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SCALING UP IN RIVER CITY:

How to Accelerate the Entrepreneurship Ecosystem for Local Scaleup Companies in Louisville, Kentucky

a report from:


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EXECUTIVE SUMMARY Growth in the Louisville metropolitan area has not kept pace with that of the United States as a whole or that of other major United States metropolitan areas. Greater Louisville metropolitan area lags behind peer cities and the U.S. as a whole in terms of economic growth. Louisville’s per capita gross domestic product (GDP) ranks 38th out of the top 50 U.S. metropolitan areas. In addition, the United States experienced a per capita GDP of $52,093 in 2013, whereas Louisville’s per capita GDP was only $48,048. The number of startups in Greater Louisville has increased, but the number of large businesses has declined even though the population is growing. The number of companies employing 500 or more workers in the Louisville area dropped by more than 35% in the last twelve years, while the number of local micro-businesses increased by more than 100%. There is a framework for action that leaders in Louisville can use to foster the development of more scaleup companies by improving the local ecosystem for high-growth businesses. Cities that wish to foster the growth of more scaleup firms and become hubs of entrepreneurship must foster the development of the local entrepreneurship ecosystem – the way individuals, companies, organizations, and governments interact to influence the development of local entrepreneurs and their firms. This is the single most important task a city can undertake to improve its economy. Successful ecosystems for high-growth companies follow a specific cycle of growth, in which entrepreneurs who succeed in building scalable firms go on to reinvest their financial, intellectual, and social capital into the next generation of local entrepreneurs and companies. This increases local access to funding, talent, and customers, which are the three most important resources for growing companies. The combined impact of these improvements creates a virtuous cycle of growth.


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Louisville’s entrepreneurship ecosystem has three major strengths: great quality of life, excellent access to a skilled workforce, and successful entrepreneurs who have a desire to reinvest in others. Interviews with Louisville entrepreneurs who have achieved high rates of growth or who aspire to do so suggest that these three factors are the greatest positive attibutes of the local entrepreneurship environment. The local ecosystem also has several significant challenges: a lack of founders promoting entrepreneurship, low levels of mentorship from successful entrepreneurs, and a small number of employees from successful companies who go on to found new ones. These challenges were cited by a majority of the local high-growth and high-potential founders surveyed and interviewed for this report. Endeavor will work to support fast-growing firms in Louisville and improve the local ecosystem for scaleup companies. The major weaknesses of Louisville’s ecosystem for high-growth companies closely match the challenges that are addressed by Endeavor’s model. Endeavor staff have identified hundreds of high-growth and high-potential companies in the Louisville area through this assessment. Each of these firms will be invited to apply to join the Endeavor network. The report also shares additional recommendations for improving individual aspects of the local ecosystem that are drawn from an analysis of over 1,000 entrepreneurship policies and programs from 100 cities across the world.


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Economic growth in the Louisville area has not kept pace with that of the United States as a whole, or that of other major United States metropolitan areas. The greater Louisville metropolitan area is one of the 50 largest U.S. metropolitan areas by size and has exhibited many signs of economic strength in the last few years. The area successfully restored 80 percent of the jobs lost during the 2008 financial crisis, for example. As of April 2015 data, Louisville’s unemployment is 4.4 percent, well below the United States average of 5.4 percent. This rate has been steadily declining from a high of almost 12 percent in 2010. Louisville’s low unemployment may also be misleading in other ways. Data shows that many Louisville residents are employed in low-quality jobs. An Economic Innovation Group study measuring economic stress by ZIP code found that the city ranks in the top 10 with populations over 400,000 for having the most income disparity. Louisville needs to support scaleup firms in order to increase the number of highquality jobs and decrease this income disparity.

