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Build a better network

by Carol James

April 2002

In 1983, a few entrepreneurs and service providers in Research Triangle Park, N.C., got together to promote homegrown start-ups in the region. They called themselves the Council for Entrepreneurial Development (CED) and their first public event was a seminar on accessing venture capital. They were astounded by the turnout – 200 people showed up. Organizers knew then that they were on to something.

The CED is one of five entrepreneurial networks described in a National Commission on Entrepreneurship (NCOE) report, Building Entrepreneurial Networks. Effective networks can open doors to capital, help entrepreneurs learn from and do business with each other, and give them access to mentors, service providers, technology and customers, note authors Erik Pages, NCOE policy director, and Shari Garmise, an independent consultant to NCOE.

Traditional business networks such as chambers of commerce have long been a source of information and resources for local business people. Entrepreneurial networks can provide similar assistance for a region's entrepreneurial community by providing services, resources for start-up and early-stage companies, and even moral support to help entrepreneurs get through the trials of starting a company.

In the case of Research Triangle Park, an entrepreneurial network developed a regional culture that supports entrepreneurship and existing businesses. Local business, industry and academic leaders had created the park in 1959 with the goals of making the region a research and development center and diversifying the local economy. Although early efforts brought in major companies and research organizations, traditional sectors continued to dominate. Raleigh-Durham-area business leaders, aware of entrepreneurial development along Boston's Route 128 and in Silicon Valley, saw the failure to generate wealth from local entrepreneurial efforts as a shortcoming. They formed the CED to facilitate mentoring and networking opportunities for local entrepreneurs with an agenda that included education, attracting venture capital and providing a network for information exchange.

Today CED has a staff of 20 and a $1.5 million annual budget to serve its more than 5,000 members. It hosts one of the nation's largest annual entrepreneurial financing conferences, has developed special interest networking groups, provides entrepreneurial training programs and sponsors many other activities.

Pages and Garmise report that entrepreneurial networks can provide numerous benefits, such as brokering relationships for entrepreneurs and creating a unified voice for achieving regional economic growth.

Entrepreneurial and other business-related networks may result from the work of visionary leaders and organizations or develop in response to economic change, such as corporate or federal downsizing. Or, a community may launch an entrepreneurial network with the goal of building leadership in the business community.

If you need help establishing or boosting entrepreneurial networks in your community, Building Entrepreneurial Networks can help. It offers a wealth of information about successful techniques for starting effective networks (see “Networking success in 10 steps”) and delineates the best practices behind them. The report uses five case studies, including the CED, to demonstrate that starting an entrepreneurial network won't be easy, but it likely will be well worth the effort.

Learn by example

Building entrepreneurial networks can translate into far-reaching regional benefits. The report cites NBIA member Ben Franklin Technology Partners of Southeastern Pennsylvania (BFTP/SEP) as an example of how a business support program started with public funding can create new networking opportunities for entrepreneurs.

BFTP/SEP is a nonprofit economic development organization designed to stimulate economic growth through innovation, entrepreneurship and new technology development.

By leveraging its resources and contacts, the nearly 20-year-old public-private partnership has created networks of technical and management experts for entrepreneurs, networks that support technology transfer, and networks that provide opportunities for emerging-company CEOs within industry sectors to share goals and experiences and conduct business. The organization also links new entrepreneurs with community and minority businesses, providing an expanded client base for the existing businesses and resources for the entrepreneurs as their businesses grow.

Additionally, BFTP/SEP builds alliances that network the networks. For example, BFTP/SEP has joined with the Delaware Valley Industrial Resource Center and Philadelphia Industrial Development Corp. to expand business resources by creating an export consortium, developing new financing organizations and winning numerous state and federal grants. By combining their staffs in joint offices, BFTP/SEP and its networked partners also improve business service delivery because service providers can respond more quickly to business needs, staffs receive cross training and communicate more effectively, and businesses accessing one program connect with other regional resources.

Follow a vision

Sometimes, entrepreneurial networks get their start from a visionary leader or organization, as is the case with the IC2 Institute in Austin, Texas. Founded by George Kozmetsky at the University of Texas, IC2 has been a critical factor in the city's economic transformation to a technology economy, according to the report. Kozmetsky's vision was to rethink the city's economic reliance on the university and state government. In 1977, he started the Institute for Constructive Capitalism, later renamed IC2 – for innovation, creativity and capitalism. IC2 has started networks including The Capital Network, a venture capital organization; The Austin Software Council, which represents software and related technology companies; and the nationally recognized Austin Technology Incubator (ATI), an NBIA member and 1994 Randall M. Whaley Incubator of the Year.

