What Do Top Entrepreneurial Cities Have That Little Rock Doesn't?
Starting a business can be risky. We all know and have heard the statistics about the failure rate of new businesses. Like healthy relationships, there are certain elements found in healthy startups that can be indicators of success.
In the past, predicting the success of early businesses has been a gamble--and to a certain extent it still is. However, at the Venture Center, we believe that by adopting a systematic approach, the success ratio of early startup ventures can be enhanced.
In Arkansas, when you take a look at new startups--particularly in the technology field--you find that the timeframe for a company to move from idea stage to sustained profitability (with the potential goal of $5-10 million dollars recurring annual revenue) has been three to five years. And if we're honest, many businesses never reach that benchmark.
According to the Kauffman Foundation, companies less than five years old are responsible for 95% of net new jobs created. The problem is that there are few systematic approaches for ensuring the success of these fledgling businesses.
There Is a Need for a Systematic Approach
We believe that there is a structured approach whereby entrepreneurial businesses can move through the startup process in a way that de-risks market, product and team.
This process is vital because we as a community have to identify a way to consistently produce and foster healthy startups and speed up the time it takes them to reach viability.
Things have changed dramatically in the business landscape over the last 50 years. Every business is a technology business, and for an entrepreneur to pretend otherwise is foolhardy at best and devastating at worst.
Technology changes every day, and so a company striving for viability can no longer afford to plod along for three to five years until it reaches sustainability. By the time it does, it finds that it is rigid and unable to adapt to the changes in the market (that have probably already passed it by).
Ideation Is Not Systematic
There is a paradox between the inherent nature of creative ideation and the systematic construction of a viable business.
Ideation is spontaneous and scattered. But we have found the best ideation happens within a structured framework. By the "best" ideation, we mean productive, results-based ideation. That is not to say that other types of creative ideation don't happen or are unimportant to the community. To the contrary. An abundance of ideation of all types is vital.
An environment of rapid and rampant ideation allows the very best ideas, systems and processes to rise to the top. As these "best of the best" percolate, they begin to build momentum as they attract creative, talented people around them. This is a natural and organic outcome of a chaotic but healthy ideation.
Ideation, by its definition is free, unrestrained and spontaneous; yet a systematic startup process, by its very nature, is structured, organized and deliberate--qualities which can kill creativity in the ideation stage.
But we have already said that in order to create a "pipeline" of ideas that turn into viable businesses, we need to have structure. How can these two seeming opposites coexist in a meaningful way?
How Do We Navigate the Tension?
Top entrepreneurial cities employ a systematic approach in which a plethora of creative events foster rampant ideation. But they don't stop there. They also have a clear process by which these top ideas move beyond that stage into a time of cultivation in which they transition from a nascent idea to a potential commercial endeavor.
In short, the cities with the most vibrant startup communities have found a way to create a pipeline of great ideas that are funneled into a structured framework by which they can be cultivated and grow without crushing the creative process which gave birth to them.
This tension between ideation and structured growth is essential to startup acceleration. At the Venture Center, we continue to build upon a proven process to create viable, growing businesses and high-paying, knowledge-based jobs.
In the past year, we have seen this approach yield promising results as our member companies have created real jobs that are making an immediate impact in the City of Little Rock. The exciting thing is that we're just getting started.
Won't you join us?
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