This is a work-in-progress report. Last Updated: Saturday, March 21, 2020.
In 2014, the Nova Scotia government commissioned the One Nova Scotia team to explore several complex questions associated with economic development in Nova Scotia. Through a wide variety of sources, the report labelled Now or Never: An Urgent Call to Action for Nova Scotians identified several opportunities to improve Nova Scotia’s economy for the future. Of the opportunities that were listed in this report, entrepreneurship played a strong role (Now or Never, 2014).
Through the years that followed the Now or Never Report, government agencies increased their involvement with entrepreneurship; giving life to new programs and including elements of entrepreneurship in classrooms across Nova Scotia (Now or Never, 2014 – need another citation). Now after 6 years, I am curious of the status of Sydney’s entrepreneurial ecosystem and whether or not the call to actions made in the Now or Never Report have been realized. As a method to exploring this topic, I determined my research question to be:
What are the enabling factors and constraints to starting and growing a business in Sydney, Nova Scotia, in the year 2020?
For sources, this research report will review entrepreneurial ecosystem concepts, components of success, and case studies related to entrepreneurial ecosystems in Tel Aviv (Israel) and Boulder (Colorado). For assessment in Sydney, qualitative interviews will be facilitated with members of the Sydney entrepreneurial ecosystem. These will be compared with recent quantitative measures of Nova Scotia’s entrepreneurial ecosystem (McKague & Wardly, 2020). Once gathered, I will compare and contrast the differences, advantages, and opportunities that exist for the development of Sydney’s entrepreneurial ecosystem.
Benefits of this Research
The findings of this study might serve as guidance for local interest groups to further refine and optimize the startup ecosystem of the Sydney community. More specifically, this research is anticipated to provide benefits to 3 different groups:
- For Aspiring Entrepreneurs. To understand what the pros and cons are to starting a business in Sydney; assisting early-stage planning, headquarters location, and which members of the ecosystem will be of most benefit to their journey.
- For Existing Entrepreneurs. To identify programs and training opportunities that entrepreneurs might not know exist in Sydney; giving opportunities to acquire talent through salary incentive programs, education, and networking services.
- For Policy Makers, Government Agencies, and Other Stakeholders. To see where entrepreneurs are realizing the most amount of impact and value from government-sponsored services to the startup ecosystem, and where opportunities lie for further improvement.
In Short: The output of this research project will answer the research question: What are the enabling factors and constraints of starting and growing a business in Sydney, Nova Scotia (in the yaer 2020)?
Table of Contents
This is the offical contents of the research report The Entrepreneurial Ecosystem of Sydney, Nova Scotia. Please interact with the links below to be navigated to each section of the report.
- Literature Review
- What is an Entrepreneurial Ecosystem?
- The Actors of an Entrepreneurial Ecosystem
- Additional Factors of Entrepreneurial Ecosystems: Tel Aviv, Israel
- Additional Factors of Entrepreneurial Ecosystems: Boulder, Colorado
- Development Challenges for Entrepreneurial Ecosystems
- Conclusions of Brad Feld’s Work on Startup Communities
- Framework: The 10 Pillars of Entrepreneurial Ecosystem Development
- Literature Review Conclusion
- Conceptual Framework
1.1 Personal Motivation
My experience working with startups has been a rollercoaster of doubt, frustration, triumph, and achievement. Through my journey, I have had much exposure to entrepreneurial ecosystems around North America. During my time as a technology startup founder, I participated in the top accelerator in New Brunswick called Propel ICT. For Nova Scotia, I have been an active member of the entrepreneurial ecosystem of Halifax where I worked at Volta Labs alongside dozens of early-stage startups. Outside of Atlantic Canada, I have participated in the entrepreneurial ecosystem of Toronto, Ontario, and participated, through a Sydney-based startup, in the world-renowned business accelerator called Techstars in Boston, Massachusetts. The memories and stories of these unique experiences have piqued my interest in research topics related to entrepreneurship as it affects community economic development.
For these reasons, I have reviewed literature related to entrepreneurial ecosystems in hopes to discover a conceptual framework to use in the design of an entrepreneurial ecosystem. The literatures to which I have reviewed answer the following questions:
- What is an entrepreneurial ecosystem?
- Who are the actors of an entrepreneurial ecosystem?
- Who’s doing it right? A case study of Tel Aviv, Israel.
- Who’s doing it right? A case study of Boulder, Colorado.
- Is there a framework we can use to develop entrepreneurial ecosystems?
2. Literature Review
2.1 What is an Entrepreneurial Ecosystem?
As per many topics related to entrepreneurship, there is no singular definition of an entrepreneurial ecosystem. Across an endless sea of definitions and opinions, I am most inclined to prescribe to Professor Daniel Isenberg’s working definition of an entrepreneurial ecosystem. Daniel Isenberg is a professor of entrepreneurship at Babson College, has experience building entrepreneurial ecosystems, is a best-selling author for the Harvard Business Press, experienced entrepreneur, active venture capitalist, and angel investor (Wikipedia, 2019).
According to Daniel Isenberg, the term “entrepreneurial ecosystem” is simply a reference used to describe an economic development strategy (Isenberg, 2014). In Isenberg’s article, What an Entrepreneurship Ecosystem Actually Is, he compares the term to a metaphor stating “the predominant metaphor for fostering entrepreneurship as an economic development strategy is the ‘entrepreneurship ecosystem’.” (Isenberg, 2014).
The unique writing structure of Isenberg’s article, What an Entrepreneurship Ecosystem Actually Is, is that he draws on the false beliefs and misunderstandings of entrepreneurial ecosystems as a means to help readers understand the true meaning of entrepreneurial ecosystems; bridging activities we see in the real working world (Isenberg, 2014). The result of his writing structure provides a clear articulation of what entrepreneurial ecosystems are and what they are not. Summarizing the article, Isenberg defends multiple statements related to entrepreneurial ecosystems (Isenberg, 2014). These include:
- The false belief that a strong entrepreneurial ecosystem means there are more startups, stating “there is no evidence that increasing the number of startups per se or new businesses formation stimulates economic development”, also “the Kauffman Foundation recently reported that as the US economy is improving and good jobs are increasing, the number of startups is decreasing” (Isenberg, 2014).
