As a majority of the StartFast team prepares for SXSW and I ready myself for a trip to Silicon Valley, the idea of start-up culture has parked itself front and center in our minds. More specifically the idea of what makes one community entrepreneurially diverse and another an entrepreneurial desert, will become a major exploratory theme over the next two weeks. As I travel to San Francisco and Silicon Valley for Syracuse University, I will be making special note of the three capital resources I have identified as paramount to the formation, continuation, and growth of any entrepreneurship ecosystem. The three capital resources I will be isolating are human capital, social capital, and financial capital as related to successful startup venturing.
In my opinion, human capital is far and away the most important capital resource an ecosystem can possess. Stated justly by Patricia Thornton, “human capital refers to [an] individual’s attributes, such as personality, education, intelligence, and job experience.” Every community’s populace possesses some level of human capital, however, the most vibrant entrepreneurship ecosystems—Silicon Valley, Boston, New York City—have their capital asset profiles magnified by an abundance of skilled engineers, designers, and business specialists. A startup’s success can be directly linked the initial skill level (i.e. human capital) of its founders and the ability of the company to attract the best and brightest. Within companies and the broader community, human capital will naturally inform the formation of healthy social capital assets which may be leveraged to generate outsized returns.
Social capital can best be described as the collective network efficiencies created by the relationships fostered between members of a community. The foundational principle contained within social capital is that social networks give value to all members of an ecosystem. The old adage, “it’s not what you know, it’s who you know,” speaks directly to the principle that connections between a community’s nodes creates larger efficiencies than many other, more expensive, activities. Entrepreneurs are natural networkers and afford their communities the opportunity to greatly strengthen the nodal relationships between heterogeneous groups of market participants. Beneficial relationships are seeded in the most energetic entrepreneurship ecosystems by a myriad of events which are equally inclusive of a range of talent, from the greenest entrepreneurs to the most seasoned moguls.
The appearance of robust social capital assets and a breadth of human capital not seen at any other time in history, has allowed investors to hedge their bets against the inherent risk of financing early stage companies. Venture capital has been steadily growing over the past few decades and entrepreneurs today have access to
an abundance of financial capital so long as they are willing to put in the leg work and get creative with their financing decisions. I believe however, that a community’s sole focus on access to capital comes at the detriment of the other two capital resources. Money will naturally flow into an entrepreneurship ecosystem which has managed to bootstrap its growth and focused on building sustainable companies capable of leveraging nonmonetary assets.
As I wonder through Silicon Valley next week and speak with my partners attending SXSW, I will be ever vigilant of which companies, and which communities, have their capital resources in order. I will be looking for ways to bring back my insights to Syracuse and implement similar programs in our ecosystem. But above all, I will be looking to enjoy the company of other passionate entrepreneurs and learn a thing or two from as many people as possible. Stay updated with the journey by following me on my various media outlets.