There is an old saying that it takes a community to boost a child. Similar to establishing a successful startup company that may grow, scale, and contribute to a healthy economy, it takes an entire community.
That was the message delivered by Brad Feld, a leading global enterprise capitalist and co-founder of TechStars, when he got here to the Business Development Center at UniSA to discuss with enterprise capitalists, angel investors, growth entrepreneurs, politicians, community leaders and students.
His message was clear: startup communities might be built in cities with 50,000 inhabitants and larger. While size doesn’t matter, community attitude and startup density definitely matter.
In Australia, we talk a lot about our entrepreneurial ecosystems. We map them and analyze their strengths and weaknesses. Our analyzes are clinical in nature and based on data: the variety of established firms, the number of obtainable colocation spaces, the amount of investment capital invested each 12 months.
After a week of listening to Brad, it became clear that this was not enough. Australia is still too far removed from the strategy of starting and growing businesses. We need more individuals who are willing to step into this process and participate fully. Starting and, more importantly, growing a business is not clean, neat or easy. It is not enough to give you the chance to explain and diagnose. We need to have interaction much more personally with our Australian start-ups.
Over the last few years, we have turn into higher at encouraging people to “give it a try” and start a recent business. However, we still have a long method to go to supply them with the support they need to turn into a fast-growing company: knowledge, mentoring, access to money, markets and customers. We’re completely missing a big a part of the picture: showing entrepreneurs the right way to fail gracefully, and then supporting them when they fight to do it again.
In short, we need to build startup communities, not only startup ecosystems.
Brad described some essential elements of a vibrant startup community:
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people seeking to start businesses, in addition to mentor and support entrepreneurs who try, fail, and try again
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community leaders with a 20-year perspective who focus on building a culture where the norm is to try, take risks, fail, and help CEOs succeed
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individuals who are willing to place aside self-interest and focus on giving (ideas, time, advice, money) without expecting immediate return
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individuals who welcome strangers and value diversity – gender, ethnicity, perspectives, cultures, knowledge and experiences.
We need to regulate our mindset and change our expectations about how many startups will actually succeed, what valuations to expect, how briskly they’ll grow, and what support they’ll need. Very few of the world’s great entrepreneurs figured it out the first time; it normally took several failures and pivots before they achieved success.
Children don’t grow into adults overnight, and not everyone becomes a rocket scientist. Every investment cannot achieve success – and we won’t wait to speculate until we are sure it should.
At one point, Brad invested $25,000 in angel investors in 75 startups and doubled the value of several of them. Did he lose money? Yes – he lost money on most of them. But the money he made from a few far exceeded the total amount he invested in all of them. Many entrepreneurs who failed the first time began one other company, and he invested in it a second time – finding that they were much smarter about the startup process this time than when he made his initial investment. In his words, “you’d be an idiot not to support them” the second time around.
Unfortunately, there is no startup simulator where entrepreneurs can practice and experience every thing that may go mistaken. That’s why all of us need to support them on this journey.
The stronger the startup community, the more likely it is to have firms that have grown and scaled and might help other firms understand the right way to grow and scale. We need to be sure that our start-ups have access to the tools, knowledge and structures that help them understand what is happening.
We need to encourage experienced CEOs to “step in,” mentor, and share their experiences in starting, growing, and exiting firms. We need to coach people investing in enterprise capital funds, in addition to enterprise capital funds and business angels, so that they have more realistic expectations about the time-frame of return on investment. And if we build these sorts of supportive communities, the density of startups will increase, the variety of successful firms will increase, the variety of jobs will increase, investors will do well and Australia will thrive.