Boston was ranked No. 1 among the top 25 startup hubs in the U.S. according to a recent report by the U.S. Chamber of Commerce Foundation and startup incubator 1776. Following are six factors that I believe enable a startup hub like Boston to be top-notch:
- Smart, well-educated young people. This – beyond the venture capital, incubators, or the presence of large, well-established companies – is the foundation for a rich entrepreneurial ecosystem. And smart, well-educated people, in turn, means the presence of substantial universities with strong research budgets; students from around the world; and a culture of practice-oriented, problem-solving education that leads to technology spin-offs (much like Northeastern University).
- Universities that are seen not just as a source of education, but also as a source of interesting, next generation applications of science and technology. This is the spin-off idea. The evidence of startup-producing education systems includes active on-campus incubators and student-friendly technology licensing offices, as well as recent examples of successful ventures started by students or recent alumni. I believe that our universities are our greatest sources for innovation in the decades ahead, and work should be done to make them even better seeding grounds for the next great ventures. The focus of that work is to create an environment where students can start companies while they’re still students. They should not feel compelled to have to drop out of school to start a company, but rather engage in coursework and incubation programs, and receive the mentoring needed to develop an idea, test it, and then launch it upon graduation. For instance, in our IDEA student-led venture accelerator at Northeastern, we have over 200 companies in process.
- A strong local technology industry or scaled services industry. The majority of entrepreneurs have 5 to 10 years of work experience before venturing out for their own ventures. Strong, growing companies are good and important training grounds for the disciplined business and R&D practices needed for successful venture development. About half of the founders in our IDEA incubator at Northeastern are young alumni under the age of 30. And for the IDEA entrepreneurs who are current students, there is no doubt in my mind that Northeastern’s co-op program prepares students with the maturity and industry savviness that is essential for successful entrepreneurship.
- A culture of successful entrepreneurship. This means role models of ventures that have launched, scaled, and perhaps even exited. It is success building on success. Over the summer, for example, we had a D’Amore-McKim alumnus sell his company for nearly $300 million to Cisco, and another for close to $70 million to IBM. And at an earlier stage, about 50 ventures that have launched from IDEA over the past three years have now collectively raised more than $70 million in venture capital. These types of successes inspire new, prospective entrepreneurs to take the plunge. At a deeper level, a society needs to respect entrepreneurs as innovators and contributors to the health and well being of society. We take this for granted in the U.S., but in other countries, that cultural lack of respect for entrepreneurship remains a challenge.
- Readily available sources of money for concept prototyping for technology-intensive ventures. This can be in the form of angel money or early stage venture capital (where in fact, Northeastern has a number of alumni actively involved in angel and VC groups in the Boston region), government grants (such as our SBIR/STTR programs from the National Science Foundation or National Institute of Health) or special funds from universities themselves (we have an Alpha Fund at Northeastern specifically designed for this purpose).
- A culture of older, successful entrepreneurs helping younger entrepreneurs. “Mentoring” of young entrepreneurs by older entrepreneurs has been, and will always be, an important ingredient of any thriving entrepreneurial ecosystem. Many universities are now forming their own mentoring groups. Northeastern’s Health Sciences Entrepreneurs and the University-wide Venture Mentor Network collectively have more than 280 mentors engaged with Northeastern startups. This is just one of the ways that Northeastern has organized itself and its alumni to create one of the “hottest,” most active university-based entrepreneurial ecosystems in the country.