ext-generation Entrepreneurial Ecosystems riving Performance and Economic Opportunity

ext-generation Entrepreneurial Ecosystems riving Performance and Economic Opportunity Presentation to CCSBE Ted Zoller, PhD TW Lewis Distinguished Professor University of North Carolina at Chapel Hill Immediate Past President, US Association of Small Business and Entrepreneurship Senior Fellow, Ewing Marion Kauffman Foundation May 2017

3 Questions: 1. What are the characteristics of highperformance entrepreneurial ecosystems? 2. How most regions are different from Silicon Valley? And why I m optimistic about emerging regions 3. What have we learned (so far) about performance-based entrepreneurial networks in 4 + 1 experiments?

1. What are the characteristics of high-performance entrepreneurial ecosystems?

Networks and Economic Performance of Entrepreneurial Economies THE WHO? New Frontiers Application of Network Theory Methods Understanding Economics Through Social Capital Integration of Innovation, Funding and Firms Understanding Acuitively Role of Social Capital Structure Who s the Who?

Ingredients of Performance Networks Creating a Mix 1. Dense Interconnected Network 2. Serial Dealmakers 3. Founder-led Culture 4. Innovation 5. Curated Ecosystem

Dealmakers Conceptualized??????? Investors Entrepreneurs

Dealmakers Conceptualized. Broker Information and Resources Shape Deal Networks Dealmakers Syndicate and Interconnect

Dealmakers Conceptualized

Dealmakers Conceptualized

Dealmakers Conceptualized

Entrepreneurial Firm Birth Results 1984-2009 2225 FIRMS 4765 FIRMS

Distribution of Total Concurrent Firm Connections of Aggregate Actors FAT BASE LONG TAIL

Structured Social Capital by Region Distribution of Aggregate Versus Dealmaker Capital 4.5% 2.9%.9%1.2% Top 2.7%

Total Associated Entrepreneurial Networks by Technopole, Sorted by Regional Population Size Boston Silicon Valley Phoenix Seattle Minneapolis Denver Orange Co. San Diego Portland Salt Lake City RTP Austin

Emerging Dealmaker and Dealmaker Networks by Technopole, Sorted by Regional Population Size Boston Silicon Valley Phoenix Seattle Minneapolis Denver Orange Co. San Diego Portland Salt Lake City RTP Austin

Dealmaker Networks by Technopole, Sorted by Regional Population Size Boston Silicon Valley Phoenix Seattle Minneapolis Denver Orange Co. San Diego Portland Salt Lake City RTP Austin

Correlation Matrix Dealmakers Better Correlated to Performance

2. Why virtually every ecosystem is different from Silicon Valley

1+ SV All Actors

2+ SV s Serials

10+

15+

20+ 44 Mega Dealmaker Investors 16 Mega Entrepreneurs

3. What have we learned (so far) about performancebased entrepreneurial ecosystems in 4+1 experiments?

Experiment 1. Southern California Contributions: Time-series Evolutionary Change Diverse and Potent Ecosystem Sectoral Evaluation

SoCal Network (Orange County): Central Network 2009 2014 N=7304 N=9150

SoCal Network (Orange County): Dealmakers 2009 2014 N=78 n=137

SoCal Network (LA MSA): Full Eship Network January 2014 March 2015

SoCal Network (LA MSA): Dealmaker Network January 2014 March 2015

SoCal Network Total: Raw and Normalized

Experiment 2. Iceland Contributions: Small World Analysis Measure Effect of Treatment = Startup Iceland Time-series Evolution Measurement of Network Change

Iceland in 2012 Aggregate Entrepreneurial Network Consumer Disc Healthcare Energy Industrials Information Tech Telecom

Iceland in 2013 Aggregate Entrepreneurial Network Consumer Disc Healthcare Energy Industrials Information Tech Telecom

Iceland 2012 Aggregate Entrepreneurial Network Consumer Disc Healthcare Energy Industrials Information Tech Telecom

Iceland 2013 Aggregate Entrepreneurial Network Consumer Disc Healthcare Energy Industrials Information Tech Telecom

2012 Dealmaker Network Consumer Disc Life Sciences Energy Industrials Information Tech Telecom

2013 Dealmaker Network Consumer Disc Life Sciences Energy Industrials Information Tech Telecom

Social Network Connection Growth Birth of Entrepreneurial Network

Experiment 3. Blackstone Entrepreneurship Network (BEN) Contributions: Direct Intervention Secondary Time-series Data Collection Coupled with Primary Data Collection Time-series Evolution by Month Role of Serial Entrepreneurs as a Catalyst for Network Performance

Metro CSA Comparison: Austin vs. RTP Austin RTP Consumer Disc Life Sciences Energy Industrials Information Tech Telecom Aggregate Dealmaker

BEN Intervention Effect This is a representation of the full RTP Network as of December 2013, showing the connections between founders and investors, connected by the companies they invest in. The red nodes are directly affiliated with the existing BEN program, and the gold nodes are the second-degree connections of these nodes, showing a broad penetration of BEN across the RTP entrepreneurial network. 43

