Q&A: Nurturing Innovative Companies on the Cutting Edge of Industry
March 2012 Newsletter
Ray Leach is the founding CEO of JumpStart Inc., a Cleveland, Ohio-based organization that has gained national recognition for its innovative model and economic impact in Northeast Ohio. In 2011, then-Secretary of Commerce Gary Locke named Leach a member of the National Advisory Council on Innovation and Entrepreneurship.
RoseAnn B. Rosenthal is the president and chief executive officer of Ben Franklin Technology Partners of Southeastern Pennsylvania, a business development organization founded in 1983. In 2010, then-Secretary of Commerce Gary Locke named Rosenthal to be a member of the National Advisory Council on Innovation and Entrepreneurship.
Recently, EDA asked two members of the National Advisory Council on Innovation and Entrepreneurship (NACIE)Ray Leach, the chief executive officer of JumpStart Inc. in Ohio, and RoseAnn B. Rosenthal, president and chief executive officer of the Ben Franklin Technology Partners of Southeastern Pennsylvaniaabout their work with NACIE and what they see as the challenges to successfully supporting small business development and entrepreneurship. Here are their responses.
Q: You have both been members of NACIE since its inception. What are the benefits of this public/private partnership?
Leach:NACIE has been a unique opportunity to broaden the range and depth of voices, perspectives, and insights shared with our federal leaders in Washington. This engaged collaboration has resulted in individual private, philanthropic, and institutional leaders working “outside the beltway” to generate more informed ideas to share with the administration. I have been incredibly impressed by how the administration has not only leveraged these insights but, more importantly, how they have taken very significant action on the Council’s recommendations.
Rosenthal: NACIE brought together accomplished individuals with varying perspectives and experiences with regard to issues of innovation and entrepreneurship. Together, they are able to speak to the key issues impeding our nation’s ability to leverage its tremendous assets for the sustained growth that is critical for today and for future generations. There has been an exchange of information and a willingness to join in developing recommendations that are practical and achievable. One example is the Access to Capital Report that NACIE produced and which informed the Start Up America legislation sent to Congress.
Q: Over the past three years, the Obama administration has undertaken a number of initiatives to promote private-sector investment and small-business development. Which of these do you consider to be the most important?
Leach: I think some of the most impressive efforts have been around access to capital, such as the $2 billion expansion of Small Business Administration (SBA) programs focused on providing capital (at no cost to the U.S. taxpayer) to private sector investors looking to put capital into high potential firms. Another example is the legislation to eliminate capital gains for small business investments. The administration has taken significant and dramatic action on these issues in response to NACIE recommendations.
Rosenthal: For our startup technology entrepreneurs, the core issue is the availability of pre-seed and seed capital. The efforts by EDA to seed regional efforts that coalesce communities around an innovation agenda, much as Ben Franklin was started by Pennsylvania almost 30 years ago, can yield long-term results. The SBA’s Intermediary Lender Program and Treasury’s State Small Business Credit Initiative programs open new sources of early-stage investment capital. These programs are important in that they create public-private partnerships with qualified and experienced intermediaries at the local level, and they make investment dollars, not grants, available to growth companies.
Q: Your organizations have had a lot of success in nurturing innovative companies that are on the cutting edge of industry. What are some of the keys to successfully launching a tech-intensive startup?
Leach: While there is a lot of conversation around capitaland for many good reasonsI think the most important asset that new initiatives and companies must have is great people. JumpStart is lucky to have an incredibly smart, committed, and hard-working team. At the same time, in our efforts to help other for-profit firms, we have made a significant investment in programs ranging from internships to executive placement services to help bring the brightest and most experienced minds to young companies in Ohio.
Rosenthal: First, people, people, people it is so important to have the right team and talented people, both leading and operating the company, but also advising the company. Second, pursuing a “lean startup” approach to product and company development. Capital is not easy to come by, and it is expensive. It is important to raise sufficient capital at the right time, at the right valuation, from the right set of investors. Third, a solid knowledge of the competition, your own competitive advantage, and how to exploit that advantage. And, fourth, where applicable, pursuing the appropriate intellectual property strategy.
Q: What do you see as the 21st century economic development model, and how does it differ from that of the past?
Leach: Since almost all net new jobs in our national economy are coming from startups and existing small companies across the country, we need to nurture and support the growth of high-potential young businesses. Economic development professionals today can benefit greatly from significant practical experience, either as long-standing advocates for small business or as businesspeople themselves.
Rosenthal: That is THE question for all of us in this arena. We are seeing a move in our society toward what has been called the “fourth sector”not public, not private, not government, but an approach that acknowledges the need for clearly “double bottom line” approaches and that creates new forms of public/private partnerships.
The National Advisory Council on Innovation and Entrepreneurship is a group that was organized to support President Obama’s innovation strategy by helping to develop policies that foster entrepreneurship and identifying new ways to take great ideas from the lab to the marketplace to drive economic growth and create jobs.