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On his weekend television show, the Jaco Report, Charles Jaco recently interviewed Jerome Katz on the nature of job creation in St Louis. Jerry Katz is the Chair for Entrepreneurial Studies at the John Cook School of Business at St. Louis University. The discussion centered on what innovative companies and startups are doing and the climate and culture of our region for starting a new enterprise You can see the clip of the show here: http://tinyurl.com/yjfdodz The startup community can be a vital driving force for economic development and economic well-being for the region but there are some concerns for its long-term future prospects. It seems that compared to other neighboring states we, as entrepreneurs, are pushed to the back seat. It doesn’t have to be that way. Angel investors are becoming more and more sophisticated in their criteria and are moving away from the pure early seed stage startup investment. Traditionally, angels fall into the category of "Family Friends and Fools" and are willing to take the risks for the benefit of getting in early. All across the nation, they are acting more like Venture Capital Firms. They are organizing and creating investment syndicates that pool money into funds and are using application like Angelsoft. They are looking for companies with revenue and will most often overlook a company in need of seed capital. It’s completely understandable – they are trying to lower their risk. This creates a gap in getting the capital necessary to get an idea off the ground to proof that the concept works. Right now, that entire burden falls on the entrepreneur. As Jim Brasunas said in his post, one of the two things required for success is a working prototype that people want. It takes a bit to get there. Some businesses can come up with a prototype with a few weeks of intensive coding, others take years to develop, test, and approve. Also recently, I attended an economic development meeting called; “Calibrating the Emerging Economy Part 1: Economic Clusters for Regional Growth and Development” It was a look at where are jobs went and why. They took a stab at where the jobs will come from. The talk soon turned from big business jobs, to small business jobs. A couple of people talked about the climate for startups, and small business formation rates, and agreed something needs to be done. I had to throw in my 2 cents. My comment was along the lines of government and civic organizations needing to work together to develop a healthy environment for growth. That includes support networks such as the ones that exist in St Louis like IVMS and iTen as well as creating the access to capital. That’s when I was tuned into the Grow Me State initiative A couple of helpful initiatives are currently being proposed in Jefferson City and are summarized at the website http://www.growmestate.com Over the following weekend, I contacted Jerry Katz and traded some comments in trying to further my own entrepreneurial endeavor, and asked about good reasons to support starting a small business in St. Louis. He forwarded the power point that outlined much of what he talked about ton the Jaco Report. He also shared some comments that I thought were alarming. Simply put; St Louis is a great place to raise a family but not for business; especially small business. My battle cry is the need for early stage seed capital to get ideas off the ground to alpha stage, to beta stage, to paying customer stage. Katz says that St. Louis is 2nd in the nation in number and value of trust funds. We need a mechanism to lower the risk of investment in early stage companies. Unlock these funds by offering the right incentives to use homegrown capital to create businesses and jobs here. The proposals currently in Jefferson City could be a start. We have to work on the culture of investment here too. There is a lot of talent here, a lot of money here, and the support services are developing. If you haven’t done so already, check in with your State Representative and State Senator. Tell them that things like startup funding, and angel tax credits, that you can read about on the GrowMeState website, are needed here in Missouri.
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