By Tim Schigel, Refinery Ventures
In the startup world we spend enormous time and resources building infrastructure to spot the next big idea, foster successful startups and ensure that the best companies thrive. We’re funding accelerators, setting up incubator spaces and offering founders everything from funding to mentorship to work space.
Just start your company. We’re here to help.
But none of this has really changed the fact that some startups thrive while others never seem to achieve escape velocity.
What’s the difference? In many, if not most, cases, our communities have all the right conditions for success, but we have not identified the right catalysts. Often it comes down to one single person, a founding team, or a dedicated investor.
Here in Ohio, we have a built-in example of the impact that the right catalyst can have on an organization. When LeBron James came back to Cleveland and won an NBA championship with the historically woeful Cleveland Cavaliers, it was heralded as one of the greatest sports moments of all time. Prior to James, Cleveland had all the right conditions for success, but without the catalyst the championship would have likely remained elusive.
It’s time to bring the same kind of disruptive change to the startup economy, recruiting catalysts not only to individual startups but also to ecosystems in areas where they can do the most good.
This is a challenge as well as an opportunity. An opportunity for smart, capable people to step up and get the support they need to work on the ideas they’ve been holding in the wings. An opportunity for universities and investors to work together to find catalysts who will bring their networks, their experience and their enthusiasm to local startup ecosystems. And an opportunity for business communities across the country to benefit from the experience and outlook of some of the best minds that have run the gauntlet in Silicon Valley.
The need is simple: We need more net new founders and co-founders who have experience working in a startup through the hypergrowth stage and know how to do it again.
These are people who understand the pace that’s needed to make it. They know the rules of the game and have the domain expertise to understand market conditions.
They’re ready to be founders. They’re ready to be catalysts.
The truth is the Midwest is better suited to produce and nurture vertically oriented startups than Silicon Valley. We have the legacy manufacturing infrastructure, access to major healthcare systems and domain expertise, and we can better support industries that don’t always fit with the Bay Area model.
But there is a problem.
The rate of creation of high-growth potential startups has been falling since the 1990s. Entrepreneurs are starting more companies than ever, but fewer and fewer of those are turning into the major successes that regions need to anchor their ecosystems. The potential for innovation has never been greater, but there is a disconnect in startups’ ability to scale and monetize in a meaningful way.
Research from Kauffman Foundation has shown that startups that break out early in their life cycles and gain traction quickly are most likely to succeed in the long term. That’s why it’s so important for communities to get behind their high-growth startups, doubling-down on their winners and providing them with the catalysts they need to succeed.
The right connections
Universities are well positioned to help meet this need. Alumni networks are strong, and schools are often better able to recruit catalyst individuals than other regional organizations, selling them on their preexisting connection to the community and the change that they can bring.
Schools need to do a better job of keeping track of their graduates and maintain their connections with them. This information can help build those networks and keep potential founders in the loop.
The truth is not everyone has to be a superstar like LeBron James to become a catalyst for growth. It’s about finding that right person to plug in when the conditions are right.
Tim Schigel is a partner at Refinery Ventures, founder and chairman at ShareThis, proud dad, and part-time guitar slinger. He is also the former fund manager at Cintrifuse, a Cincinnati fund-of-funds focused on the venture space. He can be reached at [email protected].
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