Starting with Why – Part 1 of 3
November 27th, 2018
by Danny Laudick, Executive Director
Not many may recognize the name Red Cedar, but it is something I’ve had the opportunity to spend the last three years helping bring together. As of January 1st this year, Red Cedar officially launched as a new public-private partnership, brought together between the Cedar Valley’s private businesses, cities, colleges, and economic development partners. More than just an accelerator or venture capital fund, Red Cedar is a startup catalyst, founded to champion innovation and entrepreneurship throughout the Cedar Valley.
But in all fairness what does that mean? And more importantly why does it matter? There is a lot of buzz around topics like entrepreneurship, innovation and start-ups, but there usually aren’t good definitions for them.
The best way I’ve found to explain it is using the old adage “small businesses are the job creators.” The adage is very often true, but there is a piece missing. In 2013 MIT published a research report specifically to answer the question of who really are the job creators? And what they found was surprising.
They discovered that it isn’t the size of the business that matters – it’s the age.
The researchers found that young companies, those less than five years of age, account for nearly all net job creation across the country. While they make up a small portion of overall employment, it’s these young start-up companies that are often creating new products, commercializing new technologies, and solving new problems in ways that didn’t previously exist.
But that doesn’t mean that large, established companies aren’t equally important.
Established companies are often the major anchors of research and new technological development, spinning off new products and companies in the process. And they’re often the first customers, investors and even buyers of new startup companies (remember a small business called the Waterloo Gasoline Engine Company acquired by John Deere?). With an average age of 42, most startup founders got their experience from working at other companies before starting something of their own.
So what does it mean to champion innovation and entrepreneurship across the Cedar Valley?
Just as we build new roads, railways and utilities to support businesses, it means strengthening connections between entrepreneurs and investors, researchers, customers, and subject matter experts – helping to connect the dots between them and accelerate the growth of new products and companies. It means creating a culture of support that collaborates openly, seeks new opportunities, understands the startup journey, and plugs entrepreneurs into some of the best resources in the country to build their company.
That’s what Red Cedar was created to champion. And how we do it is just as important as why. This article is the first of a three part series, so keep an eye out for the next article about Red Cedar’s work – and the difference we hope to make in the Cedar Valley.