Startups and scale-ups: Wisconsin isn’t a monolithic economy

The latest report from the Kauffman Foundation reaffirms what most people already know: Wisconsin as a whole is not a hub for starting and growing a business.

The key words there are “as a whole,” because while parts of Wisconsin are desperately short on startups and other emerging companies, parts perform above the national average.

A report released Thursday by the Kansas City-based Ewing Marion Kauffman Foundation showed Wisconsin near the bottom of 25 large states in “growth entrepreneurship,” a term tied to three specific measures of how quickly young companies grow. Those three measures are basically short-term employee growth, 10-year worker expansion, and rate of revenue growth.

If all 50 states are measured, Wisconsin ranked 33rd in the report. That’s still nothing to write home about, but better than another Kauffman index released in 2015 that ranked the state 50th overall in its startup business rate.

The reasons for Wisconsin’s low statewide rankings are somewhat easily explained: Manufacturing and agriculture are capital-intensive and therefore not always startup-friendly; the labor force is slightly older and less educated than the U.S. average; rural Wisconsin is barely recovered from the Great Recession; and a low immigration rate works against Wisconsin because newcomers are more likely to start a business than native-born Americans.

There are pockets of entrepreneurship within the state, however, that buck the trend. Three events next week in Madison will help better define the elements of success.

The largest is the Wisconsin Entrepreneurs’ Conference, which will be held Tuesday and Wednesday at the Alliant Energy Center. Built around a theme of “Why Wisconsin?,” the event will focus on company and individual success stories, as well as the basic ingredients needed for economic growth.

Among conference speakers will be Evan Absher, a policy officer at Kauffman, who will talk about his organization’s research and what it believes are best practices in the other states, regions, and cities. Healthy regions and cities are instrumental in that mix, and Absher will likely note that the Madison area and its surrounding counties are running well ahead of the U.S. average when it comes to company growth.

The discussion will continue Thursday at a summit on entrepreneurship spurred by Madison Mayor Paul Soglin, the Madison Region Economic Partnership, the Greater Madison Chamber of Commerce, and the Tech Council. A mixed audience including Wisconsin municipal leaders has been invited for a closer look at what works.

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A third event will be held Monday, when the Atlantic Council will convene a private roundtable discussion to explore its perceptions that Madison an innovation hub.

Based in Washington, D.C., the Atlantic Council is studying why the United States is the world’s leader in technical innovation and how it might remain so in the coming years. Its experts are asking why innovation happens in places such as Madison, Boulder, Colo., and Austin, Texas. It will issue a report on its findings later this year.

Topics during the Madison meeting will likely include drawing a virtual “map” of Madison’s innovation ecosystem; exploring the roles played by the UW–Madison, state and local governments, researchers, venture capitalists, and entrepreneurs in building and sustaining that network; examining the opportunities and obstacles facing startups and established technology firms; and identifying the reasons why the Madison region attracts talented people.

While economists don’t always agree on much, many agree that regions and cities are more important than states in defining economic growth simply because most states are too large and diverse to have a defined “state” economy. That’s especially true in Wisconsin, where there a sharp differences within the 400-plus miles that lie between Kenosha and Superior.

By looking closer at ourselves and inviting others to do the same, Wisconsin can create the conditions that will make its startup and “scale-up” economies more vibrant.

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