- The false belief that offering financial incentives, like angel investment tax credits, stimulates entrepreneurial ecosystems, stating “the majority of venture capital investments are in California, New York, Massachusetts, and Israel, with no direct financial incentives other than fully-taxable profits” (Isenberg, 2014).
- That job creation is not the primary objective of fostering an entrepreneurial ecosystem, stating “the motivation for fostering entrepreneurship entirely depends on who the actor or stakeholder is” (Isenberg, 2014). Isenberg describes these actors and stakeholders as public officials, banks, universities, entrepreneurs, investors, and corporations — each with their own objectives and reasons to foster an entrepreneurial ecosystem (income tax revenues, loan portfolios, research purposes, individual wealth creation, talent acquisition, etc.) (Isenberg, 2014).
- That co-working spaces are not necessary to creating a stronger entrepreneurial ecosystem, stating “there is no systematic evidence that co-working spaces contribute significantly to growing ventures” and that “there are many anecdotes of high-growth ventures in all segments which got their starts in incubators, but there are also many more examples, less visible perhaps, of very success ventures that made no use of co-working space” (Isenberg, 2014).
- That strong entrepreneurial ecosystems do not need strong entrepreneurship education, stating “surprisingly, there is no reason to believe that formal education in entrepreneurship leads to more, or more successful, entrepreneurship” (Isenberg, 2014). He continues to write “well-known entrepreneurial hotspots such as Israel, Route 128, Silicon Valley, Austin, Iceland and others, had significant entrepreneurship long before there were courses in it” (Isenberg, 2014). In defense of Daniel Isenberg’s career as an educator of entrepreneurships, he includes that he believes entrepreneurship education can be helpful to an entrepreneur’s journey, but that it is not necessary to develop a region’s entrepreneurial ecosystem (Isenberg, 2014).
- That entrepreneurs do not drive the entrepreneurial ecosystem, such that “there is no one driver of an entrepreneurship ecosystem because by definition an ecosystem is a dynamic, self-regulating network of many different types of actors” (Isenberg, 2014). Isenberg continues his writing by stating entrepreneurial ecosystems feature connectors and influencers that may not necessarily be entrepreneurs themselves (Isenberg, 2014).
- According to Isenberg’s work on the challenges of entrepreneurs, he agrees that most challenges can be summarized as (1) access to talent, (2) excessive bureaucracy, and (3) scarce early stage capital (Isenberg, 2014). However, Isenberg has argued that the true challenges of entrepreneurship reflect the fundamental struggles involved in the generic entrepreneurial process, not as challenges related to an entrepreneurial ecosystem (Isenberg, 2014).
In summary, the definition of entrepreneurial ecosystems I have derived and will use for the duration of this research study is this: Entrepreneurial Ecosystems are region-based networks designed to achieve economic development objectives through the support of entrepreneurship. Entrepreneurial Ecosystems feature both social and economic factors that enhance the process of entrepreneurship.
With this definition, it makes sense to explore other topics that relate to entrepreneurial ecosystems such as:
- Region-Based Networks. Meaning the network of organizations, people, and institutions located within a region who support and foster entrepreneurship.
- Social Factors of Entrepreneurial Ecosystems. Meaning the social elements that construct the fabric of entrepreneurial ecosystem success.
- Enhancing the Process of Entrepreneurship. Meaning the frameworks or concepts researchers have developed and tested for improving entrepreneurial ecosystems such that efforts made improve the process of starting and growing a new business.
2.2 The Actors of an Entrepreneurial Ecosystem
Who are the stakeholders, managers, and participants of an entrepreneurial ecosystem? As was referenced in the work of Daniel Isenberg in my introduction, the definition of an ‘ecosystem’ itself is “a dynamic, self-regulating network of many different types of actors” (Isenberg, 2014). Isenberg includes hints to who these actors might be (bankers, governments, connectors, influencers), but his research on the responsibilities of each actor is not adequate. For this reason, I turn to the work of the International Development Innovation Alliance (IDIA) who describe themselves as “a collaborative platform with the shared goal of actively promoting and advancing innovation as a means to help achieve sustainable development” with the organizational mission “to promote and advance innovation as a means to help achieve sustainable development”. (IDIA, 2020).
The IDIA organization places a strong emphasis on innovation as a means to drive economic development. Listed on IDIA’s website, the organization abides by 6 principles to which their collective membership agrees are important for driving innovation in an ecosystem (IDIA, 2020). These 6 principles are:
- Invest in locally-driven solutions
- Take intelligent risks
- Use evidence to drive decision-making
- Fail fast and iterate
- Facilitate collaboration and co-creation across sectors
- Identify scalable solutions
Extracted from the webpage ‘Why Innovation?’ published on the International Development Innovation Alliance (IDIA) website at: https://www.idiainnovation.org/.
Using these principles a guide for strategy development, IDIA creates and fosters supports that leverage a number of actors including governments, the private sector, civil society, academia, development institutions, and donors for the purpose and intent “to discover, fund, and scale new solutions and tap the energy of innovation needed to reduce poverty at scale” (IDIA, 2020).
These statements begin to paint a picture of the different groups we imagine to be in an entrepreneurial ecosystem, although IDIA goes above and beyond to specifically identify 12 actors of an effective entrepreneurial ecosystem. These 12 actors are:
Infographic extracted from the webpage ‘Actors in an Innovation Ecosystem’ published on the International Development Innovation Alliance (IDIA) website at: https://www.idiainnovation.org/.
In reference to each of the 12 actors identified above, IDIA provides a brief summary of how each role connects to an entrepreneurial ecosystem.
