Assessing the health of an entrepreneurial ecosystem is an important yet challenging undertaking. Point of view tempers the answer, not only because varying definitions of "entrepreneur" and "startup" exist, but also who ultimately qualifies as an "entrepreneur" and when does a "startup" no longer qualify as a "startup?"
For example, is a new startup business that is merely in its infancy part of the entrepreneurial ecosystem? They frequently are not seen as contributing and offering value to the ecosystem because, economically speaking, they have no income. Yet these new startup businesses (I like to think of them as "pre-preneurs," because they haven't yet taken on all the risks of running a business so they aren't entrepreneurs, yet) are critical to feeding the ecosystem of an area because of the potential they bring.
They contribute to the economy by hiring local businesses to do graphics, logos, accounting and prototyping to get their business going. However, their greatest contributions are not monetary, but in the value they bring to the community through innovative and creative thinking that is critical for ecosystem sustainability. It is important for the community to recognize the challenges of pre-preneurship and that the needs they have are different, requiring different resources to help them survive and flourish in the ecosystem.
As I see it, there are multiple stages to pre-preneurship:
Pre-startup is a stage when ideas are being formed and input from community resources help shape what type of business is ultimately formed. This is also a stage where many great ideas lose their potential. This can happen because it really was not as great an idea as it seemed, the market wasn't ready for it or the resources the individuals need to make it happen were not available.
New startup is a stage when an idea has passed the smell test. It's got good potential and now it needs to be loved and nurtured with lots of resources, mentorship and time. At this stage the ecosystem needs to have patience and give these new startups the time they need to get going. Many of the potential innovation-driven enterprises that become global leaders in new technology, patentable intellectual property and business models take years to develop and require significant support from a regional economy in order to reach their potential. A recent report published by Kauffman foundation suggested that innovation-driven entrepreneurship needs a separate type of support organization with different programs and mindsets to help these types of enterprises, which vary greatly from the small- and medium-sized enterprises that make up the majority of small business entrepreneurship.
Inventor/innovator is not a stage as much as a state of mind. Many great ideas exist in the minds of individuals but never even make it as far as a pre-startup stage. Again because the idea isn't that great, it already exists or is created on paper and immediately licensed without going through the process of building a business. However, these individuals still contribute to the "pre-preneurship" ecosystem through the use of support organizations and local businesses, as well as the intangible elements they bring in creativity and innovative thinking.
One of the challenges for an entrepreneurial ecosystem, whether it's a rural area like Whatcom county or urban metropolis like Seattle, is having the right kinds of resources available to nurture every part of the ecosystem at the right stage in the process. A community can keep "pre-preneurs" in an ecosystem by sharing information about existing support organizations and the resources they have available and fortunately Whatcom County has these for all stages of "pre-preneurship," startup and entrepreneurship. They can also create a network for sharing when local crowdfunding campaigns are active. A report published this month by Crowdfund Capital Advisors shows that for every successful crowdfunding campaign nearly half of those companies use the funds to hire people, with an average of 2.2 jobs created per company.
It is important for the community to take the time to measure the effect of "pre-preneurship" on the economy and recognize the intangible value "pre-preneurs" bring to an ecosystem otherwise it can stagnate and struggle to grow.
ABOUT THE AUTHOR
Lara Merriam-Smith is the program manager for NW Innovation Resource Center, a Bellingham-based organization that supports economic opportunities through entrepreneurial innovation in northwest Washington. It helps inventors looking to take products to market and connects new start-up businesses with resources to help them grow. For more information online go to nwirc.com.