A layman’s read of a recent Brookings Institute study on “Declining Business Dynamism” in the United States” has left me feeling more positive than ever about an entrepreneurial ecosystem on the Louth/Monaghan/Down/Armagh border. Our self-styled Emerald Valley.
Business dynamism is the process by which firms continually are born, fail, expand, and contract, as some jobs are created, others are destroyed, and others still are turned over. Research has firmly established that this dynamic process is vital to productivity and sustained economic growth. Entrepreneurs play a critical role in this process, and in net job creation.¹
It has huge implications as I learned in a talk on “Competitive Immigration”² delivered at the National Business Incubator Association (NBIA) Conference aptly named Entrepreneurship Energizing Economies.
Torsten Kolind, serial entrepreneur and YouNoodle.com cofounder, cited this study. He’s a Scandinavian born entrepreneur living and working in California. His startup employs dozens and generates significant revenues. Yet, his residence status in the US is in limbo. And he’s not alone.
Microsoft has been locating more and more facilities in Canada, because of US immigration policy. Talent is hard to find and foreign nationals educated in American often cannot remain. Starting up in the US is not as easy as it once was, best evidenced by the fact that ST>RT-UPCHILE, Chile’s innovative program to create the biggest start-up community in the world, has its highest percentage of applicants from the US.
Why does “dynamism” matter? America’s economic success story was owed to dynamism. The political, banking and financial institutions were long owned by a power elite, at first descended from the earliest settlers and later by second and third generation immigrants, all conservatively protecting their acquired wealth.
It has always been the latest wave of immigrants who were the risk takers, the entrepreneurs, the mavericks. Restriction on immigration since the end of the 20th century has stopped the tide.³
America’s dynamism has been rapidly declining since 1978.
What does it mean for Ireland? Their loss is our gain. Our economy has never been more dynamic. In part because millennials are more entrepreneurial by nature, we have a large immigrant population (foreign nationals formed 14% of UK start-ups) and a shortage of the “pensionable” jobs that would have employed many. There were over 10,700 new start-ups recorded in the Republic in the first quarter of 2014.
Efforts by Enterprise Ireland (EI) and Invest Northern Ireland (INI) have continued the steady flow of traditional FDI and we are now attracting young companies, even from Silicon Valley. “Start-up visas” work to our advantage and are available in the ROI & NI .
Dublin is poised to overtake London as Europe’s IT Real Estate Capital, “It feels a little bit like a mini-San Francisco…” says one recently relocated founder.
These startups are the third wave of tech companies moving to Ireland. Beginning in the 1970s, Apple, HP, Intel and Dell went there to establish a European presence, get a tax break and begin expanding into the multinational corporate giants they are today. They were followed by Google, Facebook, Zynga, PayPal, LinkedIn and Salesforce.
Silicon Valley no longer holds a monopoly on innovation. First class regional tech clusters have grown up across the globe. In Ireland, there are Dublin’s Silicon Docks, Belfast’s Northern Ireland Science Park, Derry’s Imagineering Quarter & the Northwest Regional Science Park among others.
Where’s the opportunity? Dynamic national economies, globally interdependent will prosper. Ireland, both Northern Ireland and the Republic, have invested heavily in attracting FDI. Entrepreneurial ecosystems have emerged in cities across the island. Specific investment is being made in creating centers of excellence for Fin(ancial)Tech, Life Sciences and Digital Creativity among many others. A commitment to growing our digital economy island-wide would bring economic growth outside the Dublin/Belfast corridor.
How will we do it? This will require us to “engineer” regional tech clusters. There are many we can model ourselves on. Dino Vendetti a VC at Bay Partners outlines the formula used to create a regional tech cluster in Bend, Oregon. The steps are simple and straightforward.
Geography and Diaspora are our distinct advantages here. Bend, Oregon is over 500 miles and an 8 hour drive from Silicon Valley. Nowhere in Ireland is that far from the centers of excellence already established in Dublin, Belfast & beyond. We don’t have to look far for “Entrepreneurial Density” or travel far for “Local Entrepreneurial Community Entrepreneurial-driven Events“.
Excellent “Universities” and technical colleges exist across the island.
“Local Early-Stage Risk Capital” is where the Diaspora comes in. We now have an investment vehicle in the Republic that will allow for fund creation attractive to American investors.*
And we’ve done all this before. In 1959 “free zones” were a brand new concept, the Shannon Development Company was the first to be formed…
…as a development agency. Its mandate was to generate alternative sources of business and traffic through the airport. It acted on three fronts
- It established the world’s first industrial free zone
- It developed a number of tourist products within the Shannon Region and promoted tourist traffic through the airport
- It also marketed the airport among the airlines of the world as a training base, refueling stop, maintenance and repair center, and a destination stop.
From the outset, Shannon Development was an immediate and dramatic success. The free zone attracted some major international companies e.g. De Beers Corporation, Jonathan Logan, Standard Pressed Steel and General Electric.
At the time, no one imagined these companies would locate here. They did. The skilled workforce that grew up around them seeded new businesses and industries. It paved the way for Apple, HP, Intel & Dell.
Dynamism, let’s rethink our economy in terms of these advantages and expand our digital economy island-wide.
¹ Hathaway & Litan, Declining Business Dynamism in the US, Brookings.edu, 5. May 2014
² From the 28th annual NBIA.org conference:
Find out some of the latest international efforts to lure the best entrepreneurs. Presenters will explain how several countries have launched start-up visa programs, how cross-border migration affects the entrepreneurial ecosystem, what current policy initiatives are happening, and how to help your program stand out in the increasingly competitive global landscape. Torsten Kolind, CEO and co-founder, YouNoodle, San Francisco, Calif. Sunil Sharma, Managing Partner, Extreme Venture Partners and EIR, Hyperdrive Accelerator, Toronto, ON, CanadaModerator: Stan Tomsic, Executive Director, PortTechLA Innovation Center, San Pedro, Calif.
³ Hathaway & Litan, Declining Business Dynamism in the US,
* Courtesy of Global Perspectives founder Shane Brett, author “The Future of Hedge Funds & The AIFMD Cheat Sheet”