By Scott Meacham
Copyright © 2019, The Oklahoman
When Gov. Kevin Stitt announced his vision for making Oklahoma a Top 10 State, those of us representing the Oklahoma Innovation Model — comprising OCAST (Oklahoma Center for the Advancement of Science & Technology), the Oklahoma Manufacturing Alliance (OMA), Oklahoma State University New Product Development Center (NPDC) and i2E — found ourselves nodding our heads.
Our organizations are metrics-driven. We do not limit our benchmarking to contiguous states. Nor do we focus only on states that are comparable in size or geography, nor states with economies that, like Oklahoma, disproportionately depend on natural resources. We benchmark best practices from any state that has or is trying to build an innovation economy.
A new approach from the Kauffman Foundation for analyzing and benchmarking entrepreneurial results, Indicators of Early-Stage Entrepreneurship, reports state-by-state performance against four indicators of entrepreneurship.
Two indicators focus on company creation: the rate of new entrepreneurs and the percentage of those new entrepreneurs who created a business out of choice rather than necessity. Two indicators measure the number of jobs created in the startup’s first year of business and first-year survival rate.
Kauffman trends data for the past 20 years, a time frame that overlays i2E’s lifespan as well as most of the years that Oklahoma’s best-in-class Innovation Model has been fully producing results.
Taken together with the 20 years of reported metrics from i2E and our OCAST partners, we can compare our results in Oklahoma against any other state with the goal of leveraging the initiatives that are effective for us while doubling down to improve in areas that hold opportunity for the state.
In terms of new business starts, Oklahoma ranks in the top four of all 50 states, with .41 percent of the state population starting a new business. Our pipeline of startups is robust. Only California (.44 percent), Texas (.42 percent), and Florida (.42 percent) have higher results; the U.S. average (.31 percent) is a full 10 points lower.
More than 87 percent of Oklahoma’s new entrepreneurs created a business by choice instead of from necessity. From the Love’s Cup collegiate business plan competition, through the R&D funding from OCAST, to the venture services provided by i2E, Oklahoma supports and encourages entrepreneurs. Entrepreneurship is seen as a legitimate career here.
The only areas where we fall below the national average, or are in the middle of the pack, are first-year survival rate and our first-year average of five new jobs per startup. Without a doubt, if you are leading the nation in number of startups, it is not surprising to have a slightly higher than average failure rate. Also, with our comparatively smaller population, it is not surprising to see that our startups are smaller when compared to some that occur in areas with higher population and higher population density. However, there are things we can do to improve in these areas as well.
First, Oklahoma startups need more sources of capital to bridge survival from prototype to startup. Except for TBFP capital (which is unfunded and dwindling), there is virtually no capital for this critical stage.
Second, Oklahoma could benefit from an even more robust pipeline of well-vetted, high potential startups.
Instead of investing more resources or even keeping our effort constant, the state has actually disinvested in the state’s support of this critical area. Over the past eight years, state support of OCAST and its programs (including i2E’s commercialization assistance) has been cut more than 38 percent. If we had the resources, we know exactly where to start — with the 70+ approved research projects that went unfunded last year due to OCAST budget constraints.
We are doing well nationally in the startup space, but if we truly want to be a Top 10 state, the time for action is now.
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 .