Entrepreneurial efforts 'saved' local economy
GVSU report reveals the startup culture is still in need of changes.
(Editor’s note: This is the first of a two-part series focusing on findings in the GVSU “Empowering Entrepreneurship” quadrennial report.)
If there is one statistic Paul Isely wants the Grand Rapids business community to take to heart, it is West Michigan’s nationally untouched job creation numbers during the “depths of the recession.”
Isely, professor and chair of economics at Grand Valley State University’s Seidman College of Business, co-authored this year’s “Empowering Entrepreneurship,” a quadrennial report on the state of West Michigan’s entrepreneurial community commissioned by GVSU’s Seidman College of Business and the Richard M. and Helen DeVos Center for Entrepreneurship and Innovation.
The force that essentially saved Grand Rapids during the economic recession was risk-taking entrepreneurs, he said.
“If we look at 2009 — the depths of the recession — and then fast forward to the end of 2011, West Michigan added jobs in that timeframe, and 63 percent of those jobs came from firms that didn’t exist prior to 2009,” Isely said.
“Entrepreneurship was more than twice our job growth on this side of the state. West Michigan has been growing at about twice the rate of the U.S. economy since coming out of the recession. The only reason we are is because of entrepreneurs starting new firms.”
The report, a “snapshot” of Grand Rapids’ entrepreneurial community compared to similar benchmark U.S. cities, focused on the four areas of culture, capital, climate and talent. The first report was issued in 2009 as a catalyst and call to action for West Michigan to become more proactive in entrepreneurial development, said John Reifel, Seidman interim dean.
“Since that report, West Michigan has made significant progress in developing structures and resources to support entrepreneurship,” he said.
“We have seen the creation of multiple funding sources including StartGarden, the GROW Microloan program, the Michigan Accelerator Fund I, the Huron River Venture Fund, the Business Accelerator Fund and the mezzanine fund at Blackford Capital. In Muskegon, the first Muskegon Angels recently formed with 22 inaugural members.”
While the culture has changed in favor of entrepreneurs, meaning more capital investment, Isely said, the numbers reveal improvement is needed in decreasing the cost of doing business in West Michigan, which is still higher than the national average. Additionally, Grand Rapids needs to focus more on training and retaining young talent, as well as bringing in outside talent, he said.
“Grand Rapids — and the Greater West Michigan region — has thousands of entrepreneurs and potential entrepreneurs, some of whom have the potential to create great companies,” Reifel said.
“What we need is a coordinated strategy for mobilizing the resources to achieve maximum impact. Leveraging individual strengths of our many resources will allow the Grand Rapids entrepreneurship community to become greater than the sum of its parts.”
The official findings of the report’s executive summary include:
Culture: “The population in Grand Rapids is less diverse than the national average. It also suffers from the lack of retention of young workers. This has a negative impact on the entrepreneurial climate of the region, but it is tempered by the fact that the State of Michigan has been creating new firms faster than the national average suggesting a return of the entrepreneurs to the state.”
Capital: “Michigan is attracting more venture capital funding compared to prior years. The access to risk capital is improving faster than the rest of the nation. Michigan continues to lag behind in SBIR and STTR funds, which is a key source of funds for entrepreneurial companies.”
Climate: “While the cost of doing business in Grand Rapids is still high, it is improving due to favorable change in state-wide business tax climate. However, Grand Rapids has fallen behind these cities in recruiting new talent, especially from abroad, to supplement the local skilled labor force.”
Talent: “Compared to cohort cities, Grand Rapids ranks lower in patent generation, percentage of adults with bachelor’s degrees and people employed in creative occupations — all indicators of the talent pool from which new businesses get created.”
(Part two will focus in depth on critical elements of the GVSU study.)