The Missing Ingredient: Unicorn Entrepreneurs and Local Economic Development

This article argues that the most important factor in place-based economic development is the presence of local “Unicorn Entrepreneurs.” These individuals are essential for driving long-term economic growth and creating a thriving local economy.

• Unicorn Entrepreneurs are those who start businesses with the potential to become billion-dollar ventures.
• They play a crucial role in importing wealth into an area and boosting local purchasing power.
• Unlike small businesses that primarily recirculate local money or export local wealth, Unicorn Entrepreneurs create high-growth businesses that target regional, national, or global markets, attracting venture capital and fostering economic prosperity.

The Role of Venture Capital and Small Businesses in Local Economic Development

The article highlights the limitations of traditional approaches to economic development, such as reliance on venture capital and small businesses, for fostering sustainable growth.

• Small businesses are limited in their ability to generate wealth, as they primarily recirculate local money or export local wealth by importing goods and services.
• Venture capital, while valuable, often comes after a company has already proven its potential, making it less effective for nurturing early-stage businesses.
• Branch plants, another common approach, often seek regions with low wages and high productivity, leading to a cycle of instability and potential relocation.

The Importance of Education in Fostering Entrepreneurship

The article emphasizes the critical role of education in fostering entrepreneurial talent. It argues that a strong educational foundation is essential for equipping individuals with the skills and knowledge to build high-performance ventures.

• Investing in high-quality education for all children is essential for creating a pipeline of entrepreneurial talent.
• Specific training programs focused on emerging technologies and industry trends are crucial for preparing entrepreneurs for the challenges of today's economy.

Strategies for Place-Based Programs to Succeed

The article outlines four key strategies that place-based programs can implement to effectively support entrepreneurship and economic development.

#1. Focus on the Entrepreneur – NOT on the Money or Innovation

Governments should prioritize supporting entrepreneurs, not just funding research or innovation. While venture capital plays a role, it is not the primary factor in the success of many billion-dollar companies. Governments should focus on providing resources and training that empower entrepreneurs to succeed.

• The article highlights the importance of “opportunity-smart,” “business-smart,” and “finance-smart” skills in entrepreneurship.
• These skills are essential for identifying promising ventures, developing effective business models, and securing appropriate financing to grow with control.

#2. Make High-Quality Education Universal

Every child should have access to high-quality education, regardless of their background or socioeconomic status. This is crucial for fostering a diverse and innovative entrepreneurial ecosystem. The U.S. has a strong commitment to education, but there is room for improvement, particularly in disadvantaged communities.

• A strong educational foundation is essential for equipping individuals with the critical thinking, problem-solving, and technological skills needed to thrive in today's economy.
• Investing in early childhood education and providing equitable access to quality schools are critical for fostering future entrepreneurial talent.

#3. Offer Local Training in Emerging Trends

Governments should invest in training programs that help local entrepreneurs acquire the skills needed to succeed in emerging industries. This includes training in cutting-edge technologies, new business models, and market trends. This strategy can help create a pipeline of high-growth businesses and attract venture capital.

• The article highlights the success of companies like Intel, Apple, Genentech, Cisco, Google, Facebook, and Uber, all of which emerged from emerging industries.
• By focusing on emerging technologies and industries, governments can create a more innovative and dynamic economy.

#4. Train Entrepreneurs to Grow Without Venture Capital

While venture capital plays a role in Silicon Valley, many successful entrepreneurs outside of that region have achieved success without VC. This is due to their ability to be “opportunity-smart,” “business-smart,” and “finance-smart.” Governments should invest in training programs that equip entrepreneurs with these skills.

• This approach can empower entrepreneurs to build successful businesses independently, without relying solely on capital-intensive strategies.
• It can also help create a more sustainable and equitable entrepreneurial ecosystem, where success is not limited to those with access to significant funding.

The Importance of Supporting Entrepreneurship in Local Economic Development

The article concludes that supporting entrepreneurship is crucial for achieving sustainable and inclusive economic growth. This includes focusing on training and supporting entrepreneurs, not just providing funding, and investing in education and local training programs that equip entrepreneurs with the skills and knowledge needed to thrive in the 21st century.

• By nurturing a culture of entrepreneurship and innovation, communities can create a more dynamic and resilient economy, with greater opportunities for all.
• The focus should be on fostering a supportive ecosystem that empowers entrepreneurs to succeed, creating a positive cycle of economic development and societal advancement.