Metropolitan Areas with Greater GDP per Capita than Louisville Atlanta, GA

Hartford, CT

Pittsburgh, PA

Austin, TX

Houston, TX

Portland, OR

Baltimore, MD

Indianapolis, IL

Raleigh, NC

Birmingham, AL

Kansas City, MO

Richmond, VA

Boston, MA

Los Angeles, CA

Salt Lake City, UT

Charlotte, NC

Milwaukee, WI

San Diego, CA

Chicago, IL

Minneapolis, MN

San Francisco, CA

Cincinnati, OH

Nashville, TN

San Jose, CA

Cleveland, OH

New Orleans, LA

Seattle, WA

Dallas, TX

New York, New York

St. Louis, MO

Denver, CO

Oklahoma City, OK

Virginia Beach, VA

Detroit, MI

Philadelphia, PA

Washington, DC

Source: U.S. Department of Commerce, Bureau of Economic Anlaysis5

Unfortunately, the Louisville metropolitan area is lagging far behind the economic growth of the United States and peer cities. Louisville’s per capita GDP ranks 38 out of the top 50 metropolitan areas by size. In 2013, the United States experienced a per capita GDP of $52,093, whereas Louisville’s per capital GDP was only $48,048. While GDP grew by 0.8 percent in the United States during 2013, it declined by 1 percent in the Louisville area. Louisville faces a potential exodus of talent if its growth continues to lag behind similar metropolitan areas and the U.S. as a whole. By empowering additional scaleup companies the region can prevent the exodus of people and talent and increase support for both its workers and their families.


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Since 2000, the number of startups in Louisville has increased by more than 50%, but the number of large businesses has declined even though the population is growing. Number of companies founded in Louisville Metropolitan Area*: 2000 vs 2012

Change in the number of companies by size in the Louisville Metropolitan Area*: 2000–2012

5,000

160%

4,000

120%

120%

+51%

3,000

80%

2,000

40%

1,000

0% -35% -40%

2000

2012

Note: Excludes self-employment. Sources: U.S. Census Bureau; NETS Database based on Don & Broadstreet data.

2000 Micro-businesses (2–9 employees)

2004 Small-businesses (10–99 employees)

2008 Med-businesses Large-businesses (100–499 employees) (500+ employees)

2012 Population Change

According to the most recent data available, the Louisville area has seen a large number of startups launching in recent years. 7 Even though many new companies are starting, very few of these startups are growing into large firms. Academic research has shown that fast-growing companies that scale up to become large firms are among the most effective mechanisms for reducing unemployment. (See “Evidence Shows That High-Growth Companies are Critical for Job Creation” below.) These companies also produce the successful entrepreneurs who are critical to the growth of healthy ecosystems. The number of companies employing 500 or more workers in the Louisville area dropped by more than 35% in the last twelve years, while the number of local micro-businesses increased by more than 100%. The number of small- and medium-sized firms has also decreased, even as the population in the metro area increased slightly.8 These facts indicate that significant challenges currently exist within Louisville’s entrepreneurship ecosystem. The next six pages share the results of a diagnostic evaluation that assessed the strengths of the local ecosystem, as well as the weaknesses that slow its growth.

Evidence Shows That Scaleup Companies Are Critical to Create Good Jobs. Research has shown that high-growth small- and medium-sized companies scaling up to become large businesses create large numbers of jobs that pay well and increase productivity. • A 2008 study found that the fastest-growing 2-3% of companies accounted for nearly 100% of the net new jobs in the United States between 1994 and 2006.9 • In Louisville, on average, one high-growth small business that becomes a large firm creates more jobs than 160 new micro-businesses or 20 new small businesses.10 • Employees at larger companies are also more economically productive and receive higher wages than those at smaller firms.11


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Leaders in Louisville can look to other successful ecosystems to understand how networks of successful companies develop and grow over time. Cities that wish to spur the growth of more scaleup firms and become hubs of entrepreneurship must foster the development of the local entrepreneurship ecosystem that supports high-growth companies. The term “entrepreneurship ecosystem” describes the way individuals, companies, organizations and governments interact to influence the development of entrepreneurs and their firms in a single metropolitan area or region. Participants in the ecosystem include entrepreneurs, investors, customers, suppliers, employees and many other individuals and institutions. Healthy ecosystems for high-growth companies enable entrepreneurs to access the resources they need to grow their companies and create jobs and values for their communities. Research suggests that the best ecosystems follow a specific cycle of growth, in which local entrepreneurs who succeed in building scalable firms go on to reinvest their financial, intellectual and social capital into the next generation of local entrepreneurs and companies.

