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The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.
By Yash Acharya
September 23, 2016
A tech entrepreneur has a brilliant idea. He is looking for seed money, mentors, advisors, partners and capitalist minded individuals to help him navigate various aspects of starting, expanding and building, and sustaining a company.
If I were this entrepreneur, most individuals would point me to “Silicon Valley.” It is the land of dreams for tech entrepreneurs as it offers several private incubators, venture capitalist organizations, mentors and more to support entrepreneurs with their new businesses.
Government professionals like myself would also recommended exploring government departments for some subsidies, such as the Economic Development and the Department of Revenue.
The United States has been called a land of dreams, where we can achieve our dreams and make them reality. We live in a capitalist country with great entrepreneurs and businessmen supporting and growing small businesses through various forums. In the above scenario, an entrepreneur would almost always prefer migrating or leveraging resources from Silicon Valley. But in this case, why doesn’t the entrepreneur have government support?
To explain this, I’ve categorized the support that an entrepreneur receives into two categories:
Active Support – Silicon Valley is what I call “active support” or more so “proactive support.” It’s a form of continuous and cutting edge support that ensures the entrepreneur has the right forum to choose his resources (organizations, advisors, mentors, consultants, etc.), to realize his idea and to fight the fierce competition. It’s a place full of encouraging resources that constantly strive to make our world a better, cleaner and safer place while supporting and encouraging budding entrepreneurs to achieve their dreams.
Passive Support – State and local government business development programs are what I call “passive support.” This is the type of support entrepreneurs seek when they need resource-based assistance such as tax rebates or leases in special economic zones (SEZ). This support involves entrepreneurs completing forms, waiting a set time period, scheduling meetings with government officials and getting feedback on their application. This type of support assists established companies but not budding entrepreneurs looking to solve daily business challenges and needing prompt solutions. There are some exceptions to these programs and some governments have expanded their services to adapt to the modern entrepreneurial and technological needs.
In our constantly changing world, especially around technology, shouldn’t state and local governments play a more “active support” role? Can we get governments to form a government valley (“GovernValley”) to expand the existing services and leverage cutting edge ideas to become venture capitalists too (“VentureGovernment”)?
Governments will have to evolve their way of expanding services and support by providing active support based resources. State governments could leverage Silicon Valley concepts and expand on their existing services to provide more support role for entrepreneurs and businesses. Some of the below concepts are already gaining momentum in government organizations. The advantage would be to expand and configure the economic programs to mirror some of the Silicon Valley concepts.
- Government Incubators – Leverage state departments of education and state universities to start entrepreneurial government incubator programs. Entrepreneurs can apply and cultivate their ideas using university resources and obtain mentoring from industry based visiting and in-house professors, lecturers, etc.
- Business Domain Sponsorship – In the U.S., each state has a group of industries that are primarily situated because of economic, climatic and location based considerations. Each state’s economic and business development departments should encourage entrepreneurs in those domains. This could be achieved through: hosting business domain based competitions, encouraging and attracting entrepreneurs to migrate to the state, streamlining processes to provide resources in a timely manner, and encouraging state industry leaders to become brand ambassadors to attract innovation and entrepreneurial individuals in specific business domains.
- Entrepreneurial Roundtables – Based on the industry and economic domains existing in each state, create entrepreneurial roundtables to invite budding entrepreneurs to meet and build networking and mentoring relationships with industry leaders. For example, New York hosts a New York State roundtable that brings technology leaders together to share leading practices. This could be expanded to leverage mentoring and networking relationships for budding entrepreneurs and businesses.
- Crowd Funding Management – States could arrange crowd funding portals to help entrepreneurs obtain funding from state residents. This could help bring jobs to the state and assist in expanding the state’s economy. For example, the City of New York provides such crowd funding platform for entrepreneurs to raise money. Other state and local governments could leverage these ideas to provide a platform for their local entrepreneurs.
- Public Private Partnership – The federal government could potentially gauge and measure states in how they promote and invest in resources to expand entrepreneurism by having interstate competition and providing seed money through various public private partnerships (PPP). Some states are leveraging social impact bonds (SIB) to partner with the private sector and support several state programs. Could these be expanded to support and provide seed money to entrepreneurs?
- Economic Support – The states could streamline their current location based, subsidy based programs to provide prompt responses, approvals and interactions with companies especially startups to prompt entrepreneurism.
It’s a 180-degree shift in thinking how state and local governments could expand their services, encourage and support entrepreneurs and businesses by becoming “VentureGovernment.” This is systemic change in the way governments have interacted with the private sector and provided services. Something to think about!!
Author: Yash Acharya is a director within KPMG LLP’s State and Local Government Practice, with a focus on assisting governments with business transformation initiatives. Yash’ s column shares innovative ideas, thoughts and real world challenges for government, companies and the public to think about where we want to go next. Views expressed are his own.