Note: This post was originally published on the StartupCommunity.org blog.
Building a startup community is hard. It’s usually a volunteer effort led by busy entrepreneurs who are passionate about making their city a place where their industry can thrive.
We discovered a way to grow our local network of founders, advisors, and investors by 500% in just a few months.
Here’s how we did it.
First, we identified industry ‘clusters’ that already existed within our community.
These might be obvious if your city is known for selling a particular type of product or service, but there are likely to be many small, innovative groups who are informally organized and are part of your ecosystem.
Ed Morrison, a regional economic development advisor, defines clusters as a group of members that “share goals of creating new value, are deeply committed to helping each other on specific projects, and share a common objective of regional transformation.”
In our case, our local economic development organization knew of four major clusters that were loosely organized:
- Tech (software & hardware)
- Outdoor Products
If you aren’t sure what clusters might exist, try searching meetup.com for topics such as ‘tech’, ‘science’, or ‘entrepreneur’. Searching for ‘tech’ in Portland identifies nearly 40 groups, including NewTechPDX which has nearly 3,000 members.
Find a meetup with a large number of members, then click through to look at the section labeled ‘People in this Meetup are also in:
Reach out to the organizers of the meetups you see there. You’ll find they are often entrepreneurs, and many of the attendees are local professionals interested in supporting the community.
Why organize around industry clusters?
Clusters are made up of professionals with experience in their industry, either as an investor, advisor, entrepreneur, or supporter. We’ve found every professional to be a potential advisor for others in the community.
Each cluster should be viewed as a small startup community. They have similar needs and can benefit from working together. Most of them are trying to provide these types of services for their cluster:
- Networking events
- Coworking space
- Startup incubation / accelerators
- Education opportunities for founders
- Mentorship from advisors in their industry
- Investors with knowledge of their industry
- News coverage / publicity
- Jobs / access to talent
- Membership programs & sponsors (revenue)
Collectively, these groups bring a focal point to the entrepreneurial activity within a community, and by bringing them together we’ve been able to:
- Meet monthly to discuss what issues are a priority for everyone
- Jointly pursue grants and other funding opportunities
- Cross-promote activities and share resources
- Have a single voice when interacting with local government
This sketch shows the basic startup ecosystem that evolves around clusters:
Once you’ve identified the clusters in your community:
Find one or two representatives from each cluster and bring them together with a monthly meeting. Start by identifying the immediate goals of each cluster and where
Once we got rolling, we discovered more industries that were eager to get involved. Our list of clusters expanded to include 3 more:
- Food & Beverage
Note that the investment community prefers high-growth businesses that are likely to offer a 3 to 7 year return on their investment. This means the ecosystem is slightly skewed towards scalable, exponential growth startups rather than what many call ‘lifestyle’ businesses.
You can tell the difference by looking at the growth path for each type:
As Kauffman points out, the majority of job growth in America comes from new and young companies, so linear companies will contribute to the economic growth of your city and should not be excluded, however they may not benefit from the investor network in your community.
The majority of job growth in America comes from new and young companies. @KauffmanFDN
How do you know which companies have high-growth potential?
We’ve found the best way to determine if a company has high-growth potential is by identifying whether they sell a product or a service.
A product company has distribution potential (beer, software). A service company will usually focus on selling locally (realtors, accountants). Software as a Service (SaaS) companies create products that are distributed via the web and sold as a monthly subscription, often called a ‘service’.
How we measured the growth of our startup community:
Rather than using Kauffman’s description of entrepreneurial density, which is:
Entrepreneurial density = (# treps + # startup or high growth co. employees) / adult population
We decided to begin with a simple metric: # of startups
We asked people in our community how many startups they could name. Generally people could list five to ten companies.
Our city ranked #16 in the nation for entrepreneurial density by the Kauffman Foundation, so we knew there had to be more startups in our community:
The clusters made it possible to identify even more startups than we originally anticipated were here. In fact, BendTECH’s #50startups project has uncovered at least 50 (a 5x times increase).
You will be amazed at how many startups you will find once you start digging.
The key is to organize them in a way to support each other.
Use industry clusters to coordinate the startups, advisors, and investors in your community.
Clusters are natural networks for collaboration and provide a great starting point to build a thriving ecosystem. They led us to successfully raising $50k from our local city and a matching grant, which I’ll cover in a future post.
Have questions about your community? Leave a comment and I’ll try to help.
He loves to write code, is passionate about design, and runs StartupCommunity.org as a side hobby. He sold his previous company that he started in Bend, 'The Social Business' to Innovation Garden in New York.
You can reach James by email at [email protected].
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