by Corinne Colbert
As the world’s leading organization for business incubation professionals, NBIA prides itself on providing outstanding member service. In everything we do, the NBIA staff consider you, our members, first. When we program the International Conference on Business Incubation, every session proposal is evaluated on how useful and interesting it will be to you. When we decide what books to publish or sell through the NBIA Bookstore, the litmus test is: What do our members need?
But as the incubation industry enters its 50th year, and as NBIA nears its 25th anniversary, we are finding that great member service isn’t enough. If the industry is to survive difficult financial times – let alone grow – NBIA must use its position to advocate for business incubation.
Advocacy is not incompatible with member service, says David Lohr, executive director of the Virginia Biosciences Development Center in Richmond, Va., and chairman of NBIA’s Board of Directors. In fact, he says, “advocacy is the very essence of member services, because there is strength in numbers.” Telling federal policymakers about a single successful program won’t gain support for all incubators. By aggregating the successes of many programs, though, NBIA can demonstrate that incubation works and is worthy of funding.
And there has never been a better time to speak up on behalf of entrepreneurs and the programs that help them achieve success, says David Wilhelm, former chairman of the Democratic National Committee and Bill Clinton’s 1992 campaign manager.
“This is the right time for the voices of entrepreneurship to step forward and make their case,” says Wilhelm, now president of Woodland Venture Management, the Midwestern seed fund he founded in 2002. The change in administration in Washington, D.C., combined with the need to revive the economy, makes this “the most opportune time in a generation” to advocate for entrepreneurship.
“The American political system is looking for the sort of new answers and new policies that NBIA represents,” he says.
In this article, we’ll tell you what NBIA is doing to draw policymakers’ attention to business incubation – and how you, our members, can help us do it.
First, though, let’s be clear about what NBIA doesn’t plan to do: hire a lobbyist. We don’t have the resources for it (a full-time lobbyist can cost $300,000 a year). And those in the know say it really isn’t necessary.
“There aren’t enough issues that affect incubators directly to warrant a full-time lobbyist at the federal level,” says Erik Pages, former policy director for the National Commission on Entrepreneurship. Now an independent consultant on economic development issues (and NBIA’s “Legislative Updates” columnist), Pages lives just outside Washington, D.C.
Influencing policy is all about relationships, Pages says. “You don’t want to be in a situation where you’re always coming to [policymakers] hat in hand saying, ‘Do something for me,’” he says.
Instead, he says, NBIA should leverage its position as the industry leader to give legislators information about entrepreneurs’ policy needs. “[Policymakers] want to know what’s going on in small business and the economy,” Pages says. “NBIA can be a resource for them. You bring access to voters and access to expertise.”
By developing those relationships and supplying solid information, Pages says, NBIA can position itself in leaders’ minds as a go-to source on entrepreneurship and business incubation. “When a policy decision is being made about economic development, their question should be, ‘What does NBIA say about this?’” Pages says.
With a new president, new agency heads and many new office holders, it’s also time for NBIA’s central office and members to refresh relationships in Washington (and statehouses), says NBIA President & CEO Dinah Adkins. “We need your help now to contact congressional and state leaders to ensure they understand that business incubators are the most effective job creators and that our network will be vital to jumpstarting the U.S. economy.”
“NBIA also will work with members throughout the year to help incubators make the case for greater recognition – and greater funding – from federal agencies such as the U.S. Department of Commerce Economic Development Administration,” Adkins says.
The first step in demonstrating incubation’s effectiveness is gathering data. NBIA has plenty of experience in this area: We published the first State of the Business Incubation Industry in 1989 and the first major impact study, Business Incubation Works, in 1997.
But policymakers and the media aren’t interested in a 12-year-old study. They want new information, and NBIA is ready to give it to them.
Since January, we have publicized the results of a study on the effectiveness of public works grants made by the U.S. Department of Commerce’s Economic Development Administration. The study, “Construction Grants Program Impact Assessment Report,” found that EDA-funded business incubators created at minimum three and a half times more jobs than any other agency investment. Even better: Incubator jobs cost three and a half times less than jobs created by other project types.
NBIA broadcast this good news with press releases to media outlets nationwide, as well as to members of the U.S. Congress. We also gave members a variety of publicity tools – such as template op-ed pieces and letters to legislators – so you could help us spread the word. (Get details and tools at www.nbia.org/works.)
We’ll have more ammunition later this year when the results of a current EDA-funded study come in. NBIA is working with researchers at the University of Michigan and University at Albany, SUNY to determine the link between incubation best practices and incubation outcomes.
“Increasingly important driving factors in our economy are innovation, new enterprise formation and technology commercialization,” says Larry Molnar, associate director for Community and Economic Development Programs at the University of Michigan in Ann Arbor, Mich., and the study’s lead researcher. “An important, if not the most important, part of that process is business incubation – when done properly.” By showing what practices make an incubation program more likely to succeed, Molnar says, the study can help NBIA formulate policy recommendations for federal incubation funding.
“You have to come to Capitol Hill with an agenda that’s as quantitative as possible: Here are our numbers, here’s what works, here’s what doesn’t,” he says. (He knows what he’s talking about: As past president of the University Economic Development Association, an organization of university economic development programs, Molnar visits Washington several times a year to meet with legislators.)
NBIA also is available to help you with your research needs. Last fall, we completed a contracted study of business incubation programs in Ohio for the Ohio Department of Development. In preparation for working with the ODOD to strengthen the state’s incubator support programs, NBIA developed extensive information on Ohio’s incubators, including their demographics, practices and needs. We can do the same for your state or region.