1. RTP Entrepreneurial Network Diagram Baseline Diagram of the investor relationship among all start-up founders in the Triangle. This represents the "baseline" of the current network as of 12.13. Key Light Blue Square = Company Light Blue Circle = Investor Light Blue Triangle = Investor Lines between represent connections 44

2. RTP Founder and Investor Network Diagram with BEN 1 st Degree Connections: BEN EIRs Same RTP network with the nodes representing the BEN-related EIRS and staff shown in RED Illustrates the strategic coverage (across sectors and existing network) with the 12 EIR nodes highlighted. Shows the direct impact of those engaged as employees and consultants to BEN. Key Red nodes = BEN EIRS Light Blue Square = Company Light Blue Circle = Investor Light Blue Triangle = Investor Lines between represent connections 45

3. RTP Founder and Investor Network Diagram 1 st Degree Connections: BEN EIRs and Associated Companies RTP network with the BEN-related EIRS and staff and the affiliated companies. Showing important connecting social capital among multiple firms in RTP. A measure of the "range" of the immediate RTP network, and is a measure of impact. Key Red triangle/circle nodes = BEN EIRS Red squares= BEN EIR direct company connections (1 st deg) Light Blue Square = Company Light Blue Circle = Investor Light Blue Triangle = Investor Lines between represent connections 46

4. RTP Founder and Investor Network Diagram 2 nd Degree connections: BEN EIR personal connections RTP network and the first degree of personal connections of the BEN EIRS/staff The color coding shows how much "leverage" the direct investment in BEN EIRs/staff covers RTP network. The red and yellow clearly show that the BEN can influence virtually every individual person in the network within one degree of separation. Key Red triangle/circle nodes = BEN EIRS Red squares= BEN EIR direct company connections (1 st deg) Bold triangle/circle nodes = BEN EIRs 2 nd degree connections Light Blue Square = Company Light Blue Circle = Investor Light Blue Triangle = Investor Lines between represent connections 47

5. RTP Founder and Investor Network Diagram with BEN 2 nd Degree connections: BEN EIR personal and B2B company connections Full RTP network and the "first degree" personal connections of the EIRs and staff of BEN, their associated 2 nd degree connections and companies (e.g., b2b -business to business connections) The red and yellow clearly show that the BEN can influence virtually the entire network within one degree of separation, along with substantial b2b leverage over the firms. Key Red triangle/circle nodes = BEN EIRS Red squares= BEN EIR direct company connections (1 st deg) Gold triangle/circle nodes = BEN EIRs 2 nd degree connections Gold squares = 2 nd degree B2B companies Light Blue Square = Company Light Blue Circle = Investor Light Blue Triangle = Investor Lines between represent connections 48

December 2012 Direct Impact - Network of EIRs and companies Blue Circle: Blackstone EIRS, Staff and Affiliated members Orange Circle: Founders of Blackstone Start-up companies Lines between represent connections Person to person connections made and "mediated" by the BEN Staff between the EIR and BEN clients as of the beginning of the project, December 2012. 49

December 2013 Direct Impact - Network of EIRs and companies The increased number of connections, nodes and the size of the nodes represents the increased activity and performance of the network Blue Circle: Blackstone EIRS, Staff and Affiliated members Orange Circle: Founders of Blackstone Start-up companies Lines between represent connections Measured one year later, person to person connections mediated by the BEN staff between the BEN EIRs and BEN clients. 50

Experiment 4. Eisenhower Comparative Project Contributions: Comparative Ecosystem Analysis Secondary Time-series Data Collection Coupled with Primary Data Collection Interviews with Dealmakers Role of Serial Entrepreneurs as a Catalyst for Network Performance

Experiment 4. Eisenhower Comparative Project Europe/Germany: Munich Berlin Oceana/Australia: Sydney Melbourne

Democratized Ecosystem Berlin

Democratized Ecosystem Melbourne

Moderated Ecosystem Munich

Moderated Ecosystem Sydney

Experiment 5. Atlantic Canada in Perspective: Nova Scotia Contributions: Future Direct Intervention Secondary Time-series Data Collection Coupled with Cluster Analysis Role of Serial Entrepreneurs as a Catalyst for Network Performance

Nova Scotia Ecosystem

Nova Scotia Ecosystem

3 Questions: 1. What are the characteristics of highperformance entrepreneurial ecosystems? 2. How most regions are different from Silicon Valley? And why I m optimistic about emerging regions 3. What have we learned (so far) about performance-based entrepreneurial networks?

Lessons Learned: High-Performance Entrepreneurial Ecosystems Develop regional entrepreneurial networks intentionally. Look to models to develop ecosystem through most between central dealmakers in the economy Make them your CHAMPIONS Put a face on cluster analysis to facilitate development of social capital in region-wide entrepreneurial networks Consider extra-regional integrating networks to connect regional entrepreneurial clusters geographically. Link complementary networks to distribute equity investing clusters with innovation/market-driven clusters. Recruit and retain you serial entrepreneurs and GIVE THEM A JOB!

ext-generation Entrepreneurial Ecosystems riving Performance and Economic Opportunity Questions and Thanks Ted Zoller, PhD TW Lewis Professor University of North Carolina at Chapel Hill Immediate Past President, US Association of Small Business and Entrepreneurship May 2017