Building a regional entrepreneurial ecosystem

There’s relatively constant chatter these days about regional entrepreneurial ecosystems. Cities and regions know they need to be more innovative, need to facilitate startup development and need to provide the infrastructure and tax codes that help new businesses launch, grow and stay. A big part of those regional efforts involve universities and their increasing attention paid to entrepreneurial skills development along with providing startup support capabilities in order to drive more innovation and entrepreneurial success.

We are fortunate to have many great universities in the Philadelphia region who are increasingly focused on innovation and entrepreneurship. In early 2015, a number of us who run university-based entrepreneurship centers and programs got together to talk about potential collaboration. While we compete for potential students, once they are at our respective schools it’s all about helping students in what ever way we can to ensure they have access to the best resources they can when working on new ideas and launching new ventures. So we set out to build a consortium and called it the Philadelphia Regional Entrepreneurship Education Consortium.

One of the early ideas that bubbled up was that of a regional student competition. Fortunately, with the help and support of funding from StartupPHL’s Call for Ideas Grant, the Consortium was able to develop and run the inaugural College Pitch Philly. The goal of the program was to increase collaboration among local university entrepreneurship programs and students and to give participating students a way to present their ideas to a larger entrepreneurship community beyond their university.

By all accounts, we were successful. The program included great ideas, great sponsors and a great set of judges who all came together one evening in February 2016 to hear from over 30 student startups. Three finalists were selected and they received prize money that was only possible because of StartupPHL and the Ideas Grant.

The Consortium is continuing to develop programs that provide Philadelphia-area college students with the opportunity to build new relationships across schools and to give them more ways to participate in a vibrant startup ecosystem. Our next program will be the second College Pitch Philly event that will be held during the United States Association of Small Business and Entrepreneurship conference in mid-January. Students from across the region will have the opportunity to showcase their startup ideas to over 500 entrepreneurship educators from across the country. No doubt the attendees will come away with a great perspective of the Philadelphia region and the ways we are building a great entrepreneurial ecosystem through programs such as StartupPHL.

The Modern Business Plan

The historical approach for entrepreneurs has been to first generate an idea, then do some market research, then write a business plan, then attempt to raise some money, then build a product or service and then try to sell what was built. Their business plan will often be structured like this:

  1. Cover sheet
  2. Table of Contents
  3. Executive summary
  4. Problem and solution overview
  5. Market and competitive analysis
  6. Product / technology
  7. Business model and go-to market strategy
  8. Management team
  9. Current status and accomplishments to-date
  10. Financial projection / use of funds

The traditional business plan, however, has many pitfalls especially for new entrepreneurs since so little is known about their potential idea, the market opportunity and their specific customer pains. Entrepreneurs often write their business plans in a vacuum, full of invalidated hypotheses, hockey-stick financial projections and unrealistically short timelines. What’s worse is that investors and bankers, the audience for business plans, seldom read them especially if it’s for something that has yet to generate any substantive revenues. That creates a huge opportunity cost for the entrepreneur as their time could have been better spent on performing customer development and working to validate key aspects of their business model.

The prevailing thinking today is that the business plan is dead for early stage startups. Much of the current literature around the Business Model Canvas approach and the Lean Startup methodology dismisses the business plan outright since a plan with so many unknowns is not a very good plan. In addition, the Lean Startup model emphasizes taking action over planning and de-emphasizes the role of the business plan for early stage startups.

However, what if the entrepreneur must develop a plan for a very early stage investor or perhaps as part of a competition? In those cases, I still think there’s a place for a business planning document, especially as many of the standard audiences for them (e.g. investors, bankers, etc.) are still looking for one. Often too, a startup team may want to have a guiding document that captures their to-date efforts and short-term plans.

So what should an entrepreneur do if tasked with creating a business plan? Working with student entrepreneurs at Drexel University’s Charles D. Close School of Entrepreneurship, I developed an approach that combines the lean startup action-based approach to starting up with the structure of a business plan document. This format provides better details to the reader about the idea, the value proposition, the customer development plan and the short-term key resource funding strategy.

Here’s how it looks:

  1. Cover sheet (that includes the startup’s value proposition statement)
  2. Target customer segment (with details on customer validation efforts to-date)
  3. Solution statement (with details on Minimum Viable Product development/plans)
  4. Business model canvas (using Alex Osterwalder’s format with descriptions of hypotheses validation efforts and an emphasis on what is yet to be learned)
  5. Team details (including their specific roles in the startup’s customer development activities)
  6. Planned/future business model testing process (and the overall approach to validation efforts and team decision making)
  7. Market opportunity size and future customer creation concepts (going on some base assumptions, I want to hear how they would scale the business)
  8. Company building scenarios (more of a vision of future culture and processes)
  9. Key resource funding strategy (what’s needed in terms of key resources and money to get to the next critical validated stages of the startup)

Hopefully this hybrid can serve the purpose of combining action with planning and provide entrepreneurs with a viable short-term plan that provides sufficient insights into the startup while providing them with a document that is actionable and actually helps them accomplish the activities that matter most to an early stage startup.

