Part 2: Developing an Entrepreneurial Ecosystem in Nebraska
Bob Kerry Pedestrian Bridge, Omaha, NE
As the pandemic accelerates movement from coastal metropolitan areas to other areas of the country, many Americans are seeking new locations to grow their lives and ventures. Areas across Utah, South Carolina and other states with mid-tier sized cities have exploded in popularity – these locations offer enhanced quality-of-life, affordability, and an established framework for encouraging business investment and growth. Distributed economic activity will be critical for economic recovery across the country, and states will need to create a climate which attracts and retains competent individuals, and provides the necessary parameters to encourage entrepreneurship and innovation. Based on interviews with leaders adjacent to entrepreneurship and innovation in Nebraska, Nebraska uses an array of tools to support and attract entrepreneurs and businesses to create the entrepreneurial vibrancy evident in the state today.
In Part 1 of this two-part deep-dive into Nebraskan entrepreneurship, I discussed the multiple communities established by entrepreneurs to support one another in various ventures. While entrepreneurs benefit from these communities, many start-ups require a number of foundational pieces to ensure their success, including: talent, mentorship, and physical infrastructure. Multiple organizations across Nebraska pair these offerings to assist companies, be them home-grown start-ups or relocated businesses. The Nebraska Innovation Campus (NIC) is a public-private research campus linked to the University of Nebraska-Lincoln which provides physical office space, access to university research and faculty, and the university’s student body as an employable base for companies moving to Nebraska. The NIC also hosts accelerators and incubators on its campus, including NMotion (associated with gener8tor, a national start-up accelerator), the Combine (dedicated to Food & AgTech companies, funded by Invest Nebraska), and an upcoming post-accelerator program for food industry / food technology start-ups. Drilling into the programs hosted by the NIC:
NMotion: Operated by gener8tor, NMotion offers 2 major programs for entrepreneurs, including gBeta (a free, 7-week accelerator for 5-early stage companies), and the Accelerator Studio (a 16-week accelerator program offering a $100K investment for 20% equity to scale companies). Founders are offered access to dedicated guidance from the NMotion staff, hundreds of mentors and over 80 investors; current cohort members range from fintech, to medical prosthetics, to fashion.
The Combine: Operated by Invest Nebraska, the Combine specializes in providing high-growth AgTech start-ups with commercialization support through mentorship and a capital readiness program, networking events, and a network of partnering producers across the state. The program is offered in NIC, and also includes a digital curriculum to allow entrepreneurs across the state to take advantage of the program’s offerings.
While these offerings also provide businesses with the necessary tools for success, leaders across the state are well aware investment dollars are critical for a start-up at the outset to enable their growth. NMotion’s Accelerator Studio program is one example in which private investment helps scale start-ups in their program. Omaha’s Chamber of Commerce operates a “First Look” pitch series for start-ups, in which local private and institutional investors are afforded early opportunities to invest seed funding in Omaha-grown businesses. Both scenarios demonstrate private organizations spurring entrepreneurial activity across the state – Nebraska also has an incredible public mechanism to seed home-grown start-ups through Invest Nebraska. Invest Nebraska is a venture capital fund which receives funding from the state Economic Development agency, and invests in Nebraskan start-ups while matching investments 1:1 from private investors. The fund applies various diligence criteria to ensure sound investments across a range of industries, and to date has invested in 54 start-ups and matched $90M+ in private investment dollars. Invest Nebraska demonstrates an innovative model to braid public and private funding towards seed funding for state-grown start-ups, and may be a replicable model for other states interested in spurring business growth in their states.
The above initiatives across Nebraska demonstrate a multi-decade effort by public, private and philanthropic leaders to establish the state as an economic engine in the Midwest. Cities such as Omaha/Lincoln, Salt Lake City, Miami, Austin are increasingly attracting talent and companies due to concerted efforts by states to encourage business-friendly climates. Though major metropolitan areas will continue to benefit from the agglomeration of talent and businesses, interviewees indicated any locale or area interested in becoming a hub for entrepreneurship or business activity would need the following:
Highly dedicated, young, local champions capable of establishing and seeing-through a 20+ year vision for the community: Building an entrepreneurial ecosystem takes time! The “hot-cities” in the news today were not established overnight, and started with a few individuals collaborating to develop the entrepreneurial infrastructure present today. These young champions need to envision a 20-year roadmap for their community which includes investment sources, convening and networking opportunities, talent attraction, and a coordination strategy between public and private sector leaders.
Balanced investment in lifestyle and high-growth start-ups (the former as a critical employer in rural or small towns, the latter as an engine of economic and labor activity across the state): Each new job generated in a community is important! Small towns may dramatically benefit from companies that employ 5-10 employees, and need funding to ensure these businesses may succeed. Conversely, states should also have a roster of high-growth start-ups which attract venture investors, have the opportunity to scale and employ hundreds or thousands of employees, and can attract additional businesses/start-ups to these communities given the success of the initial high-growth start-ups.
Physical and digital infrastructure: Co-working spaces, while potentially challenging as a profitable model in rural or small towns, can provide vital spaces for community members to scale businesses. Turbine Flats, a co-working space in Lincoln, NE was built in the early-2000s, with the owner betting on the city of Lincoln to eventually become the start-up community it is today. The public sector can also invest in broadband access and improved transportation infrastructure in nonmetro communities to provide additional support to businesses in these areas.
A coordinated strategy for business attraction and retention: The NIC coordinates with the Lincoln Chamber of Commerce, the state Economic Development agency, and Invest Nebraska to ensure various parties are aligned on outreach, business proposals, and to cross-pollinate learnings. Leaders across organizations recognize the ultimate goal is to attract businesses to the state – regardless of channel and who earns the “credit” for bringing the business.
A financially-viable and reliable customer base: While obvious, businesses will grow if customers are willing to buy their products! As businesses scale online, start-ups will need to be thoughtful about extending their customer reach outside the physical boundaries of their community.
As The Next Tide continues to profile strategies for encouraging economic growth in communities across the country, I hope readers internalize two key takeaways: (1) there is enormous opportunity outside the “traditional metropolitan centers” in the Northeast and West, and (2) though creating economic opportunity is challenging, it begins with a handful of talented and perseverant people (be them founders, investors or public sector leaders) dedicating their efforts towards creating an environment for their community and businesses to succeed. The post-pandemic recovery period presents a perfect opportunity for people to rethink how economic opportunity is concentrated in America, and how each person can take an active role at building opportunity in their part of the country. Perhaps this involves sourcing investors from non-traditional cities, building accelerator studios for in-state start-ups, advocating for a public venture fund, creating a start-up or becoming a local convener for entrepreneurs. People have the power to change the direction of a local community, assuming they are willing to assume the burden of this task!
Future blog posts will aim to evaluate additional necessary pillars which may drive innovation in different areas of the country, and also determine industry-specific requirements for innovation.
Have you encountered a community which has the potential to become an entrepreneurial hub? In what ways could you support an entrepreneurial community near you? Please comment below with any reactions, ideas, or recommendations for The Next Tide to improve in the future. Thanks for reading!
Blogs will be posted on a biweekly schedule on Mondays. The next blog will be posted on Monday, 5/24/2021.