- Research Institutions. IDIA suggests that research institutions are a crucial part of innovation as their role connects to knowledge creation (IDIA, 2020). These organizations are known to assist parties through research and focus on short-term market research about particular industries and technologies (IDIA, 2020). Lastly, research institutions act as a partner in education which helps contribute to the human capital pool of innovators and inventors (IDIA, 2020).
- Incubators and Accelerators. The role and value of these organizations includes providing physical space for entrepreneurs to work and share ideas (IDIA, 2020). Effective incubators and accelerators are also known to provide members with network benefits such as a committee of advisors and mentors “to assist with product development, finance, business planning, marketing, legal consulting, manufacturing, etc.” (IDIA, 2020).
- Angel Investors. Actors that less risk averse than venture capitalists who can help entrepreneurs overcome funding challenges, offer guidance to entrepreneurs, and widen an entrepreneur’s network to secure other supports their business requires (IDIA, 2020).
- Venture Capitalists. Venture capitalist act similar to angel investors such that they provide financial capital and support startups that wish to expand (IDIA, 2020). The difference is that venture capitalists are willing to make investments in order to earn a return on their investments (taking equity in the business) (IDIA, 2020).
- Private Equity Firms. These actors are typically interested in mature companies where the business model and market is already established (IDIA, 2020). Private Equity Firms typically buy companies with the interest to increase profits through revitalized operations (IDIA, 2020). Unlike venture capitalists, private equity firms normally buy 100% of a business, unlike venture capitalists who take a portion of company ownership (IDIA, 2020).
- Government. Government organizations play many roles in promoting innovation including the creation and support of policies and regulations to which entrepreneurs are “encouraged and able to thrive” (IDIA, 2020). IDIA identifies several tactics governments can leverage such as tax or partnership incentives and access to communities related to scientific research, angel investors, venture capitals and private equity firms (IDIA, 2020). An interesting notion suggested by IDIA is that governments should act as innovators alongside their entrepreneurial counterparts (IDIA, 2020). The idea is that government groups should advance and promote the vision for entire industries that are ripe for innovation (IDIA, 2020). The example IDIA uses is aquaculture and how, as a partner, government groups could take innovative actions to scale and create a sustainable environment for new industries (IDIA, 2020).
- Friends & Family. IDIA notes that the process of entrepreneurship is a difficult and frustrating, and often very lonely journey (IDIA, 2020). Because of this, IDIA identifies that an entrepreneur’s network of supporting friends and family plays a critical role in an entrepreneur’s confidence that “all of that hard work will be worth it in the end” (IDIA, 2020).
- Development Agencies. IDIA describes development agencies as organizations that focus on the gaps associated with entrepreneurship (IDIA, 2020). IDIA recognizes that between the stages of starting a business and acquiring venture capital, there are often gaps associated with idea validation, market development, and seed-level financing. For these reasons, IDIA suggests development agencies execute on activities such as entrepreneurial challenges and assistance to seed-level financial support (IDIA, 2020).
- Professionals. Professionals play a very interesting role in an entrepreneurial ecosystem. IDIA describes professionals as “the heart of an ecosystem” such that “the process through which an innovation is designed, tested, adapted and scaled depends on the quality of the people involved in the process” (IDIA, 2020). IDIA continues to describe that strong entrepreneurial ecosystems require a diverse group of professionals with unique skills, passion, determination, and risk-taking behaviour (IDIA, 2020). IDIA builds on the notion of human capital requirements stating that if professionals are not within an entrepreneurial ecosystem, competition for these individuals will intensify and deteriorate the true collaborative potential between different actors in the ecosystem (IDIA, 2020).
- Startups. IDIA describes a startup as “a company working to solve a problem where the solution is not obvious and success is not guaranteed” (IDIA, 2020). IDIA believes startups act as an engine for innovation to which they “pioneer new solutions” that redefined entire industries (IDIA, 2020).
- Market Facilitators and Intermediaries. These organizations (sometimes individuals) help bridge gaps between different actor-organizations within an entrepreneurial ecosystem (IDIA, 2020). IDIA suggests that some actors within an ecosystem might not collaborate well with, trust, or understand the motives or intentions of other actors within the same ecosystem (IDIA, 2020). This perception that the relationships within an entrepreneurial ecosystem are complex supports IDIA’s view that market facilitators and intermediaries are “often the ‘glue’ that helps to hold an ecosystem together” (IDIA, 2020).
- Private Sector. The notion that the private sector is recognizing the impact of social and economic issues as they affect the commercialization and development of markets (IDIA, 2020). IDIA identifies that because of this awareness to issues, private sector companies are becoming likely candidates for partnership opportunities with other actors in the entrepreneurial ecosystem (IDIA, 2020). Translating the benefit of this willingness to partner with other actors could mean that a startup is able to secure financing through the partnership with a private sector organization; enabling the startup to discover, solve, and scale a solution for a market problem.
The work of IDIA is impressive, but debates could exist between various topics. Why might a company need venture capital? Could a startup finance itself through sheer market demand? Are cash-prizes the appropriate reward of an entrepreneurial challenge? How do we measure the risk-taking behaviour of an individual, group, or entrepreneurial ecosystem? All of these questions could justify conducting new research studies, but perhaps the more pressing question is this: is developing an entrepreneurial ecosystem simply a matter of introducing the actors listed above, or are there other factors to consider in the development of an entrepreneurial ecosystem? To explore this question in more detail, the next section of this literature review will examine communities where entrepreneurial ecosystems have been successfully integrated. In particular, I will examine Israel’s entrepreneurial ecosystem and Boulder’s entrepreneurial ecosystem.
The process of developing, testing and scaling innovation for sustainable impact cannot be undertaken by any one actor working in isolation.
