working w/ growth companies (gc’s) economic development finance services august 24, 2011 presented...
TRANSCRIPT
Working w/ Growth Companies (GC’s)
Economic Development Finance Services
August 24, 2011
Presented by Ed Morlan, Executive Director of Region 9 Economic
Development District of Southwest Colorado, Inc.
Why is it important to help Growth Why is it important to help Growth Companies?Companies?
“entrepreneurship (is) the source and strategy for economic growth, community development and
economically independent individuals.”• Edward Lowe Foundation
“Economic growth requires continued entrepreneurial innovation and
expansion.”• Ewing Marion Kauffman Foundation
Why is it important to help Growth Why is it important to help Growth Companies?Companies?
Provide higher Provide higher
than average wage jobs than average wage jobs Diversify the region’s Diversify the region’s
economyeconomy Bring income into the Bring income into the
regionregion Creators of innovationCreators of innovation
Growth company focus has Growth company focus has advantages over other direct based advantages over other direct based
revenue sourcesrevenue sources
Oil and GasOil and Gas TourismTourism 22ndnd Homes Homes RetireesRetirees
Stages of Growth Self Employed (1 employee) — This includes small-scale business
activity that can be conducted in homes (cottage establishments) as well as sole proprietorships.
Stage 1 (2-9 employees) — This includes partnerships, lifestyle businesses and startups. This stage is focused on defining a market, developing a product or service, obtaining capital and finding customers.
Stage 2 (10-99 employees) — At this phase, a company typically has a
proven product, and survival is no longer a daily concern. Companies begin to develop infrastructure and standardize operational systems. Leaders delegate more and wear fewer hats.
Stage 3 (100-499 employees) — Expansion is a hallmark at this stage as a company broadens its geographic reach, adds new products and pursues new markets. Stage 3 companies introduce formal processes and procedures, and the founder is less involved in daily operations and more concerned with managing culture and change.
Stage 4 (500 or more employees) — At this level of maturity, an organization dominates its industry and is focused on maintaining and defending its market position. Key objectives are controlling expenses, productivity, global penetration and managing market niches.
Second Stage GC’s
In 2008 Second Stage GC’s represented the largest percentage (34.9%) of the jobs in the United States
yet accounted for only 7.7% of the establishments in the nation • Edward Lowe Foundation – YourEconomy.org
Companies to WatchCompanies to WatchCelebrating Second-Stage CompaniesCelebrating Second-Stage Companies
What is it?What is it?
• An awards competition second-stage companies, created by the Edward Lowe Foundation in partnership with respected local entrepreneurship support organizations.
• Designed to discover, celebrate and spread the news about second-stage companies in a given state
• Offered in six states in 2011: Colorado, Michigan, Indiana, Wisconsin, North Carolina, Florida. Coming to Washington state and Northern California in 2012.
Why Companies to Watch WorksWhy Companies to Watch Works
Companies to Watch is a source of good news• Brings attention to companies that typically fly under the radar
Paints a realistic picture of a state’s economic landscape• Broad geographic representation from beyond the MSAs into rural communities throughout a state• Industry diversity to reflect a healthy mix of sectors• Holistic look at companies to promote strong corporate culture, philanthropy and community giving,
enlightened business practices• These are companies with the intent and capacity to grow. They form the basis for a state’s economic
potential Fosters a vibrant entrepreneurial community through its public-private partnership
model, giving disparate entities a reason to work together• Commercial service providers • Economic developers at all levels of government• Industry associations• The media
Investment PotentialInvestment Potential “The Companies to Watch program is a great filter for us.
We typically invest in companies located in the Great Lakes region that have $1 million to $10 million in annual revenue with scalable products and intellectual property that can be protected. Nearly half of the Companies to Watch honorees meet that initial criteria for investment, which means they’re an excellent target of deal flow.”
Jeff Barry, partner of Plymouth Management Co. in Ann Arbor, Mich., manager of the Plymouth Venture Partners and Plymouth Venture Partners II funds.