To be most effective, incubation should be one part of a larger economic development strategy. NBIA is always urging you to work with other like-minded programs and organizations in your community so you’ll be part of the larger picture (and to ensure you aren’t duplicating services).
Now we’re doing more to follow our own advice. In recent years, we’ve increased efforts to send representatives to conferences held by other entrepreneurship organizations, including the Association of University Research Parks, the National Association for Community College Entrepreneurship and the State Science and Technology Institute, and to incubation conferences elsewhere in North America and overseas.
But turning up at each others’ events won’t get entrepreneurship organizations their due from Washington or help their members fulfill their missions, Wilhelm says. “This nation has lost its way. It’s time we got back to the basics of building businesses,” he says, and NBIA and its allies can be a big part of that.
Working together will be vital, adds Dan Berglund, president of SSTI. “The whole economic development community needs to do a better job in educating the federal government and Capitol Hill as to what’s going on in today’s economy,” he says.
Some of that cooperation is already taking place. Last fall, Adkins was one of 11 members of a committee convened by the Association of University Research Parks to prepare a series of policy recommendations to improve American competitiveness and innovation. The result, “The Power of Place,” made 13 specific recommendations that frequently included support for business incubation.
And in January, a group of entrepreneurship organizations sent a policy agenda to the Obama administration encouraging creation of “Innovation America,” a framework to coordinate the work of existing organizations (including NBIA) to streamline assistance to start-ups and emerging companies.
“There is an enormous overlap in what NBIA is doing, what we’re doing, what SSTI is doing,” says Jim Jaffe, president of the National Association of Seed and Venture Funds and a co-author of the “Innovation America” proposal. “I want to see how we can have a more coordinated [policy] effort without stepping on anybody’s toes.”
NBIA will be joining SSTI, NASVF and others in series of teleconferences and coordinated policy pushes, Adkins says.
Dinah Adkins, president & CEO, NBIA, Athens, Ohio
Dan Berglund, president, State Science and Technology Institute, Westerville, Ohio
Jim Jaffe, president, National Association of Seed and Venture Funds, Philadelphia
David Lohr, executive director, Virginia Biosciences Development Center, Richmond, Va.
Larry Molnar, associate director for Community and Economic Development Programs, University of Michigan, Ann Arbor, Mich.
Erik Pages, president, EntreWorks Consulting, Arlington, Va.
David Wilhelm, president of Woodland Venture Management in Chicago and former chairman of the Democratic National Committee, spoke at NBIA’s Third Summit for Advanced Incubation Professionals. Here are some of the things he had to say about the political climate for entrepreneur support:
This meltdown just may be the best thing that ever happened to [incubation], because all of you are about to be moved from the back of the bus to the front row. Business builders are about to be brought front and center into a national debate over what constitutes honest capitalism, how to best promote genuine entrepreneurship, how to reconnect hard work, achievement and accountability in this great country of ours.
The past decade has not been overly kind to seed stage or start-up investing – at least not by contrast to what’s been going on in the world of private equity investing. All venture-related investing represented just over 10 percent of all private equity investment last year, according to Dow Jones. Even within that 10 percent slice, the share of dollars committed to seed-stage businesses dropped from 16 percent to roughly 4 percent between 1995 and 2007. Angel investors are making up some of that gap, but the bottom line is that the explosion of institutional private equity capital in the United States over the past decade has completely bypassed seed-stage and early-stage investing.
At the same time, Congress and the U.S. Small Business Administration have brought an end to the SBIC participating securities program, not to mention the New Markets Venture Capital Company program that was central to [Woodland Venture’s] development. This just doesn’t make sense.
After all, it’s risk taking, it’s innovation, that represents America’s competitive advantage internationally. It’s not our education system or our system of health care that are the envy of the world; it’s our entrepreneurial capacity, our capacity to innovate, and our ability to bring new products and new companies to the market that gives us an edge.
The true hero in the American story is the entrepreneur. Just look at a [fall 2008] poll commissioned by the Kaufmann Foundation. When asked, “Who do you have more faith and confidence in to guide the U.S. economy?”
We need to pursue our own agenda – an agenda that calls for a new and improved SBIC program, a revitalized New Markets venture capital program, funding for operational assistance, funding for university research and technology transfer. The people in this room are the Main Street of the next economy. We represent the heroes. We are the true guardians of the entrepreneurial spirit. We are the authentic defenders of America’s competitive advantage. The new president and the new Congress will listen to us.
The big changes that will empower the people in this room go beyond the usual cyclical stuff. Because I think America just received a huge wake-up call. The days of easy credit and huge debt are over. The days when financial engineering takes precedence over managerial excellence are over. The days when 40 percent of all Harvard undergrads want to be investment bankers are over. The days when such a disconnect exists between the primacy given entrepreneurship in the American story and the short shrift it is given in the public policy of our nation, I believe, are over.
So, I’ll tell you what I’m going to do over the next few months. I’m going to double down. I’m going to go out into the marketplace, along with my partners, and raise a new fund. I’m going with a regional strategy and an early-stage strategy. When others are pulling back, that can be precisely the time to move forward.
That’s my sense of America. I know it’s your sense of America. These are tough times. We’ve faced tougher. Thanks for everything you do. Let’s get to work.
Keywords: advocacy, effective communication, marketing and promotion, NBIA programs, networking, policy, research -- incubation, strategic partnerships
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