Incubators, by nature, create entrepreneurial networks when they link clients with service providers, investors and other entrepreneurs. ATI is a significant player in Austin's technology economy – five publicly traded companies have come out of the program, and its 64 graduates employ more than 2,800 people.

ATI and the IC2 Institute have benefited the community in many less quantifiable ways by bringing together government, academic and private sectors for regional economic growth. For example, a team that included Kozmetsky recruited the Microelectronics and Computer Technology Corp. to the city, an event that helped catalyze development of the city's high-tech economy.

Other networking needs

For some communities, a need for coping with economic transition or developing business leadership may motivate the start of entrepreneurial networks. The report describes how planned downsizing of a federal laboratory and a lack of networking opportunities led the Eastern Idaho Economic Development Council to found the Eastern Idaho Forum for Information Technology. To provide opportunities to build on the high-tech skills of area workers, the council chose a technology focus and studied similar organizations in other regions. The 3-year-old forum now is "networking the network" to add value for its participants.

The report also explains that instead of reinventing the wheel, existing business networks can evolve to meet community needs. To maintain a flow of up-and-coming local business leaders, the Tulsa (Okla.) Metro Chamber of Commerce focused some of its networking activities to develop business leadership. In addition to traditional networking opportunities such as a monthly breakfast and committees, the chamber has developed networks that help entrepreneurs make contacts with strategic partners, investors or others. The chamber keeps the focus on building relationships among people and thus on developing new leaders.

According to Building Entrepreneurial Networks, a focus on people is what counts in entrepreneurial networking. "Soft, people-based assets matter … entrepreneurs thrive in regions where they can effectively network with other entrepreneurs."

For more details about how these organizations started and why they flourished, access the report online at

Networking success in 10 steps

The National Commission on Entrepreneurship report Building Entrepreneurial Networks presents 10 steps for building effective entrepreneurial networks. Although communities will carry out those steps in various orders, the report describes the rungs on the ladder to networking success:

1. Map the territory. Analyze the need for a network. Examine relationships among existing business and civic organizations, measure entrepreneurial demand for a network, identify unmet resource needs, and determine what type of network fits regional or local economic goals.

2. Sketch the plan. Decide how to meet the needs identified in the analysis. Possible strategies range from providing money and staff to existing or emerging networks to starting a new network from scratch. Most communities use a combination of strategies.

3. Identify and approach leadership. Community leaders must locate a committed entrepreneur or group of entrepreneurs or someone else with status in the business community to catalyze the network development process. In some cases, visionary leaders come forward to steer the endeavor.

4. Launch pilot efforts. This step outlines the nuts and bolts of operating the network. Who to invite and how, where and when participants will meet, and related considerations come into play here.

5. Outreach to businesses. Market the network to the businesses and entrepreneurs you want to use it. Develop a brand for the network, keep membership dues low and build media relationships.

6. Seed and replicate. One network can begin to build an entrepreneurial infrastructure, but more networks are better. For example, Ben Franklin Technology Partners of Southeastern Pennsylvania, a network in and of itself, helped launch a venture organization and provided seed money for a technology business network. To increase the number of opportunities for businesses to enter networks, organizations can replicate programs. An example of replication is offering the same events or programs at different times to draw in different groups of entrepreneurs.

7. Build strategic alliances (network the network). Build strategic alliances with other organizations that enhance the reach and resources of the network.

8. Let the pot boil. Just like soufflé sometimes falls, entrepreneurial networks can collapse. And they take a lot more time to prepare. Expect to invest at least three or four years before significant change becomes apparent, and keep the network flexible.

9. Tell the story. Networks should highlight local heroes, show growth and development, spotlight new and growing resources, market local events and search for recognition opportunities such as national awards programs.

10. Letting go. Eventually the network must take care of itself, although the founding institution should remain a partner and supporter. According to the report, "Letting go is really the highest measure of success for networks. It signals the build-up of a critical mass of entrepreneurs who can sustain the network organizationally and financially."—CJ

Keywords: networking, strategic partnerships

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