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© 2013 Ewing Marion Kauffman Foundation
www.kauffman.org
Measuring Entrepreneurial
Ecosystems
March 16, 2015
Jordan Bell-Masterson
Colin Tomkins-Bergh

Indicators of
Entrepreneurial Ecosystem Vibrancy
Kauffman synthesis of leading research to answer the
question:
What do we measure and how do we measure it?
Why? To gauge progress, inform program design, and to
guide resource and funding decisions

Four Categories; Twelve Indicators
• Connectivity
o Program connectivity
o Spinoff rate
o Dealmaker network
• Diversity
o Diversity of economic
specializations
o Economic mobility
o Immigrant share
• Density
o Entrepreneurial Density
o Young firm employment share
o High-tech firm density
• Fluidity
o Population flux
o Labor market reallocation
o High-growth firms
Stangler and Bell-Masterson: Measuring an Entrepreneurial Ecosystem

Density
• We want to measure density, not volume
o By e.g., population, geography
• For example, Boulder is small, but clearly punching
above its weight

Density: New and young firms
0
50
100
150
200
250
300
Firms Age 0 per 100,000 people
United States Kansas City Metro Area
Source: BDS for Firm Data, and BEA for Population Data
http://www.census.gov/ces/dataproducts/bds/data_firm.html and http://www.bea.gov/regional/downloadzip.cfm

Density: Employment Share of Young Firms
Source: U.S. Census Business Dynamics Statistics
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
United States Austin Metro Area Denver Metro Area
San Francisco Metro Area St. Louis Metro Area Boston Metro Area
Kansas City Metro Area

Density: High-Tech
Kansas City has a high-tech firm creation rate of 11.188,
which ranks 36 out of 365 metros.1
o High-tech = IT, biotech, and advanced manufacturing (per Hecker (2005), Bureau
of Labor Statistics)
Source: Kauffman Foundation
http://www.kauffman.org/~/media/kauffman_org/research%20reports%20and
%20covers/2014/01/beyond_metropolitan_startup_rates.pdf
1 Using NETS high-tech over 2009-2010;
Averaged over 2 years, then per 100,000 population

Density: High-Tech

Fluidity
• Reallocation – the process by which a resource
becomes more and more efficiently deployed
o E.g. Economic reallocation, demographic reallocation
• Perfect information only found in theory, so churn
typically represents improvement
o See Haltiwanger et al. (2012) for importance of labor market reallocation

Fluidity: Population Flux
Source: IRS, SOI Tax Stats - Migration Data Downloads - County to County Migration Data
35,721 36,793
(1,072)
69,374
71,533
(2,159)
(10,000)
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
inflow outflow net
# of Households # of People

Fluidity: Labor Market Reallocation
Labor Market Reallocation = Separations minus Job Destruction as a share of EmploymentSource: QWI
http://qwiexplorer.ces.census.gov/
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
KC
Omaha
Denver

Fluidity: High-Growth Firms
Kansas City has a high-growth firm creation rate of 24.846,
which ranks 92nd out of 365 metros.1
1 Using Inc. high-growth companies over 2010-2012;
Summed and divided by population in millions.
http://www.kauffman.org/~/media/kauffman_org/research%20reports%20and
%20covers/2014/01/beyond_metropolitan_startup_rates.pdf

Connectivity
• Recipe, not just ingredients
o How do entrepreneurs, investors, programs etc. get mixed?
• St. Louis example

Connectivity:
Programs
Think Locally, Act Locally

Think Locally, Act Locally
Connectivity:
Programs

Connectivity: Spinoff Rate
Source: Heike Mayer
http://www.kauffman.org/newsroom/2013/06/new-map-tracks-evolution-of-
entrepreneurship-in-kansas-city

Connectivity:
Dealmaker Networks
Boston
Silicon
Valley
Minnea
polis Denver RTP Austin Chicago Phoenix
Kansas
City Omaha
Investors 6017 8543 2088 3092 1294 1473 3916 1562 394 371
Operators/
Entrepreneurs 31292 54154 11877 15003 6114 6714 23003 8593 1976 2134
Dealmakers 1703 4439 378 478 136 202 562 190 43 30
Total Dealmakers /
Total Actors 4.56% 7.08% 2.71% 2.64% 1.84% 2.47% 2.09% 1.87% 1.81% 1.20%
Total Dealmakers /
Total Companies 000s 136.9 226.3 56.6 68.4 50.3 68.6 39.9 33.1 25.1 21.8
Dealmaker = Actor with 3 or more equity
positions in private companies
Source: Ted Zoller, UNC

Connectivity: Dealmaker Networks
Healthcare (59)
Information Tech (44)
Telecom (6)

Connectivity:
Dealmaker Networks
Central Connected Network
Standalone Syndicates
Inter-firm Syndicates
Disassociated Firms

Diversity
• Avoid becoming a monoculture
o E.g. Detroit vs. Seattle
• Both in terms of firm sectors, and types of people
founding the firms

