Innovation is a cornerstone of the U.S. economy: New businesses and those that are less than 5 years old are the primary source of all new net job creation. That’s a fact.
American entrepreneurs transform industries. From Henry Ford, to Steve Jobs, to Sam Walton, they create scalable solutions that change how the world operates, and their ideas and innovations create entire industries. In fact, these three entrepreneurs alone helped create millions of jobs.
But life isn’t always easy for new businesses. These entrepreneurs need capital in order to grow, and often that capital can be hard to come by. How hard? Nationwide, we estimate there is a shortfall of at least $8 billion per year in venture investing, and we at iSelect are focused on fixing that funding gap.
But funding is only one part of the puzzle. New businesses need more than just money to succeed. They need talent, they need customers and, most of all, they need help. If we’ve learned anything from the example created by Silicon Valley itself over the last 50 years, it is that entrepreneurship cannot function in a vacuum. It needs community to survive and thrive.
Why is it that Silicon Valley works so well? There are four key components to the Silicon Valley market that make it a natural place for entrepreneurs:
- Talent: First, it has great schools and companies. Talent graduates from Stanford, or leaves established companies like Google and Cisco, to create new companies.
- Customers: Second, Silicon Valley has customers. Startups need early adopter customers to help perfect their product. For example, when WhatsApp built its new messenger software, it had access to friends at Facebook who helped influence the design. Cisco, Intel, Apple, Facebook, Siebel, Salesforce, etc are all down the street looking for new technology.
- Investment: Third, Silicon Valley has risk capital. Investors in the Bay Area understand media, entertainment, and software. They understand the challenges inherent in early-stage investing. People they meet at cocktail parties, on the golf course, and school functions, etc are in and around the startup scene. Silicon Valley investors understand this market and are prepared to fund it.
- Community: Fourth, they have proven entrepreneurs that want to “pay it forward.” Every startup runs into trouble. There were probably several instances when Facebook hit a wall, but there were proven entrepreneurs that coached Zuckerburg and steered him in the right direction. That sense of community, of entrepreneurs helping entrepreneurs, is critical to the long-term success of every startup.
Filling in the gaps
Here in St. Louis and the midwest generally, iSelect is focused on the “risk capital” pillar of this equation. But what about non-investors? What can they do to help?
If you run a business, consider becoming an early adopter customer. Think about it. If a startup came to your purchasing department today, would they ever get through your layers of bureaucracy in order to actually make a sale? Why not make it easier? Get to know your local entrepreneurs and be accessible to them when they approach your company.
If you know of any talented people who are thinking about starting a business, connect them to our regional incubators such as STLVentureWorks, the Center for Emerging Technologies, and BioSTL, among others. Encourage them to attend a local startup event. You can find a handy calendar of events here. There are many opportunities available to entrepreneurs; make sure you, your friends, your families, and your neighbors know about them.
Further, connect every successful entrepreneur with us at iSelect. We have talked with more than 700 firms in the last 18 months, and each one offers an opportunity for mentorship, guidance, connection, and leadership.
If you are not accredited, you probably know someone who is. iSelect makes it easier to invest in new ventures. We source deals, conduct more than 120 hours of diligence, and manage the investment. Investors can work with a financial advisor for guidance, and they can even invest through their IRA. Help connect us to more accredited investors.
While not everyone is prepared to invest in startups today, we can all help entrepreneurs succeeded in different ways, large and small.
When folks like Bill Gates succeed, they create a plethora of jobs that may, in turn, come back and create opportunity for you. At scale, if every city works the way the network in Silicon Valley works, we benefit from growth across industries. While Silicon Valley is good at software, other cities are best for agriculture, animal health, logistics, retail, digital health, genomics, etc.
We at iSelect are ready to push this idea forward and are looking to expand our network to uncover early adopter customers, talent, and anyone else who might be interested in helping entrepreneurs—both here in Missouri and nationwide—succeed.