Revelations From A Congressional Briefing Panel

I had the opportunity to participate on a Congressional Briefing Panel regarding the challenges of funding for women and minority tech startups.  Entitled “New Models For Tech Start-Up Funding & Economic Impact”, the Briefing brought together a group of stake-holders to examine and analyze current disparities within tech start-up funding, contributing psycho-social/cultural factors, forecast, possible public-private support systems, and overall U.S. economic impact. It was a great panel that included representatives from government, technology companies, academia, investors and accelerators.

The event was kicked off by Congressman Charlie Rangel who led a very impassioned speech about the importance of creativity, innovation, infrastructure and education in order to help create the workforce of the future. The panel then dove into the difficult statistics that have been previously disclosed with a discussion around the core reasons for the major disparities in entrepreneurial funding opportunities for minority and female entrepreneurs. The panel coalesced around a few key reasons, including:

  • Lack of awareness that a problem exists
  • Cultural and unconscious biases
  • Lack of purposefulness in considering possible solutions

The panel discussion was very formative and provided some ideas for ways forward. These included:

  • Using storytelling as a means of educating stakeholders
  • Using data as a way to challenge limited partners of ventures funds to help drive more diverse portfolios
  • Encouraging the development of self-reliant ecosystems that provide better support capabilities for female and minority entrepreneurs
  • Combining perspectives from multiple stakeholders and working to find synergies through non-siloed initiatives

This is a challenging topic but one that has received significantly more attention. Hopefully this is one of a number of ongoing discussions that will lead to more action and improved results!

Event pics:

IMG_2404 IMG_2420

New Models For Tech Start-Up Funding

I have the opportunity research and reflect on an important topic for a Congressional Briefing Panel focused on new models for tech start-up funding. At task is a discussion on the significant challenges related to female and minority entrepreneurship. To start, here are some recent sobering statistics from CB Insights:

  • Earning the lowest share of investments for all minority groups were companies led by African Americans. Only one such company acquired capital funding in the time period during which data was collected, totaled at $1.9 million, which factors to less than 1 percent of the total share.
  • For female entrepreneurs, the news is even worse: Companies headed by male executives received 98 percent of all investments, totaled at nearly $1.88 billion. By comparison, female executives only received $32.2 million in funding, while mixed-gender leadership teams took in $9 million, or less than 1 percent.

In addition:

  • The National Women’s Business Council (NWBC) found that male founders start with twice as much capital on average as their female counterparts, and women-owned business are much less likely to get loans from banks or the Small Business Association.
  • Snagging venture funding is equally difficult, in part because only 6% of VCs are women, according to Babson College’s Diana Report. Only 0.2% of black female founders, for example, received VC funding between 2012 to 2014, according to a study by digitalundivided.

The good news is that there is an increasing amount of dialogue about these issues and hopefully  those in the tech startup scene will straighten-up and pay increased attention.

Without getting into the causes of the situation we are facing, what are some ways to improve the current state? I think it comes down to a similar approach that many entrepreneurial ecosystems can use to drive new participation and growth.

First, success begets success. Just as one generation of successful entrepreneurs helps to fund the next generation, successful female and minority entrepreneurs should ensure that a disproportionate amount of their financial and social capital is allocated to a new generation of entrepreneurs that may have similar backgrounds and challenges.

Second, board representation is critical and tech startups should be consistently reminded that companies with diverse boards that mirror their customers’ demographics have been shown to function better. It’s incumbent on tech startups to purposely be more diverse and more inclusive.

Finally, female and minority entrepreneurs should develop focused venture funds that allocate capital to amazing entrepreneurs who may be challenged in finding capital through current financing sources.

I am hopeful that current and future discussions will lead to unparalleled action, addressing a fundamental and structural flaw that could inhibit true entrepreneurial growth.

College Pitch Philly Student Business Pitch Competition

Very proud to share this press release on the inaugural College Pitch Philly competition. Some additional press here.

College Pitch Philly Student Business Pitch Competition
Philadelphia, PA — February 24, 2016 — Over 30 teams gathered at the University City Science Center’s Quorum yesterday evening representing 11 colleges and universities across the Greater Philadelphia region for a chance to win from a pool of $15,500 in cash prizes. Made possible by Startup PHL and led by the Philadelphia Regional Entrepreneurship Education Consortium, College Pitch Philly aims to increase collaboration among local university entrepreneurship programs while giving students a
way to present their ideas beyond their campus.