2.3 Additional Factors of Entrepreneurial Ecosystems: Tel Aviv, Israel
In previous sections, explored what entrepreneurial ecosystems are and the actors of an entrepreneurial ecosystem. With frequent reference to IDIA, an organization with a mission “to promote and advance innovation as a means to help achieve sustainable development”, I discovered that IDIA places a heavy emphasis on the actors involved in an entrepreneurial ecosystem as means to drive successful integration (IDIA, 2020). However, the possibility that there are other factors that influence the success of an entrepreneurial ecosystem remains a question. As a means to examine these might-be existing factors, I have chosen to explore entrepreneurial ecosystems that have integrated IDIA’s “Actors”. These communities are Tel Aviv in Israel and Boulder, Colorado, in the United States of America.
Israel is often referred to as “Start-Up Nation” and according to Steven Fraiberg, “(Israel) contains more start-ups per capita than any other country in the world with its high-tech industry made up of a dense ecosystem of conferences, accelerators, meetups, social media, and coworking spaces” (Frailberg, 2017).
Frailberg’s articles also confirms that Israel is a location that has integrated the actors of an entrepreneurial ecosystem described earlier in this review (see Section 2. The Actors of an Entrepreneurial Ecosystem on page 10) such that “central to this rapidly shifting landscape (in Israel) is a dense start-up ecosystem composed of an array of meetups, hackathons, lectures, training sessions, mixers, social media sites, conferences, coworking spaces, venture capitalists, angels, and accelerators” (Frailberg, 2017). Therefore, Israel is a good candidate for a community to examine beyond the actors of an entrepreneurial ecosystem.
For this section of my review, I will focus on the qualitative thoughts, feelings, and opinions that existing members of Israel’s entrepreneurial ecosystem have regarding the fabric that makes their entrepreneurial community successful. This section will draw on the work of Steven Frailberg who, in his article about Israel’s entrepreneurial ecosystem, traces entrepreneurs “in and across these fluid systems as they shape and are shaped by everyday practices” (Frailberg, 2017). Secondly, I will reference Wired’s video documentary, Holy Lands: Startup Nations, which examines Israel as a whole “to learn how the fertile innovation ecosystem of Silicon Wadi (arabic term for “Valley”) has evolved as a result of its unique political, geographical and cultural situation” (Wired, 2017).
Once understanding if there are additional factors to consider in the implementation of an entrepreneurial ecosystem, I will explore if there is a conceptual framework that can be used to measure the qualitative performance of an entrepreneurial ecosystem despite the country, region, or community to which an entrepreneurial ecosystem is located.
Starting with Wired’s video production of Israel’s entrepreneurial ecosystem, this documentary gives viewers insight to the people, entrepreneurs, government members, and venture capitalists participating in Israel’s startup ecosystem. These people are:
- Hani Alami, the CEO of Coolnet and Founder of Jest
- Yonathan Adiri, CEO of Healthy.io
- Anouk Lorie Editor in Chief, NoCamels
- Saul Singer Co-Author of Start-Up Nation: The Story of Israel’s Economic Miracle
- Yossi Vardi, Entrepreneur and Investor
- Saed Nashef, Founding Partner of Sadara Ventures (Venture Capitalist)
- Leora Golomb, Director of FuckUp Nights
- Amber Amleh, COO of Ibtikar Fund
- Dr. Oren Zuckerman, Founder of IDC Media Innovation Lab & Noa Morag, General Manager of IDC Media Innovation
- Nadav Zafrir, Former Commander of Unit 8200 (Israeli Intelligence Corps)
- Andy Dwonch, Mission Director of Palestine for Mercy Corps
- Hafeth Zghyer, Founder and CEO of UBCARD
Across multiple interviews, each person was asked about Israel’s entrepreneurial spirit and what they (the interviewee) believe makes Israel’s ecosystem so successful. The responses to these questions surprised me as a researcher. The themes and findings so far in this report suggest that building an entrepreneurial ecosystem is simply a matter of installing the actors (the accelerators, venture capital firms, universities, etc.). However a very strong theme in Israel’s ecosystem can be related to qualitative aspects of society; a dimension that has not been covered in this report thus far. Summarizing these themes into 3 categories, the qualitative aspects of Israel’s entrepreneurial ecosystem are:
- The History of Entrepreneurial Impact. The community’s understanding of how entrepreneurship plays into the history and story of Israel’s past.
- The Acceptance of Risk and Failure. The community’s culture of sharing entrepreneurial success stories and celebrating failure.
- Leveraging Diversity to Enable Creativity. The community’s support and acceptance of other groups, religions, and personal preferences such to support an open environment where entrepreneurs can freely participate.
Regarding history, Yonathan Adiri, the CEO of Healthy.io, states “when you look at the history of the country (Israel) it makes a lot of sense (the people being dissatisfied) because who were the builders of the country? They were people who were dissatisfied with where they were (as a collective of people). They (the Israeli people) had to flee and they came here (to Israel) and they had to make this place work because this was their final station” (Wired, 2017). Yonathan Adiri also points to landmarks in the community of Tel Aviv (a city in Israel) sharing “at the heart of the ‘tech mile’ (a term used to describe the location of Tel Aviv’s startup hub), is Israel’s independence hall which features a monument of the country’s founder, David Ben-Gurion (an entrepreneur)” (Wired, 2017). Yossi Vardi, an entrepreneur and investor, also shared his views on how history helped influence the Israeli culture of entrepreneurship stating “They (the original builders of Israel) decided just to go and do it — to go and build a state” (Wired, 2017). Yossi continues to describe that building the state of Israel was “a crazy fantasy” but that creating startups was a critical piece in the movement, but not high tech startups rather agriculture startups (Wired, 2017).
