Economic Development Insanity
Insanity is said to be doing the same thing over and over again and expecting different results. It is doubly insane if it is the same economic development people are doing it. For whatever reason they become blinded to alternative approaches.
This typifies the economic development approach in northwest Florida, especially that of Pensacola and Escambia county. For year after year the locale has been spending millions of dollars tilting at windmills and chasing the phantom big score rather than of growing what exists in the local businesses and entrepreneurs. Last fiscal year $1 million or so was spent and not one job was created. Just think what could be done to help local businesses, distressed neighborhoods, and entrepreneurs grow with even one half of that amount along with enlightened guidance.
The local economic development staffs are currently in the process of defining a new strategic plan…. which looks like the old plan. Even more amazing, there is no accountability. Some of the typical actions the draft plan and measurable outcomes are:
Under this plan, it is proposed that people are paid a million dollars to travel, go to meetings, attend conventions, and see international sights with no commitment to results. If my sales and marketing staff brought this strategy to me when I ran companies, they would be gone, a new staff acquired that could produce accountable results, AND a new approach taken.
WHY NOT TRY A NEW STRATEGY such as an entity (a Springboard) that leverages successful accelerator techniques (and has been successful in other cities) to underpin new or current companies to achieve the sustained operating level that creates new jobs!
Such a Springboard, managed by proven entrepreneurs and financial professionals (not by the historic failed economic development entities) could help offset some of a new company’s start-up costs by offering office and housing subsidies and two investment opportunities: a Pre-Seed Investment Program and a Seed Fund. Priority could be given to selected industries when investments are considered.
Village Capital’s “Venture Investment Readiness and Awareness Level” (VIRAL) benchmarks an entrepreneur’s progress across eight categories (team, market, business model, etc.) and assesses where entrepreneurs should focus to prepare for investment serve to facilitate connecting entrepreneurs with the people best positioned to help. Requiring entrepreneurs to take this step before asking for help from the Springboard identifies those entrepreneurs that are ready for investment, thus minimizing the potential for failure and enhancing the credibility of the Springboard.
Typical investments made by the Springboard could include:
- Pre-Seed Investment Program, with an opportunity to secure a maximum of $25,000 for product and market validation and/or $50,000 for business model refinement;
- Seed Fund (either directly or thru partnership with other funds), with the flexibility to structure deals as debt, convertible debt or equity with the capacity to fund up to $250,000 per company;
- Free co-location within a designated location;
- Office rent subsidy, up to $6,000 per year, if the company chooses to locate in a separate office space but still within designated areas of Pensacola or Escambia County;
- Housing incentive, up to $5,000 per year, if the company chooses to locate in designated areas of Pensacola or Escambia County;
- Free business consulting services; and
- Free mentoring services and training opportunities.
HELP FOR DISTRESSED NEIGHBORHOODS
The Springboard could also prioritize companies that are active in designated distressed neighborhoods with a focus on stimulating both investment and entrepreneurship in those areas. This provision has the potential to address gaps in entrepreneurship that have left too many people and neighborhoods behind-but only if entrepreneurs, the community, and government engage together.
These new approaches have a far greater chance of building on what we have than the failed economic development approach of the past that focused on building on what we don’t have. See articles below for additional insights.