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Entrepreneurship and Innovation: Growing a 21st Century Economy in New Mexico
One of the most dramatic trends affecting the U.S. economy in the past several decades has been the rise of entrepreneurial activity as a foundation for business and job growth. While small businesses of all types have always played a critical role and continue to do so, a combination of technology, financial capital, market evolution and support infrastructure has launched a new type of entrepreneur, one focused on innovation.
Innovation in this context is used to mean new approaches to solving practical problems through business ventures, including reimagining product design, business models and markets. At its extreme, “disruptive innovation” topples entire industries and product categories, creating new ones in their place—think Netflix or Uber—with the associated opportunities and economic benefits. Schools across the country have begun to treat this field as a discipline, venture capital resources have exploded, and the success of role models like Steve Jobs and Elon Musk has created a sense of possibility for all.
A Microeconomy Platform for New Mexico
Entrepreneurship is one approach to, and platform for, New Mexico’s other microeconomies, all of which hold tremendous entrepreneurial potential, and many are already showing innovative results. This approach can extend to traditional areas such as tourism and agriculture, as well as newly developing areas such as digital media and renewable energy, by promoting and supporting a next generation of innovators, prepared to take on the challenges—and capture the opportunities—of modernized markets and technologies.
The importance of entrepreneurship to the state’s economy is already clear: economic-development offices, social-sector players, and New Mexicans in general increasingly recognizing that economic diversification is crucial, and corporate recruitment goes only so far. The best solution is to attract, retain and empower entrepreneurs to grow new innovative businesses, expand our markets and widen our horizons.
It Takes an Ecosystem
While entrepreneurs are characteristically passionate individuals who are prepared to pursue their vision despite the risk and odds, evidence shows that support infrastructure—i.e., facilities, resources, programs—is needed to increase their chances and maximize their successes.
New Mexico has been making great progress in developing a rich entrepreneurial support ecosystem. From the founding of the Santa Fe Business Incubator in 1997 to a surge of recent activity in every region, we are increasingly making New Mexico a friendly, inviting, and supportive environment for startup businesses and their founders. A partial list of key elements includes business incubators (Santa Fe Business Incubator, South Valley Economic Development Center, WESST Enterprise Center, Enterprise Center at San Juan College, Arrowhead Technology Center, Navajo Tech Innovation Center, Taos County Economic Development Center); accelerators (ABQid, SFid, Creative Startups, SFAI Works); business-plan competitions (BizMIX Challenge, UNM); and technology-transfer offices (our two national laboratories and three research universities); supplemented by co-working and maker spaces, financial capital and technology support.
Incubators and accelerators play a key role in this ecosystem. Together, these two synergistic types of entrepreneurial support environments offer the full range of resources needed for startup businesses to survive and thrive, spanning the full early stages of their life cycles.
The Power of Incubators and Accelerators
Business incubation started in the United States in 1959 and slowly started taking hold in the 1960s and 1970s, through the 1980s. By the 1990s, it became clear to communities around the world that attracting and supporting entrepreneurs were strong economic tools for stability and growth. By 2006, more than 1,400 incubators were functioning in North America, with 1,115 in the United States. Since then, the numbers have increased to over 7,000 worldwide. These statistics explain why the survival rate of incubated businesses almost doubles; that is, only 44 percent of new, non-incubated businesses survive their first four critical years, according to the U.S. Small Business Administration. The rate rises to 87 percent when startups are nurtured in business incubators.
New Mexico has capitalized on this value since the mid-1990s, when the City of Santa Fe and the Santa Fe Chamber of Commerce recognized the need for a business incubator in its region. In 1997, the original 10,000-square-foot Santa Fe Business Incubator (SFBI) facility opened. By 2002, it had grown to 30,000 square feet, most recently adding a state-of-the-art BioScience Laboratory. In 2006, SFBI became the first New Mexico Certified Business Incubator under the state Economic Development Department’s certification program, which has now certified seven statewide.
As one indicator of the economic benefits these incubators provide, SFBI has served more than 150 businesses since inception, creating over 1,000 jobs generating an average of $27 million in annual direct revenues and increasing the tax base yearly by over $3 million. Statewide, an economic impact study for 2011–2012 showed a favorable cost-benefit ratio for New Mexico’s investment in business incubators of 57 to 1, with total tax revenues generated from the five hubs then in operation over a four-year period exceeding $51 million.
Santa Fe Mayor Javier Gonzales confirmed the importance of incubators when he said, “Santa Fe’s innovative spirit thrives in the long-running success of the Santa Fe Business Incubator.” The same can be said of all of New Mexico’s entrepreneurs, creative innovators in the Land of Enchantment.
Marie Longserre, president & CEO of the Santa Fe Business Incubator, was chair of the board of the iNBIA, the largest global association for business incubation and innovation. She represents New Mexico on the Community Development Advisory Council for the Federal Reserve Bank of Kansas City.
New Mexico First’s 2016 Statewide Town Hall
“Economic Security and Vitality for New Mexico”
New Mexico First, a nonprofit, nonpartisan public-policy organization, held its biennial statewide town hall in May, convening more than 220 citizens who called for robust and immediate economic policy action. Specifically, participants recommended more incentives and financial resources for entrepreneurs and businesses to thrive and stay in New Mexico, closely aligned K-12 and post-secondary education with workforce development, improved regulations and a reformed tax code. They also called for a focus on family-friendly policies in the workplace, support for families at economic risk and investments in tribal, rural and frontier communities.
The meeting in Albuquerque brought together people from all regions of the state. Participants came from small, medium and large towns and included tribal, federal, city and state employees, nonprofit employees, business people, economic developers, students and other community members.
Heather Balas, president of New Mexico First, said, “The participants addressed the topics of business growth and family economics in a comprehensive and thoughtful way, paying close attention to how their recommendations would help create a stronger and more robust financial foundation for New Mexicans.”
Strategies fall into three major categories: job creation and business growth; education and workforce; and family economics, especially for people in poverty. Recommendations included the following specific examples:
· Expand access to capital and other powerful incentives for entrepreneurs, startups and small businesses.
· Comprehensively restructure the tax code for the purposes of attracting and retaining businesses.
· Increase job creation by improving regulation, licensing and permitting processes.
· Invest in and strategically plan rural and tribal economic development.
· Expand high-speed broadband statewide, including on tribal and rural lands.
· Fund statewide economic-development efforts consistently, not up and down from year to year.
· Advance incentives and programs that promote life-long academic success for high school students.
· Better align college and vocational training with actual career opportunities.
· Provide an array of supports, including financial literacy education, to people living in poverty.
· Assess the impacts on families—positive and negative—of new public policies (similar to the way the state currently assesses financial implications of new policies).
· Incentivize employers to adopt family-friendly policies.
The town hall recommendations will be advocated to state and local leaders by an implementation team comprised of volunteers from the event. The team will be led by former New Mexico House Rep. Tom Taylor and Bill García, community leader and former secretary of the New Mexico Economic Development Department.
A full report on the results of the town hall can be viewed at nmfirst.org
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