NGA Guide Offers Tools to Enhance Entrepreneurial Capacity

States must develop a supportive environment for entrepreneurs to prosper in an increasingly competitive global economy, according to A Governor’s Guide to Strengthening State Entrepreneurship and Policy, a recent report from the National Governors Association’s (NGA) Center for Best Practices.

Instead of developing competitive cluster-based models, the report observes, most state economic development efforts continue to be organized around traditional business retention and incentive-based industry recruitment programs. This approach leaves entrepreneurs to “fall between the cracks” of programs designed to support less agile business models, NGA says.

More harm can be done, however, if states attempt to be the exclusive providers of support services. In order to meet the needs of entrepreneurs, NGA argues, states should instead serve as brokers for a variety of private and nonprofit services.

Five critical factors that state governments can influence are diversity in sources of capital, an enabling culture, strong local networks, supportive infrastructure and entrepreneur-friendly government. The NGA guide offers strategies and practices to help governors influence these factors. The guide also recommends that governors and state leaders:

• Integrate entrepreneurship into the state economic development efforts, create support mechanisms through programs and use entrepreneurial, capital and research networks to deliver services and deployment of community development systems.
• Use the education system to nurture and encourage future entrepreneurs to build readiness through the K-12 schools, offer entrepreneurship education at public universities and support faculty entrepreneurship in the university system.
• Incubate entrepreneurial companies by providing business incubation services through physical incubators and creating virtual and remote incubation options for rural and remote regions.
• Invest in diverse sources of risk capital for the state’s entrepreneurs and growth companies through the development of early-stage capital options, support of angel investors and ensured availability of risk capital in unserved rural areas.
• Remove legal restrictions on state equity ownership through regulatory reform and streamlining, adopt online regulatory and licensing process, and use one-stop business and licensing models.

The Governor’s Guide to Strengthening State Entrepreneurship Policy can be viewed at: http://www.nga.org/center/divisions/1,1188,T_CEN_ESS%5EC_ISSUE_BRIEF%5ED_6493,00.html