There's a new type of capital that every startup needs to think about raising. Emotional capital.
I worked on my business all by myself for the last two years. It made all the difference to come into a space where other people were in the trenches with me.
-Tina McCord, ZUNI Learning Tree
I hear this sentiment over and over from people engaging the Venture Center for the traditional services that startup incubator or accelerators have provided. Beyond the mentorship, training and traditional networking events, startup founders are looking for community.
Entrepreneurs often work alone or in very small groups, especially at the very early stages of business development, and it's easy to get overwhelmed with the weight of the constant shifting of "to dos" on the task list and the screeching call of urgent tasks that pop up like animals on a whack-a-mole game board.
Entrepreneurism can feel like a very insular and lonely enterprise. Finding a place to connect with others who are as passionate about their business as the entrepreneur is about hers is often a wonderful breath of fresh air for the startup founder.
What Is Emotional Capital?
The Cambridge Business English Dictionary defines emotional capital as the feelings and beliefs that help an organization's employees to form successful relationships with each other, which is good for the organization.
But what about a startup? It may not have employees—especially in the early stages of development. So how does the startup founder create relationships that benefit the organization?
Typically, this has been done through civic organizations such as Junior League, Jaycees, the Chamber of Commerce, etc. There are a plethora of routine networking groups and events which help a business professional connect to the community. But entrepreneurism is different.
There are unique challenges that the startup founder faces that other business professionals don't face. Most notably is raising capital. Typical networking is going to be ineffective for the entrepreneur in facing these obstacles which are unique to entrepreneurism.
The Impact of Entrepreneurial Emotional Capital
Cultivating and raising emotional capital as an entrepreneur is an important and useful endeavor. Among all the other things calling for the attention of the startup founder, developing emotional capital may not be a top priority.
There are three main benefits of increased emotional capital to the startup business:
1. Friendly Competition When entrepreneurs are working on their independent businesses together in the same space, there is a spirit of camaraderie that is fostered. Each is pushed to produce faster and more effectively than each might independently.
In addition, entrepreneurs are able to celebrate the wins together and help mitigate the lows of the setbacks. Entrepreneurism is an emotional roller coaster with 100-foot drops followed by 70-mile-per-hour spins and curves. A strong support system of others who are in the hunt and who understand can make a huge difference in the emotional stability for the entrepreneur.
2. Creative Collaboration The jargon of the industry describes these events as collisions. But collisions are destructive, and perhaps that's the dichotomy that is being expressed.
However, I think that creative collaboration is a more effective description of the observations I've made in our work in helping companies build and scale at the Venture Center. Meetings that happen by luck often lead to collaboration that may never have happened otherwise.
Entrepreneurs are so busy and preoccupied with the endless list of have-to-dos that it's difficult to find time to hunt down potential participants for a collaboration. But if we in the community provide a space and opportunity for those meetings to happen, the collaboration often unfolds organically in a way that we could not have planned had we tried to do so.
3. Increased TractionThe final benefit that often comes from raising entrepreneurial emotional capital in the community is increased traction in the form of sales. Entrepreneurs in a motivated, energized environment conduct more sales meetings and maintain focus in a way that often leads to greater success in revenue generation.
One of our favorite quotes around here comes from Julie Lenzer-Kirk, "Revenue is the best type of capital to raise."
This sentiment is echoed by Tina McCord of Zuni when she indicated that she had worked so hard for years and created traction in ZUNI, but when she enrolled in the Venture Center's pre-accelerator program, she found colleagues with whom she could compete, celebrate and achieve advancements which had alluded her previously.
"They key was being able to come together to work on our business and not just in the business," she said.
The Importance of Support Organizations
Providing a nurturing space for the entrepreneur to flourish in community is where support organizations can play a vital role. Organizations such as the Venture Center and other organizations play an important role in the startup community. Yes, we provide training, mentorship and programming; but just as importantly, we provide a place for creative interactions to happen.
Serendipitous meetings can make a huge difference for an entrepreneur. I have seen it happen over and over again. The exact need or connection that the entrepreneur needs to fill or to make can easily be satisfied by someone who "just happens" to be in the same space at the same time.
The Delta Regional Authority demonstrates the powerful way that government can partner with public and private organizations to create an infrastructure for entrepreneurial support. This past year, with the launch of the Delta Entrepreneurial Network (DEN) for Entrepreneurial Support Organizations, the DRA took a lead in providing a framework for these types of connections to happen across the region.
Bottom Line: Community Support
Ultimately entrepreneurs are creating the majority of innovation and new job creation that drives economic development. Even that which impacts larger more established businesses is largely driven by a response to what is happening in the community through new innovation.
How can we as a community, especially here in Little Rock and central Arkansas respond in support to encourage greater economic development in the creation of real, viable businesses?
1. Create a Space We can provide spaces to foster the types of connections which lead to the benefits I've delineated above.
2. Remove Friction and Obstacles Entrepreneurs innovate. They disrupt. They build.
The rest of us—whether we're in business, academia, R&D or government—can help by clearing a path for the startup founder to do what she does best. We can help remove friction and reduce obstacles to that natural development.
3. Cheer and Support As mentioned above, entrepreneurism can be a lonely trek. We can support and cheer the entrepreneur's successes and engage the startup community in our professional and personal capacities bringing our skills and energy to bear on behalf of the growth and expansion to the welfare of the entire community.
We can increase the development of technical industry here in central Arkansas. We can attract and retain world class experts and talent. We can change the story of Arkansas both here at home and across the nation.
It will take us all, but if we're consistent and persist, soon "they" will begin to pay attention. "What the hell's going on in Arkansas?" They'll ask.
Instead of just being a flyover state, we'll become a "you better take notice" state.