Startups: The Serengeti Plain or a fun summer camp?

It is interesting to see how government and economic development groups have evolved their view on start-up companies over the last 2-3 decades.   Government has always given money to support people who want to start their own business.  I’ll bet their was even more money around 20 years ago to give to folks wanting to become an entrepreneur.  The Transitional Jobs Fund (then Canada Jobs Fund) was giving out money to just about anyone that was unemployed.   As I pointed out then, it didn’t do much to move the needle – the number of self-employed people didn’t go up much and the number of incorporated businesses with employees flat-lined and has been declining.   My point was that it takes more than $10,000 to make an entrepreneur and it takes more than a little government coaxing to make a gritty, bet the farm kind of entrepreneur that wants to build something here and take it to the world.

Nowadays of course start-ups are the hippest thing.  Governments throw millions of dollars at incubators, accelerators, VC funds, Angel funds, start-up camps, university start-up programs – giddy up all with the goal of making it as easy as possible to start, and presumably, grow a business.

I don’t particularly have a problem with this although I hope that governments/economic development groups are not coddling or keeping alive bad business ideas in the name of economic development.  I’ve said it many times before, if governments start treating economic development like social development we are in trouble.  In social development we are specifically trying to raise people out of bad circumstances – bad business plans for their personal lives if you will and we hope to help them succeed even if there are ‘subsidies’ involved.  In strong and dynamic economies bad business plans die and die quickly.

Many entrepreneurs will try 3-4 things before they get it right.  My old boss at a startup I worked for cashed out his RRSPs and then had to beg friends and family just to make the payroll a few times.  He was a true believer – a gritty entrepreneur willing to put up his own risk capital and nearly bought the farm on more than one occasion.  Now he has 30 staff and by all accounts is doing quite well.

We want more entrepreneurs – particularly those with scale up ideas and ambition.  But I am not sure we will get there by setting up shiny new incubation centres or offering summer camps for entrepreneurs.  I think that exposing young people to entrepreneurship as a career path is a good idea but I think we need to give more thought to the ‘who’ and the ‘what’.

Governments and economic development agencies tend to be pretty good at answering the door.  If someone comes to them and says they want to start a business or expand in the province or move here – there are lots of folks to help them out.  But go out and find/recruit the best ambitious entrepreneurs from around the world?  Not so much.  Proactively going out and finding immigrants and enticing them to move here to work in key industries?  Not so much.

Because that is much, much harder.  It’s easy to sit at home and offer financial assistance for businesses that walk through your door.  The other requires much more time and effort and risk.  But in the competitive world we face these days, we must get out of the comfort zone.

In fact, just like entrepreneurs we need to see the economic development landscape more like the Serengeti Plain and less like a bouncy ball pit.

 

 

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One Response to Startups: The Serengeti Plain or a fun summer camp?

  1. Ed McGinley says:

    Great candor/fact in your assessment David. Appreciate it. It is a complicated “thing” to change the economic trajectory of a region. There are many corners in the battle we are waging. In some corners sit the willing, in others sit the complacent, in others sit the gritty, in others sit the entitled, in others the enablers – etc. However – in the middle of it all sits our future. As you so appropriately state, “its the economy – stupid”. I think we have a lot of the “right things” in place and we are thinking about it all in the “right way”. Are we doing everything “right”? Likely not – but we are trying, discussing and learning. I am with you 100% when we talk about hunting outside our region for the gritty and the willing. We are doing some of that now. I think of them as the catalytic mercenary. We have a lot of what they need and they have a piece we can’t find at home. Pull them together and you have potential for great things. I am also 100% behind the notion that we need a notion of Serengeti in our assessment of what needs to be supported and what needs to die quickly. As business people will say “its not personal, it’s just business”. However, there is nothing wrong with hanging in there a little longer with a local idea that still shows promise. We are relatively new to this game in Atlantic Canada and just like in athletic development camps or education – sometimes the stars take a little longer to develop. The magic lays in being able to spot them and work with them and knowing when to stop. When we cross the line and support them “just” so they can stay alive, then we are all doing ourselves a disservice.
    This is complicated – I said that already didn’t I?
    Love the articles David. No matter what corner of this battle you sit in – this type of discussion is what we need. I am confident it WILL lead to the right ACTION.

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