The Creation of Silicon Valley – Growth of the Local Computer Chip Industry. Fairchild generated 31 spinoff firms in just 12 years.

Legend: Size of circle reflects the influence of the entrepreneurs at each company based on the number of spinoff firms.

SPINOFFS Source: Endeavor Insight analysis.


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One of the most famous examples of this cycle can be found in Silicon Valley, where Endeavor Insight recently conducted a study into the creation of the local tech industry. While the San Francisco Bay Area is now a thriving tech hub, it was a very different place in the mid-1950s. At that time, the region lacked what are now considered essential components of a successful ecosystem: customers, talent, and growth financing. In fact, before the area south of San Francisco became famous for its computer chip companies, it was known for being the largest producer of prunes in the United States.12 However, in 1957, eight entrepreneurs decided to do something that seemed crazy. They launched a new computer chip company, called Fairchild Semiconductor in a small farming town in the region. The entrepreneurs leveraged their professional networks in cities outside the Bay Area to find two key supporters who helped them raise capital and sign contracts with their first customer. These connections set them on the path to success. After just three years, Fairchild’s annual revenues were over $20 million. By the mid-1960s, the group was generating $90 million in annual sales. Yet this was only the beginning of the co-founders’ accomplishments.13 As Fairchild started to grow, employees began to leave the firm to launch new spin-off businesses. The eight co-founders supported a number of these new businesses, and it wasn’t long before the entrepreneurs at Fairchild began to invest into local startups and create their own spin-off firms. In just 12 years, the co-founders and former employees of Fairchild generated more than 30 spin-off companies and funded many more. In 1971, a local journalist, describing the silicon used to manufacture computer chips at many of these companies, coined a new name for the region: Silicon Valley.14 These new companies and investment firms dramatically multiplied the impact of Fairchild and its founders. Intel and AMD continue to be two of the largest companies in the industry. Two venture capital firms started by former Fairchild employees, Kleiner Perkins and Sequoia, were early investors in AOL, Apple, Cisco, Compaq, Electronic Arts, Google, Netscape, LinkedIn, Oracle, PayPal, Sun, Yahoo!, and YouTube. Many entrepreneurs they supported also became active mentors and investors, including Steve Jobs of Apple, who mentored Facebook’s Mark Zuckerberg, and Marc Andreessen of Netscape, who has invested in Skype, Twitter and Zynga.15 Today, nearly 70 percent of the publicly listed Bay Area tech companies can be traced directly back to the founders and employees of Fairchild. The total impact of these businesses is staggering. Today, the 92 descendants of Fairchild employ over 700,000 people and have a market capitalization of more than $1.8 trillion. These 92 publicly traded companies are more valuable than the annual GDP of Australia, South Korea, or Spain. If we look beyond companies traded on the NASDAQ and NYSE, Fairchild’s impact is even greater. In total, we can trace over 2,000 companies back to the firm’s eight co-founders.16


