Presentation on measuring entrepreneurship ecosystems at the Global Entrepreneurship Congress in Medellin, Colombia. March 2016

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Arnobio Morelix
Senior Research Analyst, Kauffman Foundation
MEASURING ENTREPRENEURSHIP
ECOSYSTEMS FOR BETTER
INTERVENTIONS

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Acknowledgments – Research & Policy
• Alicia Robb
• Amisha Miller
• Chris Jackson
• Dane Stangler
• EJ Reedy
• Emily Fetsch
• Jason Wiens
• Jordan Bell-Masterson
• Josh Russell
• Rob Fairlie
• Yas Motoyama

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Four Takeaways
1. A tentative framework for making sense of the
complexity of entrepreneurship
2. Applications of this framework in private and public
world
3. Ingredients and recipes for a vibrant
entrepreneurial ecosystem
4. Data + resources to get started

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Entrepreneurship has many moving parts

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Entrepreneurship many moving parts
• Starting a business ≠ running a small business ≠ growing a business
– Different processes, different challenges
• We all know this. But we all of often talk about entrepreneurship as only one thing
• Challenges on
– Measurement (what are we actually measuring?)
– Targeting policy and intervention (what kind of activity do we care about?)
– Stakeholders focus on different things (e.g., accelerator, v. small business authority,
v. tech initiatives)

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1) Framework for measuring ecosystems
and making sense of the complexity – version 1.0
Startup Local Small
Business
Growth

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3 Distinct Aspects of Entrepreneurship
• Startup Activity
– New business creation
• Small Businesses (“Main Street”)
– Local, small, business activity
• Growth Entrepreneurship
– High-growth and growing companies
• Goals
– economic indicators (e.g., inflation rate, unemployment rate)
– Measured “output” indicators in the U.S. at national, state (50 states), and city level
(40 largest metros)

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Startup Activity
• Rate of New Entrepreneurs
– % adults starting new business (incorporated or unincorporated,
employer or not)
• Opportunity Share of New Entrepreneurs
– % of opportunity-driven new entrepreneurs (proxy – not
previously unemployed)
• Startup Density
– New (Age 0) employer firms by pop

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Main Street Entrepreneurship
• Rate of Business Owners
– % of adults who own a business, with our without employees,
incorporated or not
• Established Small Business Density
– Local, established (5+ years of age) small (<50 employees)
business
• Survival Rates
– % of firms becoming established (5+ years)
• to be added next edition

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Growth Entrepreneurship
• Startup Growth Rate
– Average growth 5y after founding of all surviving firms, employment
• Share of Scale Ups
– Firms that become medium or larger (50+ employees) by 5y after
founding
• High-Growth Business Density
– Firms with 20% growth over 3y per pop
To be released next month

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What it looks like

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2) Practice and Policy Applications
In the last year, since we moved one indicator (Kauffman Index of Entrepreneurial Activity) to more
nuance and more local data
• Local government, entrepreneurship support organizations, economic development agencies
– Benchmark not only against other areas, but your own area in the past
• Federal government agencies, Senate, Congress, state government and governors
– Business owners demographics
• Business intelligence
– Intuit, Staples, Square (IPO)
• Popular discourse/media
– E.g., New York Times, Wall Street Journal, The Economist, Bloomberg, USA Today, CNBC, etc.
• Discussing targeted policy
– Policy Map, by Jason Wiens

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Entrepreneurship Policy Map
introduced this weekend at South by Southwest interactive

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3) Measuring Your Entrepreneurial
Ecosystem – a look at Ingredients
• Density
• Fluidity
• Connectivity
• Diversity

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Entrepreneurial Density
• Number of new & young companies: by population
• Employment share of young companies
• High-tech startup density

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Entrepreneurial Fluidity
• Population “flux”
– Inflow and outflow of people
– Brain Circulation more relevant than Brain Drain
• With people with the un-matched skills are staying, that is bad for
them and for your ecosystem
• Labor market velocity
– Movement (“reallocation”) between jobs and companies
• High-growth firm presence

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Entrepreneurial Connectivity
• Program mapping
• Spinoff rate
• “Dealmaker” network

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Entrepreneurial Diversity
• Number of “specializations”
• Social and economic (income) mobility
• Outsiders

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4) Data + Resources
• For data sources
– To be posted at www.growthology.org
• For blank policy map and ideas
– www.kauffman.org/policymap

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Challenges
• “More entrepreneurship is better” assumption
– “more is better” (especially young and growing) is an useful
heuristics, but at least conceptually not always true
• Data lags
– Nowcasting?
• Inside city (e.g., street level) missing

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What are we missing?
• What’s missing on the framework?
• Which ingredients connect to which “output”
indicators?
• How to get more granular (e.g., interventions that
affect ingredients?)
• What are you doing in your region?

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Thank you
Four Takeaways
1. Framework for making sense of complexity
2. Public and private applications
3. Ingredients for a vibrate ecosystem
4. Data and policy discussion resources
• Arnobio Morelix
– @arnobiomorelix (Twitter)
– amorelix@kauffman.org
– www.growthology.org (entrepreneurship research blog)
– www.kauffmanindex.org

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