The Three Most Important Requirements for a Vibrant Entrepreneurial Community
Here in Northeast Ohio, technology-enabled startups will be a significant generator of job growth and wealth creation.
—By Guest Blogger Jennifer Neundorfer, Co-Founder, CFO, COO Flashstarts
—We at Flashstarts believe that right here in Cleveland we already have all the requirements to accelerate the growth of startup companies and transform our regional economy to compete for talent on a national level.
People sometimes ask, “Why should we care?” Well, here’s why:
In a 2010 study, the Kaufmann Foundation published a study of Business Data Statistics compiled by the federal government between 1977 and 2005. Called “The Importance of Startups in Job Creation and Job Destruction,” the study concluded that new firms (younger than one year old) contributed on average 3 million jobs a year, while older firms lost an average of 1 million jobs per year.
Data like this proves that startups are the engine of significant, sustainable job growth over time. The resurgence of Cleveland and the current energy around entrepreneurship exists because startups bring net new jobs and wealth creation over time.
There are three main inputs to successfully “manufacturing” successful startups here in Cleveland:
- Human capital—entrepreneurs with disruptive ideas;
- Financial capital—to fund those entrepreneurs; and
- Digital Infrastructure—which includes broadband access, data centers and world-class IT support
Northeast Ohio is rich in human capital. There are about 300,000 university students in the region and about 75,000 graduate each year. On average, 1% of the population become entrepreneurs, which means there’s a potential 750 entrepreneurs graduating every year from the excellent programs at Case, Kent, CSU, Oberlin and others. We have that talent, and we need to give it the resources needed to stay here and create businesses in Northeast Ohio rather than someplace else.
Here’s where there’s work to be done, specifically we need to increase the number of funding paths for early and growth stage startups. A key aspect of the solution is to broaden the circle of angel investors and encourage more accredited investors to participate. Many people tell me that they want to support Cleveland’s current entrepreneurial momentum, and angel investing is a critical way to contribute. Thanks to a change in FCC regulations last summer, startup companies are no longer limited to raising funds from friends and families, which by definition broadens the circle of potential investors. Now we just need potential angels to step up.
Access to robust infrastructure is critical for any company’s success. During the Industrial Revolution, companies in Cleveland relied on world class railroads and shipping routes. In today’s era, companies require cutting edge digital infrastructure in order to compete and succeed on a global scale.
A key piece of the infrastructure equation is high-speed connectivity. OneCommunity provides gigabit access right here in Cleveland, which is a game-changing resource for any bandwidth-intensive business from healthcare IT, enterprise software, digital media, and everything in between.
For example, in the past, if you had a digital media company, you had to be in Los Angeles or New York to reliably and efficiently access video files. Now, with gigabit access, it doesn’t matter where you are as long as you have access to that fat pipe.
These three aspects (human capital, financial capital and digital infrastructure) work together for the benefit of Cleveland entrepreneurs. Location is becoming less and less important, and the challenge for us is to communicate these benefits to local entrepreneurs and give them confidence that they will have access to the resources required to build successful businesses here.
About Jennifer Neundorfer
Jennifer Neundorfer is co-founder and COO/CFO of Flashstarts, a startup accelerator and investment fund focused on unique and innovative uses of software and technology. Flashstarts aims to accelerate the growth of the IT ecosystem in Northeast Ohio by providing the resources, capital and guidance necessary to support the earliest stage entrepreneurs in the area. Flashstarts has deep expertise in startups, Enterprise and Healthcare IT, mobile, digital publishing and media, and high-bandwidth applications. Jennifer holds a BA from Harvard University and an MBA from the Stanford Graduate School of Business, and is passionate about leveraging technology to disrupt or evolve traditional industries. Most recently, she was Director of New Business Development for Fox Networks Group, where she was responsible for identifying and launching new and transformative businesses.