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The Entrepreneurship Acceleration Cycle highlights how Louisville can foster the development of more scaleup companies by improving the local high-growth ecosystem. The story of Silicon Valley illustrates the Entrepreneurship Acceleration Cycle that enables successful entrepreneurship ecosystems to develop. Additional examples of this cycle can be found in a variety of successful ecosystems, including those of fashion companies in Paris, healthcare businesses in Nashville and sports apparel firms in Portland. The cycle has four stages, as illustrated on the opposite page. 1. AMBITION: The process begins with ambitious, new entrepreneurs who seek to build large, scalable businesses in the local area due to their desire to grow and their appreciation for the local quality of life. 2. GROWTH: Next, these founders grow their firms by acquiring the resources their companies need to expand—access to talent, finance and customers—and possessing the ability to put them to use. 3. COMMITMENT: Once they succeed, the founders make a commitment to support the next generation of entrepreneurs. This requires that they wish to continue living in the local area and have the desire to reinvest their capital, knowledge, and connections with others. 4. REINVESTMENT: Successful founders can best support new entrepreneurs by reinvesting their resources through working as mentors and investors, by supporting spinoff businesses, and through acting as an inspiration to others. These actions help new generations of ambitious entrepreneurs grow companies and repeat the cycle, which accelerates the development of local industries. We have illustrated this framework on the opposite page. It is important to note that even though entrepreneurs are at the center of this process, other stakeholders can still play critical roles. In order to maximize the benefits of the cycle, supporters of local entrepreneurs should focus their efforts on firms that fit the framework – the high-potential companies that can create large numbers of jobs and go on to provide resources to others. These types of companies are often a small minority of local businesses. In fact, studies have shown that in most countries, the largest share of new jobs comes from around 5 percent of companies that have the ambition and ability to expand.

photo credit : dave durand


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The Growth Cycle of Successful Entrepreneurship Ecosystems.

2. G

R OW T H

1. AMBITION

3. COMMITMENT Support the Next Generation...

Go Big & Scale...

New Entrepreneurs

4. R

Successful Entrepreneurs

E I N V E STM E N

T

The Four Steps & Sub-Components of the Cycle: 1. AMBITION

2. GROWTH

3. COMMITMENT

4. REINVESTMENT

New entrepreneurs seek to build scalable companies in the local area due to:

Entrepreneurs are able to grow their companies and reach scale based on:

Successful entrepreneurs stay in the local area & engage with new companies due to:

Successful entrepreneurs reinvest in the next generation through:

Access to customers Local quality of life

Angel & VC investing

Local quality of life

Access to financing

Inspiration Mentorship

Access to talent Desire to grow

Desire to reinvest Entrepreneurial ability

Spinoff businesses

Examples of Ways Local Leaders Can Support Each Step of the Cycle: • Provide security and amenities that make your local area a great place to live for early-stage founders. • Recognize fast-growing, early-stage firms in your area to inspire new founders. • Fund programs and organizations that specifically target fast-growing companies and evaluate these initiatives based on participating companies’ growth.

Source: Endeavor Insight analysis.

• Eliminate protectionist regulations and subsidies that make it difficult for new companies to win customers from established firms. • Offer loan and contract guarantees to qualified, fast-growing firms. • Create job fairs and job boards specifically for local startups and entrepreneurs. • Establish public-private partnerships and events to attract outside investors to your area.

• Provide security and amenities that make your local area a great place to live for older, successful founders. • Recognize successful entrepreneurs who reinvest in the next generation of founders by acting as mentors or investors. • Recruit successful founders to help lead and guide entrepreneurship programs and initiatives in your area.

• Create channels that connect successful entrepreneurs with high-potential, early-stage founders who can benefit from mentorship. • Offer tax incentives to successful founders who make angel investments. • Reduce enforcement of non-compete agreements for employees who leave entrepreneurial companies. • Promote successful entrepreneurs as local role models.


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Scaleup entrepreneurs in Louisville report that the local entrepreneurship ecosystem has three major strengths. Endeavor conducted over 70 interviews with founders whose companies had achieved high-growth rates consistent with scaleup firms or were designated as high-potential by a local investor or entrepreneurship support organization. Data from these interviews suggests that local founders believe that Greater Louisville’s entrepreneurship ecosystem for high-growth companies possesses three major strengths that support the first, second, third, and fourth steps of the Entrepreneurship Acceleration Cycle.

