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Measuring A Startup Community

How does one go about measuring a startup ecosystem? Is it even worth trying to do so?

Of course! Defining success means measuring how certain factors and actions lead to positive economic growth. Knowing what to measure will help us make better decisions about the strategy is needed, where to allocate resources, what actions must be taken, and so on.

In a new research paper by Kauffman Foundation, researchers have identified four indicators to assess the vibrancy of a local startup ecosystem. These four indicators are not exhaustive, say the researchers, and some communities should consider more factors, but these four are a good starting point for any localized startup community.

The Four Indicators

  1. Density
  2. Fluidity
  3. Connectivity
  4. Diversity

Density: density of new and young firms, defined as the number of new and young companies per 1,000 people in a geographic area; share of employment in new and young firms; and high tech (or the region’s preferred sector) density.

Fluidity: population flux, or the level at which people move between cities or regions, providing a constant remixing that is key to idea generation; labor market reallocation, or people’s ability to find the right match of jobs within a region; and number of high-growth firms.

Connectivity: program connectivity, or how connected entrepreneurs are with resources and each other; spinoff rates, which indicate the extent to which successive waves of new companies are created; and dealmaker networks, which inform entrepreneurial leaders about how effectively deal professionals are establishing relationships and facilitating new firm formation.

Diversity: economic diversification, which ensures that a city or region is not overly reliant on a particular industry; immigration, or how effectively the ecosystem attracts and assimilates immigrants, who tend to start companies more frequently than the native born do; and income mobility, or how well the entrepreneurial ecosystem diversifies economic opportunity.


Read the full article or download the full report here:

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