How Do We Empower Our Innovators?

Collaboration between feeders and leaders is essential to the Capital Region’s innovation economy

Back Commentary Dec 7, 2015 By Meg Arnold

I’ve been thinking a lot about a 3-year-old book in recent days- — even more so in the aftermath of the recent study mission to Chicago. The book is Brad Feld’s Startup Communities — a how-to manual for building vibrant, connected communities of innovative companies and entrepreneurs.

Feld’s biggest point is that entrepreneurs themselves must lead a successful entrepreneurial community. He calls them the leaders, and they offer commitment, hands-on expertise and authentic community-building unique unto themselves.

Feld notes that these entrepreneurs need to commit to a region for the long-term — as long as a 20-year term — that results in a duty to elevate their businesses and the community. Leaders are inclusive and refrain from playing a zero-sum game with each other. They’re comfortable experimenting and failing fast. They mentor.

Others in the ecosystem (Feld calls them feeders) also bring invaluable contributions. They offer support, resources and ongoing engagement, but not leadership. Feeders include funders and investors, universities, nonprofits and local government. Feeder activities — like university business competitions and technology transfer operations, university- or industry-led incubators, regional technology conferences, accelerators and mentoring programs — are essential to a balanced innovation economy.

Joined together, and with each understanding the contributions they can best make, both leaders and feeders drive activities that bind together a tightly-knit innovation community — informing it, offering resources, highlighting successes and sharing lessons learned.

The great news is that the Capital Region is firing on all these cylinders far more strongly than it was three years ago when Feld published his book.

We’ve got coworking spaces such as Urban Hive, Hacker Lab, Capsity and Pollinate Davis that offer mentorship and foster chance connections between innovators. We’ve got a proliferation of grassroots activities: Startup Grind (launched by entrepreneur Rich Foreman); hackathons like Startup Weekends, Angel Hack and Cereal Hack (hosted variously by our coworking spaces); and the Sacramento Startup Digest (launched here by Laura Good), to name just a few.

And we’ve got serial entrepreneurs who have recommitted themselves to the region’s entrepreneurial ecosystem. Both Oleg Kaganovich (Wyndow, DFJ Frontier, SARTA) and Mark Otero (KlickNation/Electronic Arts) are now working out of the Urban Hive, very much within reach of newbie entrepreneurs.

UC Davis has made renewed commitments to foster entrepreneurship among students and faculty, from the Life Science Innovation Center and creative faculty grants for research commercialization, to the UC Davis Big Bang! Business Plan Competition. Velocity Venture Capital hosts its recurring entrepreneurial bootcamp and Hacker Lab introduced a new one, Startup Hustle, just this fall. The City of Sacramento and the four health systems are supporting MedZone, which will create a physical hub for medtech innovation, while VSP’s The Shop in midtown is making a big play in internal innovation.

Since SARTA announced in September that it was winding down operations, we’ve discussed new sources of capital, added and expanded coworking and startup spaces, and launched multiple accelerator programs. As an active and substantial feeder, the Sacramento Employment Training Agency will leverage $1 million in funding from the state specifically to support the innovation ecosystem.

Stepping back from this tight focus on our own region’s ecosystem, the Sacramento Metro Chamber’s study mission trip to Chicago in October provided perspective on how one city is investing in its innovation economy. In Chicago, we could see a fundamental understanding of the leader and feeder roles — most persuasively in the creation of 1871, a bustling coworking space in the enormous Merchandise Mart building.

The 1871 creation story included a mogul with a vision and a desire to establish a personal legacy, a group of founders who truly “walked the talk,” a local and state government willing to take a risk and invest, and an economic development nonprofit that recognized what was needed as well as the best people to make it happen. That story goes something like this:

Chicago created a broadly-adopted regional economic development strategy with 10 separate strategies, one of which concerned growth in the innovation economy. (Think of our own Next Economy plan, which has five strategies, one of which is to “foster a strong innovation economy.”) A re-invigorated nonprofit, World Business Chicago, recognized the importance of work around innovation, and also recognized that there were others in the community with exactly the attributes needed to make real progress.

J.B. Pritzker (the mogul), a board member for World Business Chicago, was motivated by his desire to see something meaningful happen in the innovation economy in and around Chicago. He also knew key leaders with a long-time, personal commitment to entrepreneurship in the region who knew its resources, successes and failures, and who could help lead on a larger scale. So into this mix came the leaders who had worked together for years to effectively connect Chicago’s entrepreneurs to each other and to needed resources. They trusted each other, and they understood the current local environment. They were already playing a non-zero-sum game.

One of the key missing ingredients to achieve scale and increase momentum was more broad-based support. But the office of Mayor Rahm Emanuel, as well as the state government, had created funding opportunities and other programs to strengthen private-sector fundraising and leadership. Finally, the time was right for the feeders to recognize the need and contribute — and so 1871 was born.

After using a blend of public and private capital for its start-up costs, 1871 now runs exclusively on private funding. From its current size of about 100,000 square feet, 1871 is adding another 45,000 square feet. In addition to shared space for individual entrepreneurs and small teams, it’s also creating a significant amount of private space for larger companies that want to be a part of the 1871 bustle and vibe.

Success is easy to see in hindsight. When the doors opened on that first day, however, the founders weren’t certain who (if anyone) would enter – but plenty of people did and continue to do so. Four accelerator programs live at 1871, including Brad Feld’s own TechStars. The region’s universities have offices, hold office hours, run programs and bring students to work at 1871. The new Chicago Ventures venture fund is housed at 1871.

That’s Chicago’s story — both what it has accomplished and how it was done. Here, we’re writing our own story, and our plot lines can lead us to a similar conclusion. We need the expanded involvement and long-term commitment of our leaders and feeders. But we need them to work together — in an inclusive, non-zero-sum game — to build a community and network that’s vastly more robust than it is now. Success built this way will be what the Capital Region deserves: self-made, lasting and authentic.