Sprouting More and Healthier Concepts
By Rajiv Tandon, Ph. D.
Launch Minnesota, an initiative by the Department of Employment and Economic Development (DEED), like many such initiatives across the land, is designed to boost the State’s economy by strengthening the startup ecosystem. The goal is to accelerate the number of statewide startups and amplify the state as a national innovation leader.
Entrepreneurship is already exploding by itself. Numerous aspirants have specific ideas in mind and a deep interest in starting a business; most have no previous experience. In Minnesota, we already have 50 incubators, many angel groups/individuals, hundreds of meetups, numerous events, and several universities. These incubators work with quality concepts and grow them into successful businesses.
Most entrepreneurship support programs and policies engage an individual once they have already started a business or have gone far in the process of doing so. By the time an entrepreneur makes contact with an intervention that aims to support entrepreneurial growth, they have already likely gone quite far into the business process of doing so. What is missing is mass-scale skill development and requisite competence building. These programs leave out the people who want to start a business and have even taken some steps but stopped before they started because of a lack of reasonable assistance at the early idea stage—the initial step of pre-incubation support, screening, and polishing raw ideas into quality ones.
Lack of this piece leads to too many failures and missed opportunities. Remedying this problem will dramatically increase the number of quality concepts.
Most people became entrepreneurs in 2020 than in previous years. However, the percentage doing so by choice was the lowest.
Recent Kauffman Foundation reports, drawn from a nationally representative survey of US adults, detail critical findings on why leavers, though interested, decided not to start a business or to wait. Key findings include: • They are about 6% of the adult population. • The most common action taken was discussing the business idea with a friend, work colleague, or acquaintance. • The most commonly cited reason for leaving is concern about business survival. • The most people became entrepreneurs in 2020 than in previous years. Good news? Not so fast. Kauffman says the percentage doing so by choice rather than economic hardship was the lowest in a quarter-century.
Since the biggest impediment to entrepreneurial ecosystem development is at the preincubation stage, a complete economic development program must have an initial- screening support system to find and nurture numerous ideas and advance those that show merit for further intervention by the existing incubation incubators.
We are all familiar with a person approaching us with an underdeveloped idea and asking for investors’ help. And they expect it to be at little or no cost to them. We shake our heads but have no place to send them for preparation. Not at scale anyway.
Many aspiring entrepreneurs, inexperienced in the complex process of building a successful business from scratch, believe that having an idea merits investment to grow it into a successful business. We are all familiar with a person approaching us with an underdeveloped idea and asking for investors’ help. And they expect it to be at little or no cost to them. We shake our heads but have no place to send them for preparation. Not at scale anyway.
Launch Minnesota should provide a program of pre-incubation preparation on a large scale. Anyone with an idea should be able to participate; the initial screening program would conclude by rejecting the proposed concept or suitably preparing it for the various incubators. An abandoned idea still equips the aspirant to evolve the next good one. Proper assistance at an early idea stage is the key to convert leavers into additional entrepreneurs.
Today’s pandemic circumstances bring about urgency. We have experience from previous economic downturns that the ensuing flow of ideas will be heavy, widespread, and from a broad set of business sectors. Though the upheaval has been difficult, we would be wise to follow advice commonly attributed to Winston Churchill: “Never let a good crisis go to waste.” A primer on orchard management advocates a nursery’s importance in propagating and growing plants to a usable size before planting. They provide a valuable service by sprouting quality seedlings from the plethora of seeds, saving time, money, and effort, and improving the orchard’s overall productivity.
Lack of a robust preincubation program will shortchange any resurgence goals.
Similarly, support for undeveloped ideas can yield more and higher-quality vetted concepts. Screening numerous ideas methodically and refining those that show promise can lift Minnesota’s economic development effort. A lack of a robust preincubation program will shortchange the state’s resurgence goals.
A version of this article first appeared in Twin City Business Magazine.
To see other opinion columns go to medium.com/@rajivtandon.
Dr. Rajiv Tandon is executive director of the Institute for Innovators and Entrepreneurs and an advocate for the future of entrepreneurship in Minnesota. He is an adviser to fast growth Minnesota CEOs. He can be reached at email@example.com.