Strengths within the Components of Louisville’s Entrepreneurship Ecosystem (areas with strengths highlighted in green). 1. AMBITION

2. GROWTH

3. COMMITMENT

4. REINVESTMENT

New entrepreneurs seek to build scalable companies in the local area due to:

Entrepreneurs are able to grow their companies and reach scale based on:

Successful entrepreneurs stay in the local area & engage with new companies due to:

Successful entrepreneurs reinvest in the next generation through:

Access to customers Local quality of life

Local quality of life

Access to financing

Inspiration Mentorship

Access to talent Desire to grow

Angel & VC investing

Desire to reinvest Entrepreneurial ability

Spinoff businesses

Source: Endeavor Insight analysis.

LOCAL QUALITY OF LIFE: Greater Louisville attracts and retains growthoriented entrepreneurs with excellent quality of life. Louisville has a unique advantage: above and beyond traditional quality of life metrics like cost of living, schools, and crime. According to entrepreneurs, the region has a strong draw for people who are already connected to it. In fact 85 percent of founders noted that they started their business in Louisville because they were already living there or because they had family ties to the region. Once they become successful, Louisville entrepreneurs tend to stay in Louisville for many of the same reasons. According to these entrepreneurs—many of whom said they could relocate elsewhere—the number one reason they stay in Louisville is because they are invested in the local community and value the quality of life in the metropolitan area. Entrepreneurs of Louisville enjoy the amenities and culture of the city like the ample green space that includes numerous parks, the vibrant arts community, and rich food scene.

I started here because of family. I stayed here because of momentum.

It is economical, the city has a tremendous amount of culture, and it is very easy to navigate.

I love the people and the quality of life here in Kentucky.


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ACCESS TO TALENT: Louisville offers fast-growing entrepreneurs excellent access to a large pool of potential employees. Excellent employees are the foundation of a scaleup business. Even in capital intensive industries, management and senior employees enable a business to sell and pursue new business opportunities. As one of the key inputs to the Entrepreneurship Acceleration Cycle, human capital, or lack thereof, can be an important determinant of the success or failure of an enterprise. In Louisville, 75 percent of entrepreneurs agree that they have excellent access to talented employees. Greater Louisville is home to world-class research institutions, including the University of Louisville, as well as to companies like UPS, Humana, and a growing technology scene. These institutions train and anchor talent to the region across a wide range of disciplines, including engineering, sales, and general management. Some entrepreneurs, however, note that employees for their particular business, usually in the technology sector, are hard to find. However, it is common to hear similar challenges regarding software developers even in New York City, which has the second largest Internet technology sector in the world.

Talent in Louisville is affordable and employee turnover is very low.

Technology development talent is hard to come by – but that is hard in any city that isn’t San Francisco or New York City. We do have quality talent but it is hard to find.

There is abundant talent here in some categories like customer service, logistics, and sales.

DESIRE TO REINVEST: Entrepreneurs want to support each other and many report investing their money in the businesses of others as well. A major part of the entrepreneurship acceleration cycle is the reinvestment of capital by successful entrepreneurs in the growing businesses of younger entrepreneurs. Many scaleup businesses require outside funding at some stage of their growth. It is necessary for entrepreneurs to have a strong desire to reinvest in each other. Furthermore, 87 percent of Louisville entrepreneurs agree that successful entrepreneurs in Louisville want to support younger entrepreneurs, and are willing to invest their time, energy and money in them. Local Louisville founders report that 65 percent of entrepreneurs invest their money in the companies of other Louisville entrepreneurs. Despite these encouraging numbers, many entrepreneurs report that when seeking higher levels of institutional funding like venture capital and private equity, the ecosystem exhibits a general lack of understanding of the technology sector and it is difficult for younger companies to receive funding.

I want to inspire people to use the gifts they have to start a business.

I live in Louisville because I want to make an impact.

If someone tracks me down for a meeting, I’ll take it. People are really receptive here.


