OPINION: John Jackson

We will periodically run opinion pieces from key players in the OC startup ecosystem with their thoughts on its strengths and weaknesses and what they believe is necessary to take it to the next level.

Here’s the opinion of John Jackson, director for Cal State University Fullerton’s Center for Entrepreneurship and Small Business Institute, as well as its two Startup Incubators in Placentia and Irvine. He’s also a CSUF professor of Entrepreneurship.

Seven Key Components

How entrepreneurial is Orange County? It is widely acknowledged that Orange County has a growing startup ecosystem. But, who really cares? The answer is we all should care deeply about nurturing the Orange County startup ecosystem. According to the Kauffman Foundation, “new businesses account for nearly all net new job creation and almost 20 percent of gross job creation.” (The Importance of Young Firms for Economic Growth)

With that said, let’s begin by looking at seven components of a startup ecosystem and how Orange County is doing today with a letter grade from me:

(1) Ideas – Ideas are the crude oil of entrepreneurship. It can be argued that idea generation can be obtained virtually; it is clear that a thriving entrepreneurial region benefits from local face-to-face engagement. This can happen at meetups, incubators, classrooms and coffee shops.

Grade: B+

A growing appreciation for idea generation seems at play in Orange County with a proliferation of inventions and startup buzz.

(2) Educational Resources – In my opinion, startup education starts early with K-12 education. Science-Technology-Engineering-Math (STEM) education needs to be emphasized in kindergarten; waiting until high school may be too late for many. Colleges do the heavy lifting today.

Grade B-

More needs to be done to enhance K-12 entrepreneurship and STEM education. It all begins with simple awareness about STEM careers and education. We need to do more.

(3) Cultural Endorsement – Families, churches, schools and local communities must own this one. We must send a message that endorses the courage to be entrepreneurial and accept that learning involves experimentation and, to some degree, failure. This is how startups improve their business concepts.

Grade: C

We need to celebrate the entrepreneur’s invention and embrace continuous innovation. I fear that too many of us take the safe path and avoid risk. I think this starts at home. The message from too many parents is “be careful and don’t take chances.”

(4) Infrastructure – This includes legal firms, CPA firms, incubators, accelerators, co-working spaces, research organizations, support organizations, insurance agencies, consultants, etc. The infrastructure requirements for a new venture or an emerging company are similar to that of a mature enterprise. This includes a need for airports, roads, adequate water supply, sufficient electrical power, telecommunications, health services, bridges, schools, housing, and commercial real estate.

Grade: C-

Orange County is just mediocre despite the newness of our infrastructure. Traffic is horrible and cities have grown without any thought of how they can foster entrepreneurship.

(5) Diversity and Talent – On the surface, Orange County seems to be a great example of a melting pot. Concerns for the high cost of living may scare some startups away.

Grade: B-

OC exemplifies a diverse culture with its highly desirable lifestyle. Yet, I fear the millennials are being priced out the economy, which makes for a brain-drain of mass proportions.

(6) Government Support– The Small Business Administration (SBA) provides support through the SBDC, SCORE and others. This could also include tax credits and incentives.

Grade: C

Orange County government resources are well-intentioned, but vastly underfunded. They do good work despite their meager budgets.

(7) Access to Capital – Money comes in many forms including bootstrapping, seed capital, angel capital, venture capital, private equity and debt sources, including banks and hard money lenders.

Grade: C+

Venture capital is underrepresented in Orange County; a quick look at the IPO distribution will show a geographic preference for Northern California over Southern California. Angel money is prevalent but tends to focus on later stage startups with traction; they play it safe.

I remain optimistic that Orange County will foster the growth of its startup ecosystem. My work in the college classroom and in our incubators provide me great hope for the future.

About The Author

Deirdre Newman is a long-time journalist, who's covered OC startups for a few years.

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