One of the biggest advantages for an entrepreneur with a new idea or business is getting support from skilled professionals, such as through strong networks, cooperative platforms, co-working hubs, and high-quality incubators and accelerators. Government should support the growth and development of those methods and others to connect entrepreneurs with helpful people and tools. Policymakers should:
- Develop competitive grants to modernize the 63 Small Business Development Centers (SBDCs) and more than 900 service locations, with a focus on facilitated learning through connections and peer support in entrepreneurial ecosystems.
- Create pay-for-success models that provide federal support to organizations that serve entrepreneurs when certain agreed-upon benchmarks are met, such as the number of new businesses created, ease of accessing appropriate capital, increased revenues, new jobs created and sustained, and underserved areas and populations reached.
- About a quarter of black (26%) and Latinx (24%) first-year business owners have only one or fewer other business owners in their network.
- Recent analysis found that the introduction of accelerators to a region has a significant impact on the number of early-stage deals for new businesses, and these deals are driven primarily by the emergence of local, new venture capital firms.
The EDA’s Regional Innovation Strategies program
Under the U.S. Economic Development Administration’s (EDA) Office of Innovation and Entrepreneurship (OIE), the Regional Innovation Strategies (RIS) program awards funding through two grant competitions: the i6 Challenge and the Seed Fund Support Program. Since 2014, the RIS program has made more than $100 million in federal grants to 224 organizations across 47 states and two territories, with more than $1 billion in additional capital investments.
The i6 Challenge funds a range of programs and services — including entrepreneurship centers, entrepreneurial ecosystem building, technology incubators, and startup accelerators — that support innovation-based, high-growth entrepreneurship. By providing proof-of-concept and commercialization assistance, these programs and services result in new businesses, jobs, and dynamic regional economies. To date, the i6 Challenge has awarded $80.6 million in grants to 150 projects. These funds have helped organizations support more than 4,000 entrepreneurs, resulting in more than 7,000 jobs being created and retained.
The Seed Fund Support grant competition provides funding for technical assistance and operational support to organizations that provide early-stage, equity-based capital to startups with high growth potential. The Seed Fund Support Program has awarded nearly $20 million in federal funds that have gone on to produce 74 Seed Fund Support awards. New businesses supported by grant recipients have generated more than 1,000 jobs across 158 companies.