Yesterday, I got an email from past Midwest House speaker and current very good Substacker Donna Harris — founder and CEO of Builders + Backers — with a piece she’d written breaking down the latest Kauffman Foundation data on entrepreneurial activity. It’s a heck of a good read (see below), and you better believe it got the wheels turning (maybe spinning?).
The headline numbers in the report seem like pretty good news if you’re a “rah-rah entrepreneurship guy”: business formation is up 16% above pre-pandemic levels. More people are starting things - that’s cool.
But two other numbers tell a very different story. Startup job creation has fallen 33% from its peak. And first-year business survival rates have slipped below pre-pandemic levels. Very not cool - and if you’re reading this I can’t imagine you’re that surprised.
Donna then does an amazing job of putting these numbers in context of how startup ecosystems are designed and how they need to change:
“Over time, the ecosystem became optimized for a narrower definition of entrepreneurial success: outsized venture returns. And that matters because economic systems produce what they are designed to reward.
While entrepreneurship broadened across America, capital concentrated at the top. In other words, the entrepreneurship economy diversified while the startup financing system consolidated.
Today, venture funding flows disproportionately to a tiny number of companies, founders, and regions. Massive rounds cluster around late-stage firms. AI investment is accelerating the concentration even further. Fewer funds control more capital. Fewer startups capture more attention.
At the exact same moment, the actual entrepreneurship economy is becoming broader, more distributed, and more demographically diverse than the infrastructure designed to support it.“ - Donna Harris
This hit something fierce for anyone else?
It immediately made me think of last week’s incredibly successful Michigan Tech Week in Detroit where I found myself running into an all too familiar ambiguity where dynamic energy from founders and exciting new collaboration from ESOs mixed with whispers of real systemic panic from some of the most successful people I know.
We’re very much in a liminal moment. No great insight there. But what I really loved about this essay is it’s conclusion:
“We spent fifteen years building systems designed to increase startup formation. The next fifteen years may require systems designed to increase entrepreneurial durability, adaptability, and local economic resilience.” - Donna Harris
No small thing to be sure. But also something that sounds pretty damn in line with a lot of what I hear from folks around our community.
A thing I’ll be taking into my travels and conversations this summer: what do those kind of systems looking like? How do we build them? And how do we fit them authentically to the needs of our communities?
Did someone say travels?
Midwest House Summit Ohio — July 29–31, Columbus, OH. Walked through the venue last week. It’s an incredible room in a great neighborhood. Early bird tickets close this week — grab them before the price goes up: https://luma.com/v1b3ggkg
New York Tech Week — June 1-5, New York City. I’ll be there. If you’re heading to NYTW, hit reply and let’s find time to connect while we’re both in the city. A couple of events you’ll find me at:
The Heartland Venture Summit - June 3 - 11am-1pm
Frontier House NYC Mixer - June 3 - 3pm-6pm
Summerfest Tech AI — June 23-26, Milwaukee. One of our fave gatherings on the shores of our fave lakes. Worth the trip if you’re anywhere near. Summerfest Tech
Also DealRoom released their Global Tech Ecosystem Index this week, and StartMidwest did a full write: HERE
Like what you read above? Forward this to one person who’d want to read it. That’s how this list grew, and that’s how it keeps growing.
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