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2013 October 14 - 12:00 am

COVER STORY: Democratizing Entrepreneurship

 

courtesy Kauffman Foundation
Students work inside the clean room/laboratory at Lorain County Community College. Entrepreneurial companies involved in Innovation Fund America have access to the Northeast Ohio facility.

C  O  V  E  R    S  T  O  R  Y

Democratizing Entrepreneurship
Colleges Promote Startups To Rebuild Economies
By Paul Bradley

The stereotype of the entrepreneur is firmly embedded in the American imagination.

He’s the mad scientist, all wild hair and lab coat, holed up in a laboratory or workshop in search of breakthroughs that elude lesser minds. This manic genius is a combination of whimsy and practicality and often speaks with a vaguely Germanic accent.

Or he’s the Harvard dropout, the inventor who’s not only a computer geek but also an inventor armed with the courage and foresight to harness technology, start a company, pursue a dream and make piles of money. Think Microsoft’s Bill Gates or Facebook’s Mark Zuckerberg.

These business idols have been elevated to mythic status, a veritable deity occupying spots up on Mount Olympus, inaccessible to the mere commoners on the ground.

But not all good ideas emanate from the halls of Harvard or divine inspiration. Some start with ordinary workers who have an idea and a vision, but don’t have access to elite research universities, modern laboratories or skilled mentors.

With that in mind, a leading foundation and a group of community colleges is striving to democratize entrepreneurship, bringing to open-access schools the infrastructure, support and financing for entrepreneurs heretofore reserved for the educational elite.

Innovation Fund America is a partnership between the Ewing Marion Kauffman Foundation and Lorain County Community College which is seeking to replicate LCCC’s successful formula in launching and growing technology-based business startups. The foundation has given the college a $1 million grant to get the initiative off the ground.

IFA has selected three other community colleges — Catawba Valley Community College (N.C.), Long Beach Community College (Calif.) and Johnson County Community College (Kan.) and — to pilot its program to invest in, mentor and motivate high-growth entrepreneurs.

The initiative expands on Kauffman’s history of working with colleges and universities to build entrepreneurship education programs and curricula. The foundation sees entrepreneurship as a long-term strategy for job creation and economic growth. With community colleges embedded in 1,200 communities across the country, Kauffman now sees an opportunity to build on its resources and experience to educate and inspire local residents to pursue entrepreneurial ventures.

The initiative comes at a time when entrepreneurship programs at community colleges are expanding fast. The National Association of Community College Entrepreneurship, founded in 2002, now counts more than 300 college members, said President and CEO Heather Van Sickle. NACCE shares Kauffman’s belief that entrepreneurship programs can make a significant impact on regional economies, as well as grow and retain enrollments.

The IFA was founded by the Lorain County Community College Foundation in 2007 in an area hit hard by the exodus of manufacturing jobs from Northeast Ohio. It was an outgrowth of the college’s existing entrepreneurial-support efforts, including the Great Lakes Innovation and Development Enterprise (GLIDE), an on-campus business incubator created in partnership with the local county commissioners and chamber of commerce.

The IFA offers support to new and young businesses through pre-seed stage access to capital, intensive coaching and mentoring, with internship and educational opportunities for students. Since its founding, the IFA has invested nearly $6.5 million in about 100 companies, creating more than 300 jobs and providing more than 150 paid internships for LCCC students

“What has happened in Northeast Ohio has created a pipeline for entrepreneurs, and this program is at the center of it,” said Paul J. Corson, advisor to the president for strategic partnerships at LCCC and a former deputy director of the U.S. Commerce Department. “We’ve seen the entire process democratized. These projects don’t just come from the research universities. This is a matter of lowering the barriers.”

Now, principals are trying to spread the formula to other community colleges.

First out of the gate is Catawba Valley Community College, located in Hickory, N.C., a city still recovering from the collapse of what were the twin pillars of its economy: furniture manufacturing and textiles. Over the past decade, the region has lost more jobs to foreign competition than just about any other area in the country.

Over the past decade, Catawba County has consistently had some of the nation’s highest unemployment rates as textile mills have closed, furniture factories have dwindled and fiber-optic plants have undergone mass layoffs. The college responded by offering laid off workers training in fields like accounting, air conditioning, landscape design, nursing, medical technology and others.

But the economic recovery has been slow, and regional leaders are rethinking their approach to rebuilding the economy.

Last month, the college announced the start of Innovation Fund North Carolina, which is planning to award $1.2 million in grants and loans to high-tech startups across the state over the next year. The future of the state economy, said college President Gordon Hinshaw, now depends on new business startups and small businesses. The grants will focus on startups related to agriculture, advanced manufacturing, health care and information technology.

Money will go to businesses in the “pre-seed” stage, those that have exhausted their personal resources, don’t have investors or venture capital backing but need capital to grow. Awards consist of $25,000 grants and up to $100,000 in non-recourse loans, meaning that if a company fails, it is not obligated to pay back the money, said Jon Robinson, manager of entrepreneurship programs at Kauffman. Businesses must agree to intense coaching and mentoring and agree to take on students for paid internships.

If the startup is successful, the founder pays back the loan with no interest. The overall plan is for the fund to replenish itself: successful startups repay their loans, and that money is then used to help another high-potential startup Robinson said.

Community colleges, with their long history of workforce development efforts, are a natural place for the entrepreneurship initiatives, Hinshaw said.

“Our boots are on the ground every day,” he said. “We are charged with making connections with our citizens. That’s our job.”

When the Kauffman Foundation last year announced it was seeking community colleges where it could spread the IFA concept, Hinshaw was all in from the start. He spent days with Kauffman officials making his case to be included in IFA.

“We’ve worked with networks of entrepreneurs in North Carolina,” he said. “But they’ve been very disconnected. Given the state’s economic condition and the knowledge of the power of startups, I wanted to make sure we had an opportunity to share those best practices.”

The Kauffman Foundation has been promoting entrepreneurial education for a decade. But its work has primarily been confined to four-year colleges and universities, and it’s still getting familiar with the community college world. Since the 2003 launch of the Kauffman Campus Initiative, the foundation has made $40 million in grants to 18 campuses, Robinson said. It’s hoping its work with community colleges will have a significant impact on regional economies.

“We made real strides in injecting entrepreneurship education across these 18 campuses,” he said. “But in terms of economic development, the impact has been debatable. So we looked to how to create entry to these programs with lower barriers. We saw that community colleges had strong workforce development programs with a deep-seated culture of experiential learning.”

Still, for colleges, embracing entrepreneurship is something of a cultural change. Colleges have worked for years with small businesses and Main Street entrepreneurs. But the IFA work is something new.

“The colleges have not seen themselves as having great value to startups,” Corson said. “But we think we can expand their options. We’re confident in the quality of the colleges. We’re confident that startups will like the money that’s available. We want them to come for the money, but stay for the quality.”

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