6 essentials for an effective entrepreneurship ecosystem


Dell Gines

Woman at her work desk with basketball

I have coached basketball for over 20 years. I often think about what it took to make Michael Jordan “Air Jordan,” arguably the greatest basketball player of all time. Of course, he needed physical gifts of height and athleticism. He needed that internal motivation and competitiveness. But once you move past those “personal” attributes, everything else he needed to be great came from the broader basketball community.  

Michael Jordan needed the basic things like a basketball, a hoop, and a court. He needed training, coaching, encouragement. He needed a team, a league, and an opportunity. All those things combined with his natural gifts allowed him to become the player we ultimately knew him to be. In short, Michael Jordan became great because he had a basketball system that supported him in being great. Would he have been great with critical pieces of that system missing? While there is no way to tell, there is a strong likelihood the answer is no.

Applying the analogy to entrepreneurship ecosystems

Entrepreneurs need the same thing as basketball players. They need a strong ecosystem of support that allows them to maximize their potential. In the economic development world, this is called the entrepreneurship ecosystem.

The most basic definition of an entrepreneurship ecosystem is the holistic and interconnected system of support that allows local entrepreneurs to start and scale their businesses to the best of their ability.  

Key pieces of an entrepreneurship ecosystem

At the Federal Reserve Bank of Kansas City we analyzed research on entrepreneurship ecosystem building models. From various models, we identified six key pieces of an entrepreneurship ecosystem. The strength of each of these pieces and how effectively they connect determines whether a local entrepreneurship ecosystem is strong or weak. Let’s take a brief look at each.

  1. Entrepreneurial talent. The technical skills that local entrepreneurs currently have or acquire through education, training, and mentoring allowing them to start and grow successful businesses. 
  1. Relationship networks. The relationships entrepreneurs have with entrepreneurship support providers, key individuals in the business community, and other entrepreneurs. 
  1. Access to credit and capital. The ability of entrepreneurs to get the necessary financial resources for their businesses. 
  1. Local culture. The support and encouragement from the broader community for entrepreneurship.   
  1. Community infrastructure. Access to and availability of resources required for business activity like quality buildings, roads, and broadband access. 
  1. Policy. The reduction of red tape, access to transparent business registrations and filings, and policies that support other pieces of the entrepreneurship ecosystem. 

Importantly, successful entrepreneurship ecosystems ensure that the six ecosystem pieces work together in a coordinated fashion to support entrepreneurs.  

Role of the entrepreneurship ecosystem builder

Economic developers who focus on supporting the entrepreneurship ecosystem in communities are called entrepreneurship ecosystem builders. These advocates for business owner success focus on identifying and strengthening weak or missing pieces in the ecosystem. They also work to ensure that the pieces are connecting to support entrepreneurs effectively. Entrepreneurship ecosystem builders heavily focus on relationship development. They work diligently to connect entrepreneurs to resources, other entrepreneurs, and other entrepreneurship support providers and networks in a community.   

Finally, entrepreneurship ecosystem builders have the vital role of looking at how the whole ecosystem is working. This is important because local lenders, technical assistance providers, and other individuals who provide varying forms of support to entrepreneurs often focus on their own specific objectives. Entrepreneurship ecosystem builders take a larger view of the ecosystem to support the whole system of support for entrepreneurs in a community. 

You can help create a great community for entrepreneurs

Of course, not all basketball players, regardless of their support system, will become legends like Jordan. Nor will all entrepreneurs be Bill Gates or Mark Zuckerberg. However, by building the best local entrepreneurship ecosystem possible, the startup and growth rates of businesses produced by local entrepreneurs will dramatically improve. This will subsequently improve a community’s economic development and quality of life. This is why for the past decade I have been encouraging communities big and small to focus on entrepreneurship ecosystem building. I encourage you to do so as well. 


Grow Your Own: Entrepreneurship-Based Economic Development for Local Communities

The Federal Reserve Bank of Kansas City provides an excellent overview of entrepreneurship ecosystems. 

Kauffman Foundation Entrepreneurial Ecosystem Building Playbook

This living playbook is informed by hundreds of entrepreneurship ecosystem builders worldwide on entrepreneurship ecosystem building. 

Ecosystem Builders Hub

A great website that provides entrepreneurship ecosystem stories, articles, and information. 

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