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Entrepreneurs in Louisville report that the local entrepreneurship ecosystem for high-growth companies has three major weaknesses. Endeavor conducted over 70 interviews with founders of companies that had achieved high-growth rates consistent with scaleup firms or were designated as high potential by a local investor or entrepreneurship support organization. Data from these interviews suggests that local founders believe that Louisville’s entrepreneurship ecosystem for high-growth companies possesses three major weaknesses that affect the final step of the Entrepreneurship Acceleration Cycle and slow the expansion of high-growth entrepreneurship in the area.

Weaknesses within the Components of Louisville’s Entrepreneurship Ecosystem (areas with weaknesses highlighted in orange). 1. AMBITION

2. GROWTH

3. COMMITMENT

4. REINVESTMENT

New entrepreneurs seek to build scalable companies in the local area due to:

Entrepreneurs are able to grow their companies and reach scale based on:

Successful entrepreneurs stay in the local area & engage with new companies due to:

Successful entrepreneurs reinvest in the next generation through:

Access to customers Local quality of life

Local quality of life

Access to financing

Inspiration

Access to talent Desire to grow

Angel & VC investing

Mentorship Desire to reinvest

Entrepreneurial ability

Spinoff businesses

Source: Endeavor Insight analysis.

INSPIRATION: Louisville needs a younger generation of entrepreneurs to serve as role models in the local community. The development of new entrepreneurs is critical for a growing entrepreneurship ecosystem. In fact, the stories of successful entrepreneurs are often a primary reason young entrepreneurs choose to start their own business. In Louisville, a number of entrepreneurs report that they were inspired to start and grow their business by another Louisville entrepreneur and many founders worked for an experienced Louisville entrepreneur before starting their own business. However, there is a disconnect in Louisville. Of local entrepreneurs, 57 percent report that they rarely or never give media interviews or make speeches to promote entrepreneurship as an outstanding career option for young people. Successful entrepreneurs must promote entrepreneurship to younger generations if the ecosystem in Louisville is to continue to grow.

People in Louisville want to build nice companies, not big companies.

I don’t see any people that are as hard charging and fast paced here as I see in other cities.

We haven’t had enough success stories to enable people to want to stay here. There is quite a bit of realism due to the lack of overnight success stories.


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MENTORSHIP: Few growth-oriented entrepreneurs have local mentors, and even fewer of these entrepreneurs are mentoring other firms themselves. Mentorship is a critical, but difficult to measure, element of a successful entrepreneurship ecosystem. It is the way that successful, later stage entrepreneurs can ensure that their know-how finds its way into subsequent generations of companies. Unfortunately, the vast majority, 80 percent of local entrepreneurs report being a mentor infrequently or never. Despite low levels of mentorship, a strong majority of entrepreneurs, 87 percent, report a desire to reinvest in younger entrepreneurs. The challenge is in correcting this market failure and creating a platform to connect later and earlier stage entrepreneurs.

I am not mentoring or giving speeches right now but I would, and I intend to.

I think people want to help young entrepreneurs, but there is not a lot of opportunity. There is no great avenue to bring them together.

How do I go from where I am to where I want to be? I need someone who can help me do this.

SPINOFF BUSINESSES: Few employees are leaving successful local firms to launch their own spinouts in Louisville. Running parallel to the challenge of mentorship is the lack of employees of local businesses who go on to found their own firms. Like the Paypal Mafia in Silicon Valley, groups of former employees who have experience growing a business oftentimes make the best entrepreneurs. Examples of this have been seen throughout Louisville’s history in the healthcare and spirits industries. However, this seems to be much less common today. Entrepreneurs and investors cite several challenges. Even entrepreneurial firms may not have an internally entrepreneurial culture. People may enjoy being part of the entrepreneurial culture but are not entrepreneurs themselves. Another issue is the lack of local examples or successful spinouts at this time in Louisville. Without role model to look towards, it is less likely that employees will strike out on their own. This lack of spinoffs may also be explained by the lack of financing available for smaller, riskier spinoffs or startups.

I tried to help one of my guys take some of our tech and start a new business. He wouldn’t do it because he didn’t want to leave the nest.