Regarding risk and failure, Yonathan Adiri references a phrase from Shimon Peres, the former Prime Minister of Israel, quotting “people without fantasies don’t do fantastic things” (Wired, 2017). Yonathan continues to reminisce on the career of Shimon Peres stating he was a leader that was “known to take down legal barriers and put Israel on the path it needed to grow” (Wired, 2017). This perspectives bridges into the idea that in order to grow, risks need to be taken. Saul Singer, the co-author of Start-Up Nation: The Story of Israel’s Economic Miracle, shares “most of us often don’t even see the big problems around us because we take them for granted” and that “if you have to ask what if the main trait of the startup ecosystem (in Israel) it’s a different attitude towards failure than exists elsewhere. Failure is the only way to success. If you can’t fail, you can’t succeed” (Wired, 2017). One way Israel celebrates failure is through a program called FuckUp Nights. Leora Golomb, Director of FuckUp Nights, pitches the mission of FuckUp Nights as this:
“How do I talk about failure? How do we do it in a way that it’s fun? 97% of startups fail. We keep talking about the 3% that actually did it and made it and they made the exit. Somebody bought them, they made a big sell, they’re now in stock exchange, but we’re not talking about the 97% that fail. Basically we bring 4 entrepreneurs in once a month to talk about their biggest failure” (Wired, 2017).
Direct quote from Leora Golomb, Director of FuckUp Nights, Israel.
Lastly in regard to diversity and creativity, we look at Israel’s ability to leverage diversity as a tool to enable creativity. The people interviewed in Wired’s documentary reference elements they associate with a modern society that is accepting and diverse (religions, sexual preferences, political views, and immigration). While there is no scientific evidence that a person’s sexual preference, religion, or ethnic background makes them more creative than someone else, the theme does emerge that entrepreneurial ecosystems that foster more embracive and accepting cultures yield a higher output of creativity. Yossi Vardi shares his view that startup founders seek embracing cities with liberal views: “all the startups don’t want to live outside the city, they want to live downtown. They want to have urban life, they want to have coffee shops, they’re looking for cities which are liberal, which are embracing people with all kinds of tastes. You can be female, you can be gay, you can be lesbian, you can be transgender — nobody gives a shit. Tel Aviv is providing this kind of atmosphere. It’s an open city, liberal city, embracing city that celebrates diversity. This is why we have such a concentration of creative people” (Wired, 2017). Yossi also shares his opinion about the strong role immigrants play in the entrepreneurial ecosystem stating: “Immigrants are always the best entrepreneurs. They can gain a lot from becoming an entrepreneur and can lose little because they don’t usually have anything (to begin with)” (Wired, 2017). In accordance with Saed Nashef, a venture capitalist and co-founder of Sadara Ventures, he points out that innovation and creativity transcend borders, cultures, and religions (Wired, 2017). When the actors of an entrepreneurial ecosystem work together under this same accepting umbrella, more unique programs emerge that help introduce citizens to entrepreneurship while enabling aspiring entrepreneurs to take the next step in their journey. Hani Alami, CEO of Coolnet and Founder of Jest, states the actors of Israel’s entrepreneurial ecosystem are “giving them (students and entrepreneurs) the capacity-building opportunity and the training, and the professional trainers to be part of an ecosystem” suggesting that people will identify as being entrepreneurial and feel confident to join different groups and activities in the ecosystem. Through this involvement, more creative ideas are shared which leads to a case where Andy Dwonch, Mission Director of Palestine for Mercy Corps, recalls a time when a group of entrepreneurs found a way to run their cars off cooking oil during a fuel shortage, stating “they’re innovating to survive” (Wired, 2017).
In summary, Israel’s entrepreneurial ecosystem has identified 3 additional factors to implementing an entrepreneurial ecosystem: (1) the history of entrepreneurial impact, (2) the acceptance of risk and failure, and (3) leveraging diversity to enable creativity entrepreneurial ecosystems. Yossi Vardi shares his understanding that other groups around the world are trying to learn and replicate what Israel has achieved in terms of entrepreneurial spirit (Wired, 2017). However, Yossi feels that Israel’s success does not relate to a particular industry or certain infrastructure, rather “it has to do with things like culture, virtues, aspirations, (and) the human component” (Wired, 2017).
2.4 Additional Factors of Entrepreneurial Ecosystems: Boulder, Colorado
Having explored Tel Aviv’s entrepreneurial ecosystem and hearing the opinions of why members of their community consider their ecosystem to be successful, I begin to wonder about the differences in business practices from one nation to another. For this reason, I take my research to the western world of the United States to explore whether the formula to create a vibrant entrepreneurial ecosystem is different. As a short guide of reference, I will explore Brad Feld’s opinions on entrepreneurial ecosystems from his book, Startup Communities: Building an Entrepreneurial Ecosystem in Your City. Brad Feld’s career with entrepreneurship is difficult to match by way of experience starting and fostering entrepreneurial spirit in a community. Brad Feld has been described as a pioneer when it comes to developing regional ecosystems with his most successful case being Boulder Colorado (Startup Communities, 2012).
Brad Feld’s book focuses on what he calls The Boulder Thesis, which is a framework for creating and building startup communities in other regions of the world (Startup Communities, 2012). Brad shares his view that we, humanity, are living in a highly networked society with many different nodes that continually emerge (Startup Communities, 2012). In Brad’s definition of ‘what is a startup community’, he describes these ecosystems as “the energy, activity, and innovation in a society” such that this mix occurs in small geographic regions (Startup Communities, 2012). In my earlier research on Israel, I was led towards the city of Tel Aviv. In Brad’s book, his opinions and experience are in relation to Boulder, Colorado.
But what makes Boulder a special place to examine? According to Brad, “the community (Boulder) is defined by a strong sense of collaboration” (Startup Communities, 2012). Brad also includes an external perspective of Boulder where Mark Solon, of Highway 12 Ventures, shares his opinion of Boulder. Solon states:
“There was no strategic plan (to make Boulder what it is). Government has little to do with it and there weren’t committees wading in bureaucratic quicksand wasting hundreds of hours of peoples’ time strategizing about how to create more startups” (Startup Communities, 2012).
