Economic downtown is a great time for startups to begin and flourish
Dynamism in the economy comes from new businesses, but the bad news is new business creation has dropped over the past five years.
However, Americans can take comfort in the fact that “50 percent of our largest companies today were founded in either a bear market or in a recession,” said Robert Litan, a senior fellow with The Brookings Institution, a nonprofit think tank in Washington, D.C.
Litan believes it is possible for the United States to get its “mojo” back, especially if decision makers at the state and federal level will create policy friendly to startup businesses.
Economic leaders in Mississippi are recognizing the importance of encouraging homegrown innovation and new businesses. The 2011 recommendations of Blueprint Mississippi – a public-private partnership dedicated to improving the state’s education and economic outlook – include a focus on promoting technology-driven enterprises and engaging the help of the Mississippi Technology Alliance.
MTA, a private nonprofit that receives state funds, helps vet startup companies and assists them in developing business plans and connecting with angel investors, or initial investors.
MTA President Tony Jeff said Mississippi needs to focus on taking advantage of resources at its research universities as well as its high-tech business clusters, such as the polymer science industry in Hattiesburg.
Jeff says “transplant manufacturing” is not the long-term cure to Mississippi’s job creation needs: “Even if it’s the coolest technology in the world, if the parent company is headquartered elsewhere, you don’t get the full economic benefit.”
Mississippi has four research institutions: Jackson State University, Mississippi State University, University of Mississippi and University of Southern Mississippi. The largest is MSU with more than $200 million spent on research in the last fiscal year
An example of a successful MSU tech spinout that has been assisted by MTA is SemiSouth Laboratories, Inc., a semiconductor company founded in 2000 by two professors engaged in silicon carbide (SiC) research. SemiSouth now has 90 employees.
Gerald Nelson, who oversees the MSU Entrepreneurship Center, said its “mission is to couple great technology with great business and great entrepreneurs to create good companies.”
The Center involves resources from the College of Business, MTA and experienced entrepreneurs in residence, among others. Additionally, the university’s Thad Cochran Endowment for Entrepreneurship is able to make small grant to startups. More advanced startups can pitch to investors in the MSU Angel Network.
Nelson said, typically, technology developed at the university is licensed exclusively back to the company, and university ownership is relatively small, like in the 5 percent to 10 percent range.
A new startup developed from MSU bioengineering research is Innometrix, which has a device that will aid in early detection and diagnosis of pelvic floor disorders, a leading cause of surgery in women. Innometrix is pitching to investors.
Many startups don’t come from research institutions, such as the Jackson-based The Donor Tree, started by Ginger Whitwell who was impressed by President Obama’s online fundraising abilities. The Donor Tree is an online fundraising tool that integrates social media and tracking features.
MTA helped Whitwell put together financial models and connect with a mentor.
“They’ve really helped in getting us ready to present to investors and asking the hard questions that investors are going to ask. I really felt like going through their process was like a business education course,” Whitwell said.
Another Jackson startup, edaptIT.com, has an e-commerce solution that manages online selling across multiple channels, such as Amazon, eBay and others. Developer Ralph Smith created the software that better manages fulfillment and inventory processes out of necessity when selling thousands of overstock items online. Smith and edaptIT is currently in discussions with investors to whom they were introduced by MTA.
Commitment by politicians needed
Jeff said one challenge in getting support for startups is that it usually takes five or more years to see results, and the delayed success factor makes political support for startups more difficult.
“The problem is that it takes awhile, and a lot of these companies fail,” Jeff said. “You don’t get the immediate bang for your buck with a shiny new manufacturing facility. It takes commitment by politicians.”
Jeff is pleased that the Southern Growth Policies Board, a non-partisan public policy think tank based in North Carolina, recently recognized MTA as an model program for states seeking to foster a positive climate for technology innovation.