[MUSIC] >> Hello again and welcome back to Beyond Silicon Valley. I'm Michael Goldberg. This is the final lecture of this course. Over the last eight lectures we examined, in depth, the Cleveland case study. As we discovered, a massive effort has been undertaken in the last ten years to support the growth of entrepreneurship in northeast Ohio. This effort was not accomplished through private capital, as is the norm in Silicon Valley, but rather through government and donor support. We heard from entrepreneurs and thought leaders in Cleveland about the array of programs introduced to provide capital and support to start-up companies. So looking back, how much progress has been made in Cleveland? And what will come in the future? Remember that it was ranked 61 out of 61 regions in the U.S. by Entrepreneur Magazine in 2002 in Friendliness to Entrepreneurs. Have things improved for entrepreneurs? If you were trying to start a company in Cleveland today, would you find an environment to grow your business or would you look elsewhere? It is clear that access to capital for start-up companies in Cleveland has improved significantly. In 2013, 118 companies in Cleveland raised $259 million from venture capitalists, corporate and angel investors, representing an increase of 115% over 2004. The number of companies attracting capital has tripled. Of Northeast Ohio companies attracting equity investment in 2013, slightly over 50% received an Angel Investment. 10 years ago, Angel investing in startup companies was a rare occurrence in Cleveland. Cleveland now has three active seed accelerators that have launched nearly 100 new companies over the past three years. Bruce Katz from the Brookings Institution sees promise in Cleveland's progress. >> You know, I think success can be measured on multiple levels at sort of a base level. You want to know that your investments are growing more jobs, quality jobs, attracting private investment, market investment. And all those measures for Northeast Ohio, given these interventions can be shown. >> So, yes, many would agree that great progress has been made, however, many challenges remain. Investment capital for companies looking to grow past the seed stage is tightening with the expiration of the Angel Tax Credit, and uncertainty about the renewal of the Ohio Capital Fund. Signs of donor fatigue. Keeping political leaders and the public engaged in supporting entrepreneurship programs beyond ten years can be difficult. The region's resources are scarce and needs are many. And the lack of sizable exits in Northeast Ohio calls into question whether or not the region is capable of creating and sustaining successful return on investments in its start ups. We ask the entrepreneurs and thought leaders from Cleveland to reflect on the progress that has been made over the last ten years of intervention, and what needs to happen in order to sustain it. >> So, ten, ten years later, we, we've come a long way, but, and a lot of, you know, strong intervention has happened, in the early stages. But it, we can't stop. We can't, can't lessen up. In fact, I think now is the time you can, you should accelerate it. Because you've got so much, you've built this great platform of fledgling companies, some of them continuing on and actually growing. So, some, some people are going to start to spin out from these companies, they're the ones that are going to be, those are the ones that you are reaping from your investment to build more companies. But if there's no resources or money or focus going towards these new companies, you're just going to, it's going to sort of start to wither away and sure, you'll have a nice little core that will go forward. But you've missed the benefit of the investment that you've put through. >> If you take a look at a ranking in entrepreneurship, it's 61 out of 61. You know you want to move up, and you, then you start putting things in place like intermediaries, seed capital, mentors, mentorship programs, business accelerators, where people can come together and start businesses and have the comradery of being in the same place at the same time. So they learn from each other. So, you put all those things in place. And then at some point you say, all of these things that you've put in place have to continue to be fed. Either with state money or business community money or foundation funds. >> We're about ten years in to this economic transformation program in entrepreneurship and economic development more generally and I think we're justifiably very proud of the progress. But what do we call it? A good start. It took us about five decades to get into the situation we were in. And we believe that it's a multi decade effort to, to fully effectuate the turn around that we're all seeking. >> I think that's sort of the, the big fear for a region like Cleveland, if we decide for whatever reason we're not going to sustain our intense focus in investment of, of resource in growing that technology sector to the point where it truly can be self sustaining. >> If we were right in the beginning, and I think we were, that we were embarked upon a long term process here. A 20 to 30 year process. And if we were successful in the first decade of that, of that period, in getting things started, then almost by definition, that support had to be continued in the second decade and third decade, or you would not reap the benefits of your first decade investment. >> One of the things that we spend a lot of time talking to our funders about and certainly are in conversation, not just in Ohio, but in regions across the country is, this is a decades long process for most communities. If you're in a place that has had huge economic distress, it's going to take longer than it would be in something that's been, you know, more on the average issues and challenges. So for us, you know, we say, this is a marathon, not a sprint. >> This is a long-term play. If Ohio takes its foot off the pedal right now, and it has taken its foot off the pedal