GUEST COMMENTARY: Now is the time to invest in startups

2013-06-23T00:00:00Z GUEST COMMENTARY: Now is the time to invest in startupsBy Kelly Schwedland nwitimes.com
June 23, 2013 12:00 am  • 

Northwest Indiana needs more innovation-driven enterprise startups and the entrepreneurial ecosystem that supports them.

The recent jobs component out of “Northwest Indiana: Regional Economic Trends and Opportunities” report is, at best, bleak. There are 6,700 fewer jobs today than at the height of the recession.

A recent U.S. jobs report posted an amazing jump and the U.S. economy might actually be starting to recover. But Northwest Indiana has missed out on all that job creation.

It is not news that small businesses are the job creators in this economy. What is most interesting is which small businesses are the true job creators.

According to the Kaufman Foundation’s research, nearly all net job creation came from companies less than five years old. In other words, startups create the jobs.

High-paying jobs come from what they refer to as innovation-driven enterprises or IDE's, in the recent report called “The tale of two entrepreneurs." The other type of business is the traditional small to medium enterprise, or SME. While SME’s are typical of the local or even regional company, the IDE startups focus on addressing global markets based on technological, process or business model innovation – and can potentially create hundreds or even thousands of high-skill jobs if they succeed.

IDE startups are more risky and require different support mechanisms. IDEs tend to start out losing money, but achieve exponential growth if successful.

To help IDE entrepreneurs take their idea and develop it into a full-fledged company, requires a variety of skill sets. This type of startup is more typified by the need for team building, mentorship and outside investment, or what could be called a startup community.

Startup communities have a long-term view and commitment, highly inclusive and celebrate failures for the attempt to try great things. These communities develop support groups, angel investor clubs, venture capital investment vehicles and accelerator programs so ideas and entrepreneurs can fail fast and then start again, with minimal loss of capital along the way to finding the winning idea.

As an example, Chicago just celebrated the first year of its 1871 collaboration space in the Merchandise Mart by announcing the new community generated 800 jobs, $30 million in capital investments and $13 million in revenue.

But all these things take effort and investment by caring individuals who want to see a different future. Current government policies and programs, however, tend to favor SMEs, which often produce faster, more visible results – an approach that undermines the success of potential new IDEs.

If Northwest Indiana wants to create high-paying jobs then no is the time to celebrate the risk takers and innovators. Now is the time to invest in business accelerator programs. Now is the time for successful entrepreneurs to partner with local and regional politicians to invest in the future of job creation.

Kelly Schwedland is an entrepreneur-in-residence at Elevate Ventures. He can be reached at KellyS@ElevateVentures.com. The opinions are the writer's.

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