Do you own a business with high-growth potential—maybe even the potential to do an IPO (initial public offering) one day? If so, you’ll be interested in the results of a study published by the SBA’s Office of Advocacy in May. The Geography of Employment Growth: The Support Networks for Gazelle IPOs examined the factors in a geographic region that help fast-growing companies, or gazelles, flourish.
Remember the saying “It takes a village”? Well, it turns out it takes a village to create gazelles. Fast-growing companies flourish in regions that have strong entrepreneurial support networks (ESNs), including skilled labor, access to capital, and plenty of customers and suppliers.
Where are these ESNs? According to this study, ESNs with the strength needed to build IPO-worthy businesses are predominantly found in California, Massachusetts, Florida, New York and Texas. Although California accounts for approximately 12 percent of the U.S. population, it produces nearly 32 percent of all of new IPOs; Massachusetts, with 2 percent of the population and 7 percent of the IPOs, has the greatest concentration of IPOs per capita.
One city stood out as an entrepreneurial hotspot despite the absence of an entrepreneurial support network: Minneapolis-St. Paul, which is a hotbed for medical instrument companies and home to 10 percent of the IPOs in that industry.
One reason ESNs matter for small businesses, the report notes, is that small companies are more likely than big ones to rely on local service providers. How can your region encourage more gazelles? The report says partnerships between universities and high-growth companies, plus a focus on creating ESNs (rather than financial incentives such as tax breaks to attract business), will help encourage high-growth startups and IPOs.
Of course, one way to help your startup grow is by turning to the free support network you can access at your local SCORE chapter. Visit www.score.org to get matched with a SCORE mentor and get advice, counseling and more.