a little bit, you're going to see a reversal. And we have seen some, some hiccups. You know, we've got great momentum, but we need to keep on keeping our foot on the accelerator. >> Silicon Valley was not built in ten years, so it is no surprise that the folks involved in supporting entrepreneurship in Cleveland are urging similar patience in allowing the entrepreneurial ecosystem to flourish. Ten years is a short time for growing a sustainable start-up environment, especially considering the fact that a major economic recession occurred a few years after the beginning of all the efforts. The programs put into place in Cleveland to support entrepreneurship have not come cheap. JumpStart, the venture development organization profiled during the course, has received over $75 million in funding from donors and the government since its founding in 2004. As Dorothy Banauch questioned, when will there have been enough intervention and when can the market take over. Some of JumpStart's government and philanthropic funders are urging it and other intermediary organizations to become self sustainable, or eventually cease to exist. Otherwise, some fear that Cleveland will have simply created an array of well-funded intermediary organizations rather than catalyzed a healthy market place. We asked our entrepreneurs and thought leaders in Cleveland to provide advice to other transitioning economies around the world that are looking to support the growth of entrepreneurship. >> Be patient with entrepreneurs. Understand that you likely won't see financial successes right away in a, as, as a community is trying to sort of get started, right? At the same time, failure will happen and you have to accept it. If you're going to measure the success of your start up community by how many companies, sort of, are successes right out of the gate, you're going to be disappointed. Because it's just not going to happen. >> I, I think it's, at its core it's a fairly simple equation, right. It's capital, it's, it's talent. And it's, and it's the idea, and I think that the, the talent and the idea, having universities nearby, or at least research institutions well-funded, I think are drivers of that, I think, capital, whether it's philanthropic or venture, or any other kind of for-profit investment. is, is critical, critical to getting that that equation to work. Finding not only the, the, the, the talent but the best talent, and realizing that the best talent may or may not be in your community today but you might have to play a hand in, in recruiting that talent. To your, to your region so they're there for tomorrow. >> I think growing an entrepreneurial economy is just as dependent, as understanding the economy that's already there. And sometimes we get a little bit too focused on startups as if they are on an island. And they're not, because in order for them to grow, they're going to have to develop customers among the economy that's already in your region. And so the portfolio approach, and keeping start-ups as part of a portfolio as part of the single answer I think is something that, that regions have to understand. >> And don't necessarily try to greenfield something, don't try to become the next Silicon Valley, or the next software company. Look at you, and see what assets you have, and what kind of technology platforms are there that you can invest in and build on because you've got an asset base it's there. >> I think one of the most important things that the country can learn, or the world can learn, from what Northeast Ohio has done is the collaboration that happens. It cannot be about your own organization or building that. It has to be about reaching into the community, multiple organizations, call all hands on deck. You know, to make sure that these things are moving forward. And the more that the leaders and the community and the organizations work together, and, and then figure out what your differentiation is within that common goal, the faster and the better it can happen. >> I was in, in Tunisia last year, and just recently in Egypt, and the entrepreneurs there are just hungry for change there, and they're hungry for an opportunity to do something, as are, you know, some of the government officials who I met with in Tunisia. And they always say, what do we do if we don't have that kind of money? We don't have $2.3 billion to invest in entrepreneurship in Egypt. What do we do? How do we make change with the things we have? And I say, well, that's just it. The, it's the things you have. It's the resources and the assets that you have in your country that you use, that you organize. You organize people into a collaborative activity so that the best do what they do best. >> So, we've seen that you don't have to be in Silicon Valley to grow a company. Cleveland's approach breaks the mold of what is typical there. Long term success is still an open question but Northeast Ohio has certainly garnered job growth, access to capital and formed many new companies. And communities around the world are testing out other new ways to grow entrepreneurship, that fit with their own local resources and expertise. One thing is certain, to launch more start up companies in places with scarce resources, community leaders need to act more like the entrepreneurs they're trying to help. Entrepreneurs take risks. Leverage their network, and show grit and hustle to try an build successful companies. I hope that the Cleveland case study and our weekly interactive discussions outside of these lectures have provided you with an opportunity to reflect on what might work best in your communities. We all would love to have what Silicon Valley has. A robust entrepreneurial ecosystem. Creating high paying jobs and exciting technology based companies. At some point, some years or decades from now, Cleavland, Hanoi, Ankara, Kigali, or Lima may get there too. It has been a pleasure presenting this course. Thank you for sharing your time with me. I hope our paths cross again soon. [MUSIC]