Total Revenue in 2010 $338 Million
Increase over 2009 34.9%
Full-time equivalent in 2010 1,543
Jobs Created over 2009 453
5yr Revenue Total (’07-’11) $1.4 Billion
5yr FTE Total (’07-’11) 1,304
5yr Rev. Growth (’07-’11) 190%
5yr FTE Growth (’07-’11) 188%
Economic Impact of the 2011 Class ofEconomic Impact of the 2011 Class of50 Colorado Companies to Watch50 Colorado Companies to Watch
Southwest Colorado Growth Southwest Colorado Growth Company Initiative (GCI)Company Initiative (GCI)
Supporting the Supporting the
Entrepreneurial Entrepreneurial
Environment of Environment of
Southwest Southwest ColoradoColorado
Attributes necessary to build Attributes necessary to build entrepreneurial sectorentrepreneurial sector
High quality of lifeHigh quality of life Educated workforceEducated workforce Outstanding university or collegeOutstanding university or college Supportive regulatory and economic Supportive regulatory and economic
development policiesdevelopment policies Collaborative PartnershipsCollaborative Partnerships Creative ClassCreative Class InnovationInnovation
Growth Company Initiative PartnersGrowth Company Initiative Partners
Region 9 EDDRegion 9 EDD Fort Lewis College School of Business Fort Lewis College School of Business
Administration (SOBA)Administration (SOBA) Small Business Development CenterSmall Business Development Center County Economic Development County Economic Development
OrganizationsOrganizations GC’sGC’s
GCI’s definition of Growth Company:GCI’s definition of Growth Company:
Growing 15% per year Growing 15% per year Innovative product or serviceInnovative product or service
• Intellectual PropertyIntellectual Property Sustainable competitive advantageSustainable competitive advantage Competes outside SW Colorado, Competes outside SW Colorado,
usually nationally/globally usually nationally/globally Significant number of above average Significant number of above average
wage jobswage jobs
GCI’s Job Impact in S.W. CO
In 2011 the 24 GC’s have a total
employment of 886.75 FTE’s of
which 56% of them are paid above the respective counties
average wage.
Five Major ComponentsFive Major Components
1.1. Identify Growth CompaniesIdentify Growth Companies1.1. Survey – Survey – www.scan.org
2.2. CEO Peer NetworkingCEO Peer Networking
3.3. Business Advisors Network (SBDC)Business Advisors Network (SBDC)1.1. Economic Gardening ServicesEconomic Gardening Services
4.4. Facilitate Access to Equity CapitalFacilitate Access to Equity Capital
5.5. Develop Ongoing Systems to Monitor Develop Ongoing Systems to Monitor Progress and Business NeedsProgress and Business Needs
Evolution, Success, & Challenges
1. Identifying Emerging GC’s• Originally 35-40 potential prospects
“Qualified” 25 firms using short survey
• County ED Directors have/had primary responsibility
Lack of stability with Rural ED organizations and turn over in staff
• Continually trying to identify GC’s Added 5 GC’s
Evolution, Success, & Challenges2. CEO Network
• Originally had monthly meetings that were hosted by SOBA
CEO’s meet to:CEO’s meet to:• Share challenges, successes, resourcesShare challenges, successes, resources• Provide mutual supportProvide mutual support• Have guest/CEO presentations on topics of interestHave guest/CEO presentations on topics of interest
• Currently driven by it’s three CEO member’s Executive Committee
Community Awareness/Involvement Outreaching emerging GC’s
• Challenges in continuing to have relevant topics monthly and participation due to CEO’s busy schedules of running their companies
Working on new direction of the CEO Network
Evolution, Success, & Challenges
3. Business Advisors Network (BAN)• SBDC is responsible for the BAN services
Originally started with 3 advisors and has grow to 30 advisors
• Mix of retired and active executives with various/extensive backgrounds in business.
Provides services to broad range of companies, not just GC’s
• One on one counseling or monthly panel Working to develop a BAN in each county of
S.W. Colorado• Finding new ways to tap into the human capital
Evolution, Success, & Challenges
4. Facilitate Access to Equity Capital• Formed the Animas Venture Group
Looked at several deals but have yet to fund one
• Did commit to one deal
• Region 9 EDD Has made equity investments and is open to
future opportunities
• Working with other potential sources of venture capital
Companies that have a need for “pre” venture funding
Evolution, Success, & Challenges
5. Develop Ongoing Monitoring Systems• Quarterly meeting of the GCI partners
Schedules and changes in partners
• Challenges in tracking the impact and measuring the success of the GCI
GCI recognized “player” in the community 2009 Impact study
GCI long-term goalsGCI long-term goals
Work towards developing Work towards developing • Continue to grow and expand the Continue to grow and expand the
GCIGCI• S.W. CO reputation as strong S.W. CO reputation as strong
entrepreneurial (friendly) locationentrepreneurial (friendly) location• Entrepreneurship Center at FLCEntrepreneurship Center at FLC• Extended entrepreneurial Extended entrepreneurial
education programseducation programs• Business incubatorBusiness incubator• One stop shopOne stop shop
Questions?
Ed Morlan, Executive Director of Region 9 Economic Development District of Southwest Colorado, Inc.• Website – www.scan.org• Email – [email protected]• Telephone – 970-247-9621