Most new jobs are created by new businesses, Steven Cochrane, a Moody’s Analytics economist, told the crowd gathered Thursday at the Connecticut Convention Center for Gov. Dannel P. Malloy’s “Economic Summit.”
“So when we talk about job creation and business formation we’re actually talking about entrepreneurship,” Cochrane said.
Only about 50 to 60 percent of Connecticut’s industries actually create jobs, which is below the national average of about 70 to 80 percent. That means there’s less opportunity for job creation in the state at times of economic expansion. Cochrane encouraged to the state to expand that base of jobs.
Not less than two hours after his remarks, Malloy announced that Connecticut would become the third state to set up regional StartUp centers in partnership with StartUp America Partnership.
“We’ll greatly strengthen the support network for Connecticut entrepreneurs and innovators and it’s critical to our job creation efforts,” Malloy said.
While Connecticut has a reputation for innovation, it hasn’t fostered its relationship with those innovators.
Timothy “Scott” Case, CEO of Startup America Partnership and the founding chief technology officer of Priceline.com, said every new job that’s been created in the last 30 years has been created by companies less than five years old.
“It’s not just these young companies, but it’s the entrepreneurs that lead them,” Case said.
He said there’s tens of thousands of them here in the state of Connecticut and if the state focuses its energy in supporting those young companies “we can drive job growth and drive the economy forward and ultimately build jobs.”
He said Connecticut is ideally situated for fostering entrepreneurs and startup companies because of its proximity to Boston and New York, the number of colleges and universities it contains, and the number of companies like GE and Sikorsky that have a history of innovation.
Often times policymakers focus on small businesses and large businesses and the startup sector doesn’t get the attention that it needs, Case said.
Malloy said he will be asking the legislature for help during the upcoming special session to help find capital for these startups. He refused to say how much money he will be dedicating toward the venture, but he said “it will be a major new effort.”
But capital isn’t the only thing, or even the central focus of the regional StartUp Connecticut centers.
The program will focus on establishing efforts to bring technology, concept testing, mentors, and business connections to these new entrepreneurs.
“As an entrepreneur, when another entrepreneur comes up to me and says ‘All I need is money’ that’s a red flag,” Case said. “You really need a lot more than that. You need things like expertise, you need things like support services. You need to get your books correct, you need to understand your customers really well, you need to have great.”
He said StartUp Connecticut will focus on all those things, and capital is only one of them. He said it’s important to create an ecosystem of entrepreneurs.
It’s uncertain where the centers will be located at the moment, or even how many there will be. Malloy said that information is being discussed and will be available as soon as they make a decision.
He said in essence what the state is building with StartUp Connecticut is a small business infrastructure, which “perhaps in better times wasn’t quite as critical.”
“What we now know we need to do a lot more in Connecticut to get that job done and we also know that by our benchmarking that other states are doing these kinds of things,” Malloy said.
“In more prosperous times when capital and expertise flowed more precisely it was easier…these are difficult times,” Malloy said.
Case said entrepreneurs are “scrappy” and if they don’t find the resources they need in a certain place they will go somewhere else. He said there are times when startup companies will be given advice to leave a particular state or region.
He said what they’re trying to do with StartUp Connecticut is “create ecosystems that foster that organic growth within the state because it’s not only the high-tech industry that wants to keep the entrepreneurs here, but the serial entrepreneurs that provide the leadership.” He said it’s the serial entrepreneurs who are leaders of these ecosystems and help bring the younger generation up.
“We have to be in the business of getting more businesses created in our state,” Malloy said. “We’re going to do everything in our power to see Connecticut grow jobs for the first time in 22 years.”
The announcement of StartUp Connecticut was just part of the larger discussion on jobs taking place at the Connecticut Convention Center Thursday. The “Economic Summit” is expected to help policymakers finalize their ideas for an Oct. 26 special session on jobs.