Quote by Mark Solon of Highway 12 Ventures
Further in Solon’s opinion of Boulder, he shares a brief story where a group of entrepreneurial youth gathered to celebrate the “death” of one of their fellow startups (Startup Communities, 2012). This act was interpreted by Solon as “the startup community’s way of showing these young, fragile entrepreneurs that it was okay to fall – that the honor was in trying” (Startup Communities, 2012). Comparing this finding in Boulder to the themes that emerged from Tel Aviv, we see the pattern that celebrating failure plays an equal role in developing entrepreneurial ecosystems.
Startup Communities featured a variety of common themes to what we have already explored so far in this research and shed light on some harsh realities. Brad Feld shares his perspective of what it’s like to develop an entrepreneurial ecosystem in North America. Brad Feld also mentions that entrepreneurial ecosystems feature actors similar to what we found earlier through the International Development Innovation Alliance (IDIA) who created a stronger description of the actors involved in an entrepreneurial ecosystem; the 12 actors mentioned earlier in this report (Startup Communities, 2012). Brad’s experience of growing Boulder’s entrepreneurial ecosystem touched on similar cultural aspects found in Tel Aviv such as developing a willingness to fail, helping one another, sharing knowledge, and expanding “grow networks” (Startup Communities, 2012). The areas where variances appear to occur stem from what are Brad’s personal experiences and patterns noticed throughout his career developing and building entrepreneurial communities with a hands-on approach. These variances are described through Brad Feld’s “Boulder Thesis”.
Brad Feld summarizes the Boulder Thesis as the following: “The framework (called the Boulder Thesis) has 4 key components: (1) Entrepreneurs must lead the startup community, (2) The leaders must have a long-term commitment, (3) The startup community must be inclusive of anyone who wants to participate in it, (4) The startup community must have continual activities that engage the entire entrepreneurial stack” (Startup Communities, 2012). Upon first glance, this framework might strike some readers as biased, but I will remind readers that Brad Feld has been a heavily active member of Boulder’s entrepreneurial ecosystem for decades. In addition to that, he has experience helping other communities implement best practices for the development of entrepreneurial ecosystems. Given this context, it is fair to assume that Brad Feld draws on the patterns and themes that he has noticed throughout his career. While his book Startup Communities does not feature hard numbers or data, his opinion and perspective are welcome to this research study in the form of professional insight. As a brief synopsis of the Boulder Thesis, here are the 4 components Brad Feld deems necessary for an entrepreneurial ecosystem to be successful:
- Led By Entrepreneurs. Brad states “the most critical principle of a startup community is that entrepreneurs must lead it”, he defends his opinion that “unless the entrepreneurs lead, the startup community will not be sustainable over time” (Startup Communities, 2012).
- Long-Term Commitment. Brad suggests long-term commitment should be 20 years, stating “startup communities have to take a very long-term view”. Brad draws on his experience that cities and leaders become excited about entrepreneurship after a community experiences economic decline (Startup Communities, 2012). Brad argues that “leaders must be committed to the continuous development of their startup community, regardless of the economic cycle their city, state, or country is in” (Startup Communities, 2012).
- Foster a Philosophy of Inclusiveness. Brad argues that “a startup community must be extremely inclusive. Anyone who wants to engage should be able to, whether they are changing careers, moving to your city, graduating from college, or just want to do something different. This applies to entrepreneurs, people who want to work for startups, people who want to work with startups, or people who are simply intellectually interested in startups” (Startup Communities, 2012).
- Engage the Entire Entrepreneurial Stack (Ecosystem). Brad stresses the importance of hosting regular activities as a means to building entrepreneurial interest (Startup Communities, 2012). In these activities Brad emphasizes that startup community activities must “engage the entire entrepreneurial stack” (Startup Communities, 2012). Brad’s interpretation of the entrepreneurial state includes “first-time entrepreneurs, experienced entrepreneurs, aspiring entrepreneurs, investors, mentors, employees of startups, service providers to startups, and anyone else who wants to be involved” (Startup Communities, 2012).
2.5 Development Challenges for Entrepreneurial Ecosystems
Through Startup Communities, Brad Feld shares worthwhile insights into the challenges and common problems he has experienced and observed throughout his career. These problems are included in this research study to give readers context to risks associated with entrepreneurial community development such that they may identify and prevent these risks from becoming a problem over time. Brad described these 10 problems as:
- The Old White Guy Problem. Brad Feld described this problem as the “old white guys who made their money years ago but still run the show” (Startup Communities, 2012). He states how these people tend to try and control the entrepreneurial ecosystem and not let newcomers rise to make an impact (Startup Communities, 2012). Brad has 2 suggestions of how to navigate this problem: (1) “wait for them to die”, or (2) “start your own thing and do it good enough that you noticed” (Startup Communities, 2012).
- Complaining About Capital. Brad points to a classic complaint heard in entrepreneurial ecosystems where government groups and entrepreneurs complain there isn’t enough capital in their community (Startup Communities, 2012). Brad’s advice for this challenge is to simply let it go; that there are capital firms located elsewhere in the world and that entrepreneurs should find and interact with the ones that already exist (Startup Communities, 2012).
- Being Too Reliant on Government. Brad describes this challenge as “when a startup community starts relying on government to be a leader” (Startup Communities, 2012). Brad argues that “very few people in government have a background as entrepreneurs and, as a result, they don’t really understand startups in any depth” (Startup Communities, 2012). Lastly, Brad share his opinion that the speed of execution found in government groups is much slower to the pace of execution found in startups (Startup Communities, 2012).
- Making Short-Term Commitments. Brad Feld relates this challenge to a lack of short-term results among actors in an ecosystem. Brad argues that leaders of an entrepreneurial ecosystem put a lot of effort into developing their startup community but that after 2 years of not seeing results, discontinue further development (Startup Communities, 2012). Brad strongly believes that the success of entrepreneurial ecosystem development is through long-term commitment and consistent effort to gain the required attention needed for the community to be successful (Startup Communities, 2012).