There used to be a lot of spinouts in Louisville. Not so much anymore.

People are either interested in being here for the quality of life or stability found by joining the huge companies.


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Endeavor will support local companies in Louisville to improve the local ecosystem for high-growth firms. Data from interviews also indicates that additional programs can be implemented to address specific needs in the city. The major weaknesses of Louisville’s ecosystem for high-growth companies – lack of inspiration, lack of mentorship, and few spinout businesses – closely matches the challenges the Endeavor’s model addresses. Given the demonstrable need for the services Endeavor offers as well as the potential of local entrepreneurs, Endeavor opened a new affiliate office in Louisville in May 2015. The Endeavor Louisville team, led by managing director Jackson Andrews, will work to implement Endeavor’s model, which has been launched in 22 countries and over 45 cities across the world. Endeavor’s Co-Founder Peter Kellner serves on the Endeavor Louisville board, which is chaired by Humana Co-Founder David A. Jones, Sr. The remaining board members are: – Ryan Bridgeman, President of RJE LLC – Henry “Hank” Dudgeon, III, Co-Founder of Rubicon Global – Sandra Frazier, CEO & Managing Member of Tandem Public Relations – Dan Jones, Founder and CEO of 21st Century Parks – Kent Lanum, President and CEO of Paul Ogle Foundation – John Schnatter, Founder and CEO of Papa John’s International – Kent Taylor, Founder and CEO of Texas Roadhouse – Matt Thorton, CEO of Thorntons Inc. Through the process of conducting this assessment, Endeavor Louisville identified hundreds of highgrowth and high-potential companies throughout Louisville. Each of these firms will be invited to apply to join the Endeavor network. Every founder who is selected to join the Endeavor program will receive access to mentoring from leading executives and established entrepreneurs in the Louisville area and around the world. They will also be invited to participate in unique training programs and networking events designed especially for the leaders of fast-growing and high-impact companies. Endeavor Louisville will then select the most promising high-impact entrepreneurs from among the hundreds of founders identified in this research and support their growth with additional programs that increase their access to talent, capital, and mentors. These include participation in events hosted by Endeavor’s Investor Network, which has helped Endeavor companies raise over $400 million in the last three years, as well as talent-focused fellowship programs with corporate partners, such as EY and Bain & Company, and custom-built advisory boards of executive-level mentors. Endeavor also actively encourages the entrepreneurs it supports to become mentors and investors for other companies as they become successful. Worldwide, more than 60 percent of Endeavor’s current entrepreneurs act as advisors and investors for other entrepreneurs in their communities. Successful entrepreneurs who participate in Endeavor’s program will then be promoted as role model for the next generation of founders in the community.


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In addition to providing Louisville firms with services from the Endeavor network, the researchers leading this project identified a number of recommendations for improving specific aspects of the ecosystem for high-growth firms in the city. We draw these recommendations from an analysis of over 1,000 policies and programs from 100 cities, as well as from discussions with leading stakeholders in government and the private sector. We recommend that these programs be duplicated in Louisville as independent efforts or through incorporation into existing initiatives to accelerate the development of the local entrepreneurship ecosystem. Create Case Studies of Local Success Stories (Scaleup Case Studies) Endeavor Argentina worked with sponsors to create case studies of entrepreneurs at local scaleup companies. These case studies share stories of key moments in the companies’ growth as well as the challenges that entrepreneurs had to overcome. The founders featured in the cases are frequently invited to speak to classes of college students when their cases are taught. An Endeavor Insight study in 2011 found that a number of younger entrepreneurs reported that they were inspired by the companies profiled in these cases as they studied entrepreneurship. Highlight Scaleup Founders in the Media (We Are Made in New York) The “We Are Made in New York” advertising campaign was launched in 2013 to promote successful New York City technology entrepreneurs as role models and job creators. It was created using resources donated by local media firms and promoted on free municipal platforms, including large poster advertisements in hundreds of subway stations