Wednesday, June 19, 2013

Advocacy Study Highlights Top Locations for High-Growth Companies

The SBA Office of Advocacy study, The Geography of Employment Growth: The Support Networks for Gazelle IPOs, identifies specific states with the strongest support networks for companies to launch Initial Public Offerings (IPO). To create a fast growing company or gazelle, it takes an Entrepreneurial Support Network (ESN) including skilled labor, capital, customers, and suppliers. According to this study, ESNs with the necessary strength to launch an IPO are predominantly found in California, Massachusetts, Florida, New York, and Texas. However, one city stood out as an entrepreneurial hotspot despite the absence of an entrepreneurial support network. Minneapolis-St. Paul is home to numerous medical instrument companies and claims 10 percent of the IPOs for this industrial sector.

“We are a nation of innovators, and our entrepreneurs excel at the highest standards. The IPO process is a completion of a major financial milestone in a company’s development, creating more jobs and opportunity at home,” said Dr. Winslow Sargeant, Chief Counsel for Advocacy. “We must expand business sectors that can thrive without a support network and build support networks for other industries. With these steps in place and as the economy continues to improve, I believe Minneapolis-St. Paul will be one of the many cities outside the traditional geographical regions for gazelles.”

Basic highlights from the study include:
• California leads the nation in high-growth businesses with the potential to enter the stock market through an initial public offering (IPO).
• Massachusetts is home to the highest number of IPOs per capita.
• Minneapolis-St. Paul holds 10 percent of all the IPOs in the medical instruments industrial sector.

As a result of this study, the researchers believe next steps should include:
• Focusing on more successful firms that can be created despite an absence of a support network.
• Creating an environment that strengthens the partnership between university and high-growth startups.
• Moving away from the practice of recruiting businesses through financial incentives and instead creating an Entrepreneurial Support Network in the region.

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