- Having a Bias Against Newcomers. Brad describes this challenge as new community entrants needing to “earn their way into the entrepreneurial ecosystem instead of just becoming part of it” (Startup Communities, 2012). Brad Feld argues that entrepreneurial ecosystems should be extremely inclusive and welcoming to all new, existing, and aspiring entrepreneurs (Startup Communities, 2012). Brad also suggests that inclusive efforts should be made to people who are from other communities that are visiting our own entrepreneurial ecosystems; enabling networking and connection with other people and resources abroad (Startup Communities, 2012).
- Attempt by a Feeder to Control the Community. Similar to the first challenge, The Old White Guy Problem, Brad shares that “in many communities the feeders masquerade as leaders and in some cases try to control what’s going on in the startup community. This is a syndrome I refer to as feeder control and it stifles short-term growth and long-term health of the startup community” (Startup Communities, 2012). Pointing to a specific example of a feeder taking control over a community, Brad shares “when the government creates an innovation council. This innovation council takes months to get going while it recruits the appropriate high-profile members. It then creates a set of high-profile public events to spread innovation across the state. Everything is abstract, filled with pomp and circumstance, and is usually disconnected with what is actually going on in the startup community” (Startup Communities, 2012). Brad’s final opinion of the problem is that “many people (startups) use it (the innovation council) as a way to generate more visibility for their company, their cause, or their agenda and very little work actually gets done” (Startup Communities, 2012). Brad’s recommendation for bypassing this challenge is that startups focus on execution and growth; to let their results rise above the innovation council’s agenda (Startup Communities, 2012).
- Creating Artificial Geographic Boundaries. Brad describes this as a lighter issue that happens in entrepreneurial ecosystem development. Essentially, this challenge rises from the false perception that there are artificial barriers when attempting to do business in other geographic locations (Startup Communities, 2012). Expanding upon Brad’s description, I interpret this challenge to be associated with an entrepreneur’s fear, doubt, or stress when reaching out to communities outside their local region.
- Playing a Zero-Sum Game. Brad describes this challenge as people, or actors, in an entrepreneurial ecosystem competing to be the ‘innovation district’; comparing their community efforts to those of nearby communities (Startup Communities, 2012). Brad shares that when these behaviours emerge, it hinders the community’s entrepreneurs from accessing more resources and building their networks (Startup Communities, 2012). Brad emphasizes the importance of network development as an enabling factor of new business growth and suggests communities collaborate together and focus on increasing their networking opportunities (not limiting them) (Startup Communities, 2012).
- Having a Culture of Risk Aversion. As we’ve already identified in this research study, creating a culture of risk-taking is an important aspect of entrepreneurial ecosystem development. Therefore, Brad Feld identifies communities with a lack of risk-taking behaviour as a problem. Brad suggests ecosystem leaders to emphasize and articulate the message: “if you have an idea or initiative that is interesting to you, just get started. If, after a few months, it isn’t going anywhere, you’ve lost interest in it, or you’re having trouble getting others to engage, take that as a signal that the initiative isn’t working in its current form. You then have two choices: change it or kill it. In either case, you are moving on to the next iteration of the idea” (Startup Communities, 2012). Through this messaging, we can see how Brad Feld’s approach encourages entrepreneurs to view business setbacks as obstacles with solutions. This shift in attitude changes the perception of failure, encouraging further exploration and discovery.
- Avoiding People Because of Past Failures. Brad describes this challenge as the negative feelings and association that some members of an entrepreneurial ecosystem have towards others in the community (Startup Communities, 2012). In particular, Brad identifies common negative attitudes towards entrepreneurs who acted recklessly, were not polite, or have discontinued their business operations, suggesting that their reputation and network were damaged as a result of trying to start a business (Startup Communities, 2012). Brad suggests actors of entrepreneurial ecosystems should work together to eliminate these negative perspectives and continue to involve the struggling or discontinued entrepreneur (Startup Communities, 2012).
2.6 Conclusion of Brad Feld’s Work on Startup Communities
Brad Feld’s book Startup Communities draws on many elements of actually implementing and managing an entrepreneurial ecosystem. A theme that was heavily emphasized through Brad’s writing was the notion that entrepreneurs should lead entrepreneurial ecosystem development (Startup Communities, 2012). Throughout Startup Communities, Brad contrasts between entrepreneurs and government groups, arguing that the nature of government organizational structures is very different from startup organizational structures (Startup Communities, 2012). Specifically, Brad identifies that government structures take on a “top down” approach whereas startups and entrepreneurs adopt a “bottom up” way of thinking (Startup Communities, 2012). To further defend his opinion, Brad shares “when entrepreneurs start a company, they do all the work. They don’t have resources, staff, structure, or a framework for what they are going to do. They just go do it. Government is exactly the opposite — there is a well-defined hierarchy, existing infrastructure, staff that persists from one administration to the next, and clear rules of engagement for getting things done” (Startup Communities, 2012). Brad’s argument concludes to emphasize the need for impact in an entrepreneurial ecosystem, stating “in a networked system, you want to have impact; in a hierarchy, such as government, you want to have control. Sure, many government people talk about their desire to have a positive impact, but they do this through having control. Entrepreneurs, on the other hand, are really only interested in impact and, if something doesn’t matter, or doesn’t work, they move on to the next thing” (Startup Communities, 2012).
However, Brad Feld’s suggestions carry some risk for entrepreneurial ecosystem development. A common misinterpretation could be extracted from Brad’s text to suggest that government groups should be entirely absent from an entrepreneurial ecosystem. This, however, would conflict with our findings about the actors of the entrepreneurial ecosystems. Brad Feld’s book on startup communities includes chapters that defend the presence of public institutions involvement such as universities and support programs, but I would argue his work doesn’t include the full breadth of research and consideration to other factors we have extracted from Tel Aviv in Israel (culture, diversity, etc). For this reason, I wish to explore the work of other researchers and their findings on entrepreneurial ecosystems. In my exploration and discussions with fellow entrepreneurial enthusiasts, I was referred to the work of Erik Stam and Ben Spigel who, in 2016, co-authored a book called Entrepreneurial Ecosystems.
