In last month’s column, I referenced six strategies that can be deployed by economic development organizations to grow an economy.
As a refresher, these include (1) increasing the population; (2) increasing short-term visitors or temporary residents; (3) recruiting businesses to the area; (4) securing a large-scale state or federal public investment like a port or a university; (5) getting local residents and businesses to “buy local” instead of from out of the area; and (6) helping local businesses with innovative products sell outside of the community into regional, statewide, national or global markets, thereby bringing new dollars into the community.
Like many other cities and counties across the U.S., discussion among government officials, community leaders, media representatives and businesses about economic development in Nevada County has become an increasingly important topic of conversation. Much of the conversation has been centered on determining which strategy or strategies are best suited to strengthen and grow Nevada County’s economy.
At our ERC Board Strategic planning session earlier this year, we decided that one of our two key implementation strategies would be the sixth one — helping local businesses with innovative products sell outside of the community into regional, statewide, national or global markets. When this occurs, there are multiple economic benefits. Among them, quality job creation!
Many published studies support the ERC’s direction. Below is a snapshot of data points obtained from the National Commission on Entrepreneurship:
• Innovative, entrepreneurial growth companies equal only 5-15 percent of all U.S. businesses but created two-thirds of all net new jobs in the prior two decades;
• Innovative, entrepreneurial growth companies have created 50 percent of innovations and 95 percent of the radical or revolutionary innovations; and,
• Innovative, entrepreneurial growth companies have created entire new industry sectors such as biotech, online retail, social media, wireless messaging, and oh, before I forget, those associated with video broadcast technology!
As I mentioned in last month’s column, history reveals that Nevada County has experienced uncommon economic success across multiple eras and industries dating back over 150 years. One could argue that much of that local economic success was driven by innovation and entrepreneurship.
This month the ERC is excited to announce the launch of its “Fab 5” initiative to support innovative, entrepreneurial companies. Through this initiative, five high potential existing or new Nevada County businesses will receive intensive “organizationwide” support from the ERC executive team, board of directors, members and sponsors and industry experts from throughout the county (and beyond) who will play a role for the company much like the “12th man” did for the Seattle Seahawks last year. By the way, I am not a Seahawks fan, but the analogy does hold true. In totality, the ERC’s Fab 5 initiative will provide up to 1,000 hours of assistance to the selected businesses.
Why is the Fab 5 initiative so important? Growth businesses face a wide variety of obstacles, challenges and opportunities on their paths to success. For a variety of reasons, they don’t always possess the expertise, team depth or bandwidth within their organization to pivot when necessary or to fully capitalize on new opportunities that emerge. Hence, the need for a “12th man.”
We’ll be using a six-term typology to categorize the range of innovate companies we plan to assist through our new Fab 5 initiative. When you read each typology description below, does it make you think of a local company that fits the bill?
Start Up Sensations are early stage companies, almost always under five years of age, and in some cases less than two years, that have innovative products or services that are seeking to scale nationally or globally. Remember, every big company today started as a tiny one some time in the past.
Hidden Gems are important contributors to the economy and in many cases are flying under the radar screen. They are often 5 to 15 years old and generating $1-$10 million in annual revenue.
Mid-Market Marvels are also important contributors to the local economy, many having been in existence for 10-25 years or even longer, and revenue can vary widely from a few million annually to $50 million-$100 million or more.
Emerging Market Leaders have highly differentiated products with the potential to become significant market leaders and local icon companies. In some cases they are backed with venture capital; in others they have grown organically. They can be early stage companies or long-established companies that have “turned the corner” or entered a compelling new market opportunity.
Local Innovation Icons represent a very small subset of the innovation ecosystem and are well respected as major economic contributors to the local economy. In many cases, they are leading employers and the envy of the community.
Global Giants are typically local homegrown companies that achieved a significant amount of success and then were acquired by a major national or global company. Alternatively, they can be companies with headquarters elsewhere but establish a division or subsidiary in the community.
Contributed by Jon Gregory, executive director, Nevada County Economic Resource Council. You can reach him via email at firstname.lastname@example.org