Legislators, Experts Dissect Nebraska’s Entrepreneurial Ecosystem
By Jordan Pascale, Silicon Prairie News
Entrepreneurial experts from the Kauffman Foundation and Pew Charitable Trusts say Nebraska is in pretty good standing when it comes to state policy that fosters entrepreneurship.
But there’s always room for improvement, said Dane Stangler, vice president of research and policy at the Kauffman Foundation.
“Overall, Nebraska is doing well,” Stangler said after the event. He was comparing the state to the two other states where The Council of State Governments has held Entrepreneurship Days. “Nebraska has good assets in the legislature and an engaged community from what we can tell.
“The best thing both parties can do is continue to communicate, have senators come to entrepreneurial events and listen and find out those problems entrepreneurs are hurdling and continue the dialogue.”
Stangler and others who study how state government and entrepreneurs intersect are on a four-state tour to explore state-based solutions to help foster entrepreneurship. CSG has held roundtables in Arizona and Connecticut, and is planning one in Tennessee in May.
More than 30 state senators, legislative staff, policy experts from the region and a few entrepreneurs from Omaha and Lincoln packed a small meeting room in the Nebraska State Capitol for the April 2 roundtable. Sen. Heath Mello led the discussion with help Sens. Beau McCoy, Galen Hadley, John Wightman and Sue Crawford, along with staff from Omaha Mayor Jean Stothert’s office.
Dan Hoffman of Invest Nebraska, a private nonprofit corporation focused on high-growth companies and growing the state’s economy, put it this way: There’s no way to put a plan together that will be a cure-all to develop Nebraska's entrepreneurial ecosystem.
“Slowly over time these organizations,” he said, pointing to a slide with groups including local startups, accelerators, venture capital firms, coworking and incubator spaces and government programs, “are communicating and working together for the benefit of Nebraska.”
Stangler analyzed the state’s tangible and intangible ways to affect the ecosystem.
“Invisible policy” is shaping the face of the entrepreneurial landscape, Stangler said. Things like the effects of state incentives, the opportunity cost of state programs, availability of talent, culture and more are things governments can’t directly control.
The “visible policy,” Stangler said, is something at which Nebraska excels. Things like structuring favorable fees and tax structures, simplifying processes and creating state programs for incentives and tax credits.
Stangler presented a study conducted by the Kaufmann Foundation surveying more than 6,000 small businesses and startups across the nation. Nebraska received a B in overall friendliness for small businesses while getting high marks for health and safety, employment laws, tax code, licensing, environmental and zoning laws, and training and networking programs.
“It’s much better than the other states we’ve been to,” he said, referring to Arizona and Connecticut.
But Hadley said the legislature needs to guard programs already in place, like the Angel Investment Tax Credit, which is set to expire in two years if the legislature doesn’t extend the credits.
“We need to actively go and tell the story of this program and show how it’s working,” he said. “If they go away, it would be almost impossible to bring back with our fiscal situation.”
But Yasuyuki Motoyama, a researcher for Kauffman, said governments often try to assist entrepreneurs with money through public venture capital funds or tax breaks to angel investors and by establishing infrastructure like incubation centers, and often don't produce results.
“The failure of public venture funds is that it’s hard to pick winners,” Motoyama said. “Fifty percent fail within five years and often politics overtake good investment decisions.”
Invest Nebraska’s Hoffman agreed.
“Nebraskans are fiscally conservative and risk averse, which is usually a good thing, but not when we’re talking (about funding) entrepreneurial endeavors,” he said.
Instead, governments should stop focusing on the old model of top-down flow of government establishing venture capital funds and incubators for entrepreneurs. The new model, he said, should have entrepreneurs connecting in the middle of it all with government, incubators and venture funds surrounding and helping them.
Entrepreneurs, Motoyama said, are not born, but must get skills through learning and experiencing. He said events like startup weekends, where entrepreneurs and those hoping to break into the scene intermingle, are a great place for inspiration and connections to happen. 1 Million Cups, a networking and sharing event in more than 30 cities, is another great example, he said.
“These work because it creates local, peer-to-peer connections and fosters learning and teaching from experienced entrepreneurs to newcomers.”
Mentorship, Motoyama, said is a key indicator of success. More than 75 percent of companies in Inc. Magazine's 5,000 fastest-growing companies list have had mentors, he said.
“Many are willing to give back and connect,” Motoyama said. “You need many stages of businesses in one ecosystem” to continue the cycle.
Government, he said, can help the process by providing shared space for entrepreneurs to work and interact while injecting catalytic events and then track data about how state and local programs are working.
Brian Ardinger, director of Lincoln’s NMotion accelerator, asked how entrepreneurs can get a seat at the table before policies are already crafted and in place.
“We need more outspoken people like yourself,” Motoyama said. “Grassroots activities by and for entrepreneurs are so important and I encourage state legislators to visit those events, hear their stories and help address the problems they're facing.”
This article first appeared April 3 in the Silicon Prairie News and is reprinted with permission. Jordan Pascale is the Nebraska editor for the publication.