As part of a larger push to boost the state’s entrepreneurial climate, the Indiana Economic Development Corp. has hired San Francisco-based Startup Genome to study the state’s startup economy.
The IEDC signed a $150,000 contract with Startup Genome, a research and policy organization that formed in 2011 to help government entities and public/private agencies attract entrepreneurial activity.
In the first phase of the project, Startup Genome will study Indiana’s startup ecosystem to determine its areas of strength and weakness, and to identify areas where the state might see the most success in accelerating innovation and startup technology.
“We want that baseline snapshot of where we are right now,” said Julie Heath, the IEDC’s vice president of entrepreneurial ecosystems. “Their assessment will show us our strengths, our areas of opportunity and a sense of how we compare to other ecosystems around the globe.”
The IEDC has put a larger focus on entrepreneurship as a driver of economic growth under its new leader, Indiana Secretary of Commerce Brad Chambers, who stepped into the role this summer.
“Having a sense of where we are so we can map out where we want to be, and to have a baseline to measure our efforts against, seems a prudent approach,” Heath said.
To produce the baseline report, Startup Genome will survey business founders from around Indiana, with the goal of receiving 100 responses from central Indiana and 50 surveys each from both the northern and southern parts of the state. The report will also use outside data sources to determine how Indiana measures up on metrics such as patent production, the availability of capital and university activity.
Once the IEDC sees the results of that report, Heath said, it will decide whether to move forward with Startup Genome on future phases in which the consultant would help the state craft an action plan based on the report’s findings. Heath said she expects the report will be available early next year.
Startup Genome’s proposal to the IEDC indicates the additional work, if approved, would come in three phases that would add a total of $230,000 to the initial $150,000 contract, for a total of $480,000. The proposal also includes a fifth phase of work that would involve executing the plan and measuring results, but no dollar figure is attached to that phase.
To date, Startup Genome has advised more than 100 clients around the world, including U.S. clients that range from the Mississippi Development Authority to the Miami-based John S. and James L. Knight Foundation to New York City-based Tech:NYC. International clients hail from England, Australia, Sri Lanka, Israel and Canada, among other places.
Startup Genome’s founder and CEO, J.F. Gauthier, said entrepreneurial activity is an important part of the economy because small businesses are a reliable creator of new jobs.
According to the U.S. Bureau of Labor Statistics, companies that are younger than five years old consistently add new jobs to the U.S. economy even as more established firms shed them. During the Great Recession in 2009, for instance, the BLS data shows that companies younger than five years old actually added jobs, even as companies that were more than 10 years old shed about 5.5 million jobs.
Tech startups are especially valuable, Gauthier said, because it’s relatively easy for a tech company to scale up quickly, adding a large number of new jobs in a shorter time than would typically be possible in other industries.
“A lot of [tech startups] fail, but even if just 5% of them succeed in a big way, you create a lot of new jobs,” Gauthier said.