SGS and others, we still need more support to help build a more diverse economy in northern Nevada.
The investment community consists of angel investors, bankers and lenders, private investors, corporate partners and other individuals and organizations interested in utilizing their capital to finance new businesses. In addition to the efforts by C4CUBE to establish a medium-sized venture capital fund in northern Nevada, a collaboration of many parties, such as Reno Angels, Sierra Angels, NMI, Optimum Strategies and others will greatly enhance the ability to screen fundable deals, identify qualified investors, perform due diligence, and source quality talent for new hires. Access to available capital is required to move this enormous effort across the finish line. Although money will attract new businesses, money alone will not solve our growth problems.
As you can see, northern Nevada has many of the essential ingredients that can collectively ignite the beacon of northern Nevada. So, what’s missing?
Access to more available capital is the leading resource lacking in northern Nevada.
C4CUBE and other groups are collaborating to develop new capital resources for startups. These efforts include: 1. Establishing a private and public venture capital fund of funds; 2. Establishing matching fund for non-profit educational support. 3. Establishing a dedicated resource for finding and applying for government grants and 4. Exploring alignment with groups like the Rocky Mountain Venture Capital Association.
We need your help and involvement. What can we do for you? How do you want to get more involved? If you want to help build a new capital resource, email me at email@example.com and see us at http://www.c4cube.com.
Ky Good is managing director of C4CUBE.
Allan Swan, President of Panasonic Energy of Northern Nevada, Swan was the speaker for the 2019 UNR College of Engineering Distinguished Lecture Series Nov. 20. He addressed a crowd of roughly 185 about the “Next 100 Years” of the company.