Suppose you want to get an entrepreneurial ecosystem started and you currently have a desert. Where do you start? Starting something from scratch is challenging, but it’s nice because you have a blank canvass to paint on.
When I co-founded an angel group in Chicago, there wasn’t a lot going on here. Much had been tried, and failed. But my experience has a lot of parallels to other start up companies that were really successful. There are things that work, and things that don’t. You need to toss out the things that don’t work. That sounds simple, but really isn’t when it comes to practice.
The other thing you need to do is think outside the box a little. A couple of iterations here and there make all the difference. As you proceed down the path of building, don’t be afraid to try new things as long as you aren’t committing a lot of core strength to them. If they fail, they are not fatal. If they succeed, put more resources around them.
As your company/ecosystem grows, you will discover new challenges. Management style has to change, otherwise you will strangle it. Success will cause a bunch of advice giving people to beat a path to your door. Not all the advice is good. Some of it will kill you.
In Chicago, we had an entrepreneurial desert from 2000-2005. Prior to that, Mayor Daley actually put the full force of government behind innovation, and certain individuals were picked to lead the charge. It was a quasi public-private partnership. The effort failed. The internet bubble that burst in 2000 caused a lot of people to back away from funding start up companies. Midwestern sensibility didn’t lead itself to putting money into companies that didn’t have revenue. Investing in early stage companies seemed like buying a lotto ticket than building something interesting.
Entrepreneurs were left with little choice. They had to navigate a series of private networks, fragmented angel groups, some VCs that really weren’t interested in them. The private networks put money in, but the cost of capital was huge. Especially when you considered transaction costs, the time it took to pitch every individual investor. It was more a game of who you knew rather than if you had a great idea. Since capital was so tough to get, the innovators went to the coasts.
That’s what it looked like to us locally when we started.
If you want to start something in your town, and it looks like a desert to you, what is the first thing that you need? Think hard about this.