By Scott Meacham
Copyright © 2015, The Oklahoma Publishing Company
Last week I wrote about gazelles — young companies notable for their accelerated growth, new firms that having reached $1 million in revenue, are growing at 20 percent a year, effectively doubling in less than five.
In a perfectly efficient world, we would have a set of early indicators that could accurately predict future gazelles.
Until we do, the next best thing is to figure out the optimal combination of services and resources that keep an early gazelle on track and accelerating for its first five to seven years. That’s how long it typically takes for a gazelle to build from 200 to 300 jobs and millions in revenue.
A study by the Small Business Administration (SBA) of the 10 years of de nova IPO filings that preceded the Great Recession examines the impact of legal, finance, and banking support on employment growth of gazelles.
It can be tempting for Oklahomans to shrug off a report like this. There’s no arguing with the jobs and wealth creation cited, but most of the startups in the analysis are either from California or Massachusetts.
Oklahoma’s entrepreneurial ecosystem isn’t like California (self-contained and flush with venture capital cash) or Massachusetts (uniquely sophisticated and successful at spinning out volumes of marketable technology).
But there are policy and practice implications in the SBA research on gazelles that do apply to us. For example, state and private sector investment that encourages entrepreneurship clusters (as opposed to, for example, offering established firms financial incentives to relocate) gets results.
One of the most important Oklahoma developments in this regard is the SeedStep Angels. With four chapters managed by i2E (Ardmore, Muskogee, Oklahoma City, and Tulsa) and nearly 50 members across the state, this angel network is helping our state overcome the lack of venture capital sources here.
SeedStep members have become an efficient focal point in Oklahoma and the wider region as the go-to source for entrepreneurs as well as for accredited and institutional investors who want to diversify their portfolio geographically or through including seed or early stage deals.
Early stage investing is complicated. After five years in this game, SeedStep angels know what they are doing. They have the connections to help entrepreneurs get the resource they need. They know how to open doors to strategic partners and customers.
And SeedStep Angels have strong and trusted relationships with other individually accredited investors and institutions in Oklahoma as well as with angel groups and venture capitalists from other states. They know how to syndicate deals.
SeedStep is the fulcrum in Oklahoma’s model of leveraging early stage capital. We ought to figure out how we grow this important resource even more.
Scott Meacham is president and CEO of i2E Inc., a nonprofit corporation that mentors many of the state’s technology-based startup companies. i2E receives state appropriations from the Oklahoma Center for the Advancement of Science and Technology. Contact Meacham at i2E_Comments@i2E.org.
Did You Know? Small business have created jobs every quarter since 2010 and are back to creating two out of every three net new jobs. SOURCE: Brookings Institute