Over the past twenty five years, economic developers have begun applying a complex systems approach to spur more entrepreneurial activity in a city or region. In this article, the first in a series, I will share an overview of the components of an entrepreneur ecosystem, outline three benefits of tending to it and as always,challenge you to do better for the common good.

The entrepreneur ecosystems approach takes its cue from the natural environment and farming. A natural ecosystem must have elements such as sunlight, water and soil which can be cultivated to grow beautiful gardens or lush forest. The assumption is that entrepreneur ecosystems have components that can be managed to cultivate and grow a healthier environment for entrepreneurs and business growth.

An ESHIP Ecosystem consists of actors, organizations and institutions (both public and private) that offer resources and conditions that support an entrepreneur’s success. They include (but are not limited to):

  • Capital – supply of grant, debt and equity to start and grow new businesses
  • Labor – skilled labor force training, public-private partnerships for workforce development
  • Talent – entrepreneurship education, professional development and mentoring
  • Business Assistance – specific training and technical assistance required for growth
  • Market Access – specialized programs to help link products to markets
  • Policy – government policy and resources that spur startups and new investments
  • Infrastructures – Physical assets that are essential to business success including (transportation, water, sewer and power systems, and broadband)
  • Culture – celebrating stories that promotes and normalizes entrepreneurial behaviors (e.g. risk-taking, failing forward, persistence, ect.).

Each of these areas have formal and informal actors and dynamics within a local ecosystem, including gaps and lack of connectivity, collaboration and shared purpose. The key is to understand and promote the connections between the actors and resources so that they benefit the entrepreneurs. Think of the entrepreneur as the customer or user. What is the entrepreneur’s ease of entry and navigation within the system? What level of awareness and ability to access resources exists within the ecosystem?

We should always put the entrepreneur at the center of the ecosystem and design around their ever changing needs.

Why should you consider supporting a robust Entrepreneurial Ecosystems?

Let’s examine three key benefits and a challenge:

  1. Jobs. Most job creation comes from new business startups through innovation to meet needs in new ways or commercialization of technologies. Therefore, focussing on creating the right conditions for new entrepreneurs and growth of existing businesses is worth it for job creation.
  2. Economic Growth. According to a recent study, “Ecosystems help regions spawn a larger number of entrepreneurs (diversity), which spurs more competition and innovation (dynamism), which in turn creates new opportunities (deal flow) for new entrepreneurs, as well as their employees, customers, and investors.” It can be a virtuous cycle that benefits various actors and the community at large; especially when the approach includes everyone to accomplish the next benefit.
  3. Rooted wealth. You may be able to retain more wealth if you leverage your own local resources and community assets; plus you get to have a unique mix that is hard to duplicate. What works in San Francisco may not work in Santa Fe New Mexico. An urban community is very different from a rural community, starting with population density and economic concentration and/or diversity (both industry and talent). Rather than comparing and imitating other communities, it’s best to identify and leverage the local assets and actors to grow your own entrepreneurs and attract others to participate.
However, as much as we aspire to be independent, we all live in systems that keep us interconnected and interdependent. Is this a good or bad thing? Depends on who you ask.

What’s challenging is that our human systems have become infected with various pollutants. For example, bias or exclusivity that might benefit only a few can reduce the benefits mentioned before for our entrepreneur ecosystem. That’s why testing your ecosystem’s ease of access and getting feedback from users and those that are not using the resources can provide valuable insights for improvement.

The fact is our natural systems and human systems both seem to perform better when we allow for complexity, diversity and a virtue of togetherness for the common good. So, I challenge you to think about how to contribute towards a togetherness for the common good in your ecosystem.

In the next part of this series, we will look at examples and best practices of entrepreneur ecosystems.

What has been your experience with entrepreneurship ecosystems in your community?

* Photo by Surface on Unsplash

About the Author Paul Wright

Paul Wright is the founder of WVS Courses and Coaching, and is passionate about helping entrepreneurs launch and grow new enterprises. He especially enjoys working with social innovators who create a greater good in the world with their businesses.

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