There has been a great deal of discussion in Iowa over the recent months and years about how to encourage entrepreneurial development. The formation of new businesses has lagged other states for decades and now that the recession has curtailed new plant locations all eyes are on starting new businesses. Certainly we need to do something after all unbeknownst to most, we were the slowest growing state in the 20th century and the first decade of the 21st century was not much different.
Most of the proposals have as there centerpiece an angel or venture capital fund. This is not new either it goes way back to the 1980’s with the creation of the “Iowa Fund” and the “Iowa Product Development Corporation.” These were followed by the Business Development Finance Corporation and the Iowa Capital Investment Corporation. All of these have been noble experiments but in some cases they were not given enough time to work and in other instances they were ill conceived. None of them were enough.
When I say they were not enough, I don’t mean enough money although that could be argued. Providing investment capital does little good if there is little or no entrepreneurial culture, support services or training. These initiatives really need to come before at least simultaneous to the investment capital. They will cost as much or more that the funds directed toward investment capital and they must be given years, perhaps decades to work. If one reads documents prepared by those involved in the North Carolina “Research Triangle” initiative one finds that significant results were not seen for ten to twenty years following its launch.
An entrepreneurial development program that will bring success needs to identify potential service providers and train or re-train them. It needs to educate local and regional leadership and get there buy-in. It needs a commitment from these leaders to work regionally instead of parochially. Those same leaders need to re-direct most of the funds committed to traditional economic development towards developing entrepreneurial businesses. Finally, we need to change the cultural mindset of Iowans. This is the toughest because Iowans have engrained in them the notion that it is better not to take on risky or unfamiliar endeavors than to try and fail.
This initiative is doomed to failure if we do not do something that has opportunities for all regions of the state to succeed at some level. This means an initiative that may be statewide but where program design for a particular region is largely developed locally. The programs should also be, at least in part funded locally, as well.
I have seen this type of program work in other states not unlike Iowa. Recently I have had the opportunity to work with a group of people in Caribbean and South American Nations on an entrepreneurship program for a twenty nation area. I have also had the opportunity to provide input to those attempting to rebuild the economies of Iraq and Afghanistan. In all of these cases I have recommended a comprehensive program that begins with education, training and the building of support services.
I believe that state government has some role to play in all of this. And just like local governments needs to re-allocate funds away from traditional economic development programs and toward entrepreneurship. I also firmly believe that if we are to make significant progress in changing Iowa’s economy the lead and most of the funds must come from philanthropy. This is the only way to keep politics out of it, to keep it flexible and to make quick decisions when necessary. It is also the only way to get a commitment for sustainable. The problem with some of the funding programs mentioned earlier was that they were subject to the whims of people running for office every two or four years. A change in legislature or governors office could doom a program or take it a different direction.
I think this is far more important than many initiatives funded through foundations and other philanthropic organizations. It will take millions of dollars over a number of years but will return far more over the long term. Let me know if you agree or if you are someone with financial means whether you might consider financing a piece of it.
Ode’ to Cecil!
4 years ago