“This event is a fantastic example of our new Consortium’s ability to bring diverse students together and introduce them to the wider entrepreneurial ecosystem. We each work to serve our communities, but having this larger regional format is truly unique. Students are able to connect with others they may never have otherwise met.” Consortium member and Blackstone Launchpad Director at Philadelphia University, Zoe Selzer McKinley emphasizes, “This has tremendous potential to help build a stronger and more
cohesive collegiate entrepreneurship community.”

A call for ideas was issued in Fall 2015 and open to all currently enrolled undergraduate students attending any college or university throughout the region. This call and opportunity was available to students in any disciple and major. Over 30 teams were invited to pitch at yesterday’s competition event with 6 finalists asked to give final presentations in front of a public audience, primarily made up of entrepreneurs, professors, and other business professionals. Cash prizes were awarded and made
possible by: Comcast, Wharton Entrepreneurship, RobinHood Ventures, and NextFab. Audience members also had the chance to vote on their favorite pitch for the People’s Choice Award.

Archna Sahay, Director of Entrepreneurial Investment in the City of Philadelphia’s Department of Commerce, reinforces this initiative’s purpose, “With the Startup PHL grant, we hoped to witness ideas coming to life through that serendipitous way when diversity exists in a room. With the hard work of the Consortium, we see that. We want to make sure our current and future students know that the City supports their entrepreneurial drive and has the resources to help them bring their vision to life right here in their own backyard – launch in Philly, build in Philly, and take over the world from Philly!”

The winners are:
● 1st Place: Habitat (tryhabitat.com), Andrew Nakkache, Class of 2016, Temple University
Habitat makes it easy for college students on campus to order pickup and delivery from their favorite food trucks and local restaurants. They help their vendors, who do not typically offer any online delivery, to become more ‘mobile’ online by making delivery easy and simple with no cash exchanging hands.
● 2nd Place: Rungh Cosmetics (www.rungh.com), Neha Raman, Class of 2018, Temple University The Rungh System is a 60 second process to create your own nail polish color. The set consists of base liquid bottles, color capsules, a specially engineered mixer with detachable tips to blend your perfect color to suit your mood or outfit at anytime.
● 3rd Place: SayUmm (sayumm.co), Danish Dhamni, Class of 2017, Drexel University
SayUmm is an on demand, personalized speech feedback application in Virtual Reality. Practice anytime, anywhere and receive feedback on your delivery immediately.
● People’s Choice: BioCellection (biocellection.com), Miranda Wang, Class of 2016, University of Pennsylvania BioCellection is producing economic, sustainable, and consistent fish aquafeed components to ensure fish health through a microbial process that recycles plastic in a way that minimizes waste and outputs two bi-products: a safe cleaning agent and aquafeed. They envision the future of our oceans to be sustained through biotech innovation.

“We expect this will be the first of a number of initiatives that the Consortium will develop to provide college students with the opportunity to build new relationships across schools and to get them more opportunities to participate in a vibrant startup ecosystem,” Chuck Sacco, Consortium member and Director of Drexel University’s Laurence A. Baiada Institute for Entrepreneurship shares.

Sponsors included: Startup PHL, Blackstone Launchpad, University City Science Center, Comcast, RobinHood Ventures, NextFab, Wharton Entrepreneurship, Campus Philly

Final Round Judges: Glen Gaddy of RobinHood Ventures, Christine Kane of Comcast, Chris Laing of University City Science Center, Archna Sahay of City of Philadelphia Department of Commerce First Round Judges: Fred Berg, Jeff Bodle, Adam Greenspan, Harvey Hoffman, Alex Kaplan, Satyajeet Shahade, Jared Shelly, Raj Singh, Bob Solomon, Ken Tomlinson, Tracey Welson-Rossman, Amy Yozviak

What I Learned About Entrepreneurship by Playing Ms. Pacman

The title of my next book (ok, well the first book is very unfinished and will probably remain that way for a while) is tentatively titled “What I Learned About Entrepreneurship by Playing Ms. Pacman.”

Why this title? Well, I love entrepreneurship and I love playing Ms. Pacman. I even have one in my home and I’m a fairly decent player (I get to play a lot and have been playing a long time.) I got to thinking through all the playing that there are some solid entrepreneurship lessons that come through playing this amazing classic game:

  • Starting from zero
  • Things always speed up
  • Fast pivots are key to success
  • Using tunnels to get more done
  • Timing big dots to your advantage 
  • The types of ghosts you’ll encounter
  • The importance of patience
  • Leveraging random fruit

I have an outline and I hope the book will be both entertaining and educational. Now on to the hardcore writing.

I’ll be sharing more of the book content here in the coming weeks (months) and look forward to sharing the finished product with you.