Meet Larry Lee, business development specialist of technology and commercialization for the Small Business & Technology Development Center at the University of Missouri–Kansas City. Lee and the SBTDC provides small businesses and technology venture firms in the Kansas City region with the analysis, consultation and training support they need to confidently grow and develop.
High-growth, high-impact entrepreneurs are a different breed of entrepreneur. Like a gazelle (one metaphor of choice), they run fast and jump high. These innovative entrepreneurs get to market fast: they vet their ideas quickly, ramp up their business quickly and scale quickly.
And they need resources that can keep up.
Life Cycle of the High-Growth Enterprise
Because of their need for speed, innovation-led enterprises require substantial expertise, capital and talent early in their life cycle. Like every entrepreneur, they need to be able to find the right resource to feed their needs at the right time.
But unlike other entrepreneurs, they often need specialized information and resources. Before they can hit the ground running, these innovation-led enterprises must test the waters.
The Question of Feasibility: From concept definition and testing through prototype development, high-growth entrepreneurs must first determine whether they have an idea or a technology, if they can produce it, and its value proposition.
To Market, To Market, Just How Fat Is That Pig? Before entrepreneurs can secure funding for their idea from angels or venture capitalists, they have to find a market for their product—and prove that there’s enough of a demand and differentiation to make investing in their project worthwhile.
Top Chefs to Stir the Pot: Who leads the team determines how far it will go. It’s the quarterback theory. You can’t get very far down the field if you don’t have the people to move the ball. Investors care about the management team. The lore in venture capital industry is to take an “A” team over a “B” idea, every time.
Grab That Cash and Make a Stash: High-tech, high-growth entrepreneurs often need substantial cash to get their companies off the ground. Many turn to personal savings, credit cards, friends and family and perhaps crowdfunding to get their seed or growth cash. Others may look to angel investors, peer-to-peer investors or venture capitalists who, if the idea is right, can provide those extra zeros for a piece of the company.
High-Growth Firms Create Jobs
Those high demands of high-tech entrepreneurs—for technical analysis, market assessment, talent and capital—don’t go unrewarded.
While lifestyle entrepreneurs may make up the bulk of the entrepreneurial population, innovative entrepreneurs create more than their share of products, services—and jobs.
Consider these statistics from the 2010 report “High-Growth Firms and the Future of the American Economy” from the Kauffman Foundation:
- In any given year, the top-performing 1 percent of firms generates roughly 40 percent of all new jobs.
- “Gazelle” firms (ages three to five) comprise less than 1 percent of all companies yet generate roughly 10 percent of new jobs in any given year.
- The "average" firm in this top 1 percent contributes 88 jobs per year, and most end up with between 20 and 249 employees.
- The average firm in the economy as a whole, on the other hand, adds two or three net new jobs each year.
So what does all this mean?
Innovation matters to our economy, locally and nationally. And innovative entrepreneurs need the kind of support that can help them remove barriers to growth and move to market quickly.