Diversity: Multiple Economic Specializations
Sector KC Boulder Boston
NAICS 517
Telecommunications
2.36 0.98 0.87
NAICS 518 Data
processing, hosting
and related services
2.15 2.76 ND
NAICS 323 Printing
and related support
activities
1.77 1.08 0.97
NAICS 524 Insurance
carriers and related
activities
1.68 ND 1.26
NAICS 492 Couriers
and messengers
1.58 0.52 ND
NAICS 511 Publishing
industries, except
Internet
0.9 6.38 2.6
NAICS 334 Computer
and electronic product
manufacturing
0.69 6.24 2.5
NAICS 518 Data
processing, hosting
and related services
2.15 2.76 ND
NAICS 541
Professional and
technical services
ND 2.43 1.53
NAICS 312 Beverage
and tobacco product
manufacturing
0.62 2.01 0.52
NAICS 451 Sports,
hobby, music
instrument, book
stores
1.1 1.91 0.94
NAICS 511
Publishing industries,
except Internet
0.9 6.38 2.6
NAICS 523
Securities,
commodity contracts,
investments
1.41 1.39 2.53
NAICS 334
Computer and
electronic product
manufacturing
0.69 6.24 2.5
NAICS 519 Other
information services
ND 1.5 2.23
NAICS 316 Leather
and allied product
manufacturing
ND 0.42 2.16
KC
Top 5 Sectors
Boulder
Top 5 Sectors
Boston
Top 5 Sectors
Source: QCEW, http://data.bls.gov/location_quotient/ControllerServlet

Diversity: Economic Specialization
Omaha
Location Quotient
0
1
2
3
4
5
6
NAICS115Agricultureandforestry…
NAICS336Transportationequipment…
NAICS481Airtransportation
NAICS321Woodproductmanufacturing
NAICS112Animalproductionand…
NAICS331Primarymetalmanufacturing
NAICS111Cropproduction
NAICS517Telecommunications
NAICS312Beverageandtobacco…
NAICS221Utilities
NAICS212Mining,exceptoilandgas
NAICS814Privatehouseholds
NAICS314Textileproductmills
NAICS813Membershipassociations…
NAICS339Miscellaneousmanufacturing
NAICS611Educationalservices
NAICS237Heavyandcivilengineering…
NAICS485Transitandground…
NAICS486Pipelinetransportation
NAICS443Electronicsandappliance…
NAICS448Clothingandclothing…
NAICS325Chemicalmanufacturing
NAICS452Generalmerchandisestores
NAICS531Realestate
NAICS333Machinerymanufacturing
NAICS713Amusements,gambling,and…
NAICS236Constructionofbuildings
NAICS519Otherinformationservices
NAICS337Furnitureandrelated…
BaseIndustry:Total,allindustries
NAICS445Foodandbeveragestores
NAICS447Gasolinestations
NAICS326Plasticsandrubberproducts…
NAICS523Securities,commodity…
NAICS511Publishingindustries,except…
NAICS561Administrativeandsupport…
NAICS492Couriersandmessengers
NAICS622Hospitals
NAICS493Warehousingandstorage
NAICS327Nonmetallicmineralproduct…
NAICS623Nursingandresidentialcare…
NAICS711Performingartsand…
NAICS238Specialtytradecontractors
NAICS522Creditintermediationand…
NAICS323Printingandrelatedsupport…
NAICS442Furnitureandhome…
NAICS515Broadcasting,exceptInternet
NAICS551Managementofcompanies…
NAICS712Museums,historicalsites,…
NAICS524Insurancecarriersand…
NAICS311Foodmanufacturing
NAICS484Trucktransportation
NAICS518Dataprocessing,hosting…

Location Quotient
0
1
2
3
4
5
6
7
Boulder

0
0.5
1
1.5
2
2.5
KC: only two sectors above 2.0
Location Quotient
KC

Diversity: Economic Mobility
• Kansas City’s “Absolute Mobility” measure is 40.2.1
o This ranks 231st out of 381 MSAs.
• If we take a look at the entire ladder, the picture that
emerges is that Kansas City is slightly above average for
the intergenerational mobility of wealthy families, and a
little below average for poorer families.
1 “Absolute upward mobility (AM) is the expected rank of children
whose parents are at the 25th percentile of the national income
distribution”
Source: Equality of Opportunity Project
http://www.equality-of-opportunity.org/index.php/data

Diversity: Immigration
Kansas City has roughly
128,000 immigrants,
which is 41st among all
MSAs, and immigrants
make up 6.3% of Kansas
City’s total population,
which is 268th among all
MSAs.
Source: ACS, tabulation and map by Migration Policy Institute
http://www.migrationpolicy.org/programs/data-hub/charts/us-immigrant-
population-metropolitan-area

Immigrant High-Tech Entrepreneurs, 2011
Source: Cathy Yang Liu, Gary Painter, and Qingfang Wang, “Lessons for U.S. Metro Areas: Characteristics and Clustering of High-Tech Immigrant
Entrepreneurs,” Kauffman Foundation, March 2014.

Immigrant High-Tech Entrepreneur Growth,
2000-2011
Source: Cathy Yang Liu, Gary Painter, and Qingfang Wang, “Lessons for U.S. Metro Areas: Characteristics and Clustering of High-Tech Immigrant
Entrepreneurs,” Kauffman Foundation, March 2014.

Progressing the “measuring” conversation
• What new data can be developed?
• Other theoretical frameworks?
• How do we measure impact of specific programs,
policies, or interventions?

Thank you
jbell-masterson@kauffman.org
ctomkins-bergh@kauffman.org

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