Travels Abroad Bring Optimism About Indiana Entrepreneurship
11/14/2007 (Kelley Indianapolis)
“Don’t tell me how educated you are, tell me how much you have traveled.” To me, this quote from Mohammed reflects the value of sabbaticals: Traveling abroad to broaden research perspectives, teach students and interact with colleagues from a different culture, and gather observations and insights to bring home – it’s the kind of intellectual cross-pollination that’s critical to a well-rounded education.
I recently returned to the IU Kelley School of Business Indianapolis from a faculty sabbatical, during which I had the opportunity to explore my primary interests, entrepreneurship and venture creation, in Australia, New Zealand, and Thailand. In doing so, I gained a new appreciation for the progress we’ve made here in Indiana: While entrepreneurs in these countries share common challenges with Hoosiers trying to launch new ventures, we also have several advantages that our international counterparts envy and are trying to replicate.
Over the last decade, it’s become apparent to most Indiana policymakers that we must diversify our economy and encourage entrepreneurship. While business attraction wins like the Honda plant in Greensburg and Nestle in Anderson should be celebrated, we also need to foster an economic climate that allows Hoosiers to grow our own business success stories.
In Australia, the venture community laments the many obstacles they face in developing a vibrant venture community – a conservative business culture, a lack of established entrepreneurial infrastructure, limited early stage capital, and a “brain drain” of talented people and ideas leaving the country. Sound familiar?
However, Australia’s entrepreneurial sector is also burdened by two broader cultural issues – the people are fiercely independent on a personal level, and are less active in the kinds of networking activities that help entrepreneurs share ideas and learn from one another.
At the same time, they seem overly dependent on (or resigned to) a strong role for government in the economy, perhaps as a result of the nation’s roots in British colonialism. I saw entrepreneurial creativity often dampened by fatalism about the difficulties of navigating government bureaucracy. The public sector was involved in funding research and commercialization in certain industries…but government’s well-intentioned attempts to pick winners lacks the efficiency of free markets.
In Thailand, on the other hand, lack of government intervention creates its own difficulties. The Thai government, like many Asian countries, has historically not been as aggressive about protecting intellectual property rights – so there’s little incentive for entrepreneurs to launch high-growth ventures based on original technologies, knowing that their “big idea” is likely to be stolen by a larger, better-positioned competitor. One prominent member of the Thai venture community notes the inclination towards “karaoke entrepreneurs” - they mouth the words but can’t write their own songs!
Thailand does have a growing economy (the nation is now the world’s number one manufacturer of computer hard drives, for example), but most foreign investment is focused on large manufacturing operations. This doesn’t help the supply of risk capital needed to support homegrown businesses. A growing and active group in Bangkok is trying to change that, and was interested in seeing how they could learn from the Indiana experience.
Here in Indiana, we have strengths (or at least positive momentum) that offset many of these problems. Through organizations like the Indiana Venture Center, Venture Club and TechPoint, as well as the Indianapolis Chamber’s new Slingshot initiative, Hoosier entrepreneurs are able to take advantage of a growing variety of networking opportunities and resources.
We also seem to have walked the fine line between the free market and constructive government action – at the federal level, strong protection of intellectual property rights and funding for research and commercialization (SBIR and STTR grant programs, etc.). In Indiana, state government has begun investing in equity financing (mostly through public pension funds). Instead of government trying to pick winners (as in Australia), the state has partnered with private venture funds through organizations like the BioCrossroads life sciences initiative to ensure that investments are guided by the market.
Rather than top-down directives, the government is looking to break down barriers that prevent our venture community from realizing its potential and provide support where necessary.
Finally, like Thailand, Indiana has experienced a significant influx of foreign investment, primarily in automotive manufacturing. But Indiana has been able to match this trend with positive gains in venture capital financing: The Corporation for Enterprise Development ranks Indiana the 4th highest state in venture capital percentage gains between 1999 and 2004.
Mark Twain once said, “Travel is fatal to prejudice, bigotry and narrow-mindedness.” Travel can also prove fatal to certain assumptions we make about our own hometowns. My travels confirm a simple truth that’s often overlooked – it’s hard to start a new company anywhere, whether in Indianapolis, Sydney, Bangkok or Silicon Valley. Every market faces its own unique challenges.
Indiana is no different, and we certain shouldn’t be overconfident and complacent based on the progress we’ve made towards a more diverse, entrepreneurial economy. But we do have positive momentum, and advantages that put us ahead of many regions, here in the U.S. and around the world.