2.7 Framework: The 10 Pillars of Entrepreneurial Ecosystem Development
Stam and Spigel’s led a research study to critically investigate emerging literature on entrepreneurial ecosystems. Stam and Spigel felt that efforts around entrepreneurial ecosystem development were focused on generalizations of successful case studies such as Silicon Valley and Boulder, rather than the social science that fueled the entrepreneurial presence in those communities (Stam & Spigel, 2016). In their research, Stam and Spigel examined a number of common sources to the literature reviewed already in this study including the actors of entrepreneurial ecosystems, Brad Feld’s experience in his book Startup Communities, and the work of Daniel Isenberg. Stam and Spigel also explored topics from dozens of other authors and researchers, truly capturing the most current understanding of entrepreneurial ecosystem development. Through their research and findings, Stam and Spigel introduce an “integrative model that connects the functional attributes of entrepreneurial ecosystems with entrepreneurial outputs” (Stam & Spigel, 2016).
Figure 1.0. The 10 Pillars of Entrepreneurial Ecosystems extracted from the research study, Entrepreneurial Ecosystems, co-authored by Erik Stam and Ben Spigel (Stam & Spigel, 2016).
The framework, called the 10 Pillars of Entrepreneurial Ecosystems, is now a globally recognized framework to creating, building, and fostering entrepreneurial ecosystems (Stam & Spigel, 2016). In February of 2020, an organization called the Global Entrepreneurship Monitor released their latest annual report to which they highlighted Stam & Spigel’s framework as a means of measuring entrepreneurial ecosystems for countries around the world (GEM, 2020). For context of what the Global Entrepreneurship Monitor (GEM) is, it is an active and ongoing study of entrepreneurship dating back to 1999 (GEM, 2020). The report monitors entrepreneurship “both in terms of the state of the entrepreneurial mind-set, motivations, activities and ambition, and the national framework conditions required to allow entrepreneurship to flourish in an economy” (GEM, 2020). Most unique to GEM’s 2020 report are the results of an extensive survey and interview series conducted throughout 2019. GEM representatives surveyed and interviewed people from fifty different countries including ones from the Middle East, Africa, Asia, Latin America, Europe, and North America (GEM, 2020). Of the countries that were able to participate in the study, 5 were classified as low-income level, 12 as middle-income and the rest as high-income (GEM, 2020). For interviews, the GEM had “over 150,000 individuals participate in extended interviews as part of the GEM research in 2019” (GEM, 2020).
2.8 Literature Review Conclusion
The world of entrepreneurship begs for more research studies on the influence and effect of social sciences and how they drive entrepreneurial behaviour. This study examined one of the smaller areas of entrepreneurship which is entrepreneurial ecosystems. Through this literature review, readers were taken on a tour through the different aspects of entrepreneurial ecosystems, the actors in them, and roles people play, and communities who have had success. Through various attempts, I tried to extract the secret recipe for developing successful entrepreneurial ecosystems while remaining critical and realistic to the literature I exposed myself to. Through the tour of Tel Aviv in Israel to the bustling community of Boulder, Colorado, we have extracted many pieces that play a part in the grand scheme of entrepreneurial ecosystem development. Most notably was the framework provided by Erik Stam and Ben Spigel, called the 10 Pillars of Entrepreneurial Ecosystems, began to draw a clear picture of what is truly involved in the creation and success of an entrepreneurial ecosystem. Furthermore, we learned about the Global Entrepreneurship Monitor report which, through their most recent successful efforts as an organization, has successfully merged the work of many different researchers of entrepreneurship on a global scale. The world agrees, the 10 Pillars of Entrepreneurial Ecosystems is the way forward for ecosystem development.
- Entrepreneurial ecosystems feature 12 distinct actors. IDIA identifies these actors as: Research Institutions, Incubators & Accelerators, Angel Investors, Venture Capitalists, Private Equity Firms, Government, Family & Friends, Development Agencies, Professionals, Start-Ups & Enterprises, Market Facilitators & Intermediaries, Private Companies.
- Fostering a culture of risk taking is important. As was found in Tel Aviv and Boulder, the acceptance and encouragement for people to take risks is important in the development and success of an entrepreneurial ecosystem.
- There is a list of common challenges people face when trying to build entrepreneurial ecosystems. Brad Feld has taken a hands-on approach to developing entrepreneurial ecosystems in various places in North America. From his experience, he has listed the problems he sees most frequently.
3. Conceptual Framework
3.1 Translating Research into Effort: Sydney, Nova Scotia
Having now reviewed literature on the actors, factors, and elements of entrepreneurial ecosystems, it’s time to explore ways to improve ecosystem development in my local community of Sydney, Nova Scotia. My conceptual framework is a representation of how I plan to design and conduct my research. For my approach, my conceptual framework will consist of 3 layers:
- Examine the Ecosystem Actors of Sydney, Nova Scotia. A theme throughout my literature review proved that successful entrepreneurial ecosystems feature 12 distinct actors. I will attempt to map each of these 12 actor-roles to different companies and organizations in Sydney.
- Perform Discovery Interviews for Qualitative Analysis of the 10 Pillars of Entrepreneurial Ecosystems Framework. My literature review highlighted the 10 Pillars of Entrepreneurial Ecosystems as a credible and viable framework for entrepreneurial ecosystem development. I will attempt to apply this framework to Sydney by conducting interviews with members of the entrepreneurial ecosystem.
- Determine if Brad Feld’s List of Common Problems are Present in Sydney. Through my literature review, I examined the work of Brad Feld in his book Startup Communities. In this reading, Brad Feld listed 10 common problems that he sees when developing entrepreneurial ecosystems. As part of the interviews I will conduct with members of Sydney’s startup community, I will ask participants to rank whether they feel any of Brad Feld’s problems are present in Sydney. My hope is to identify and address gaps between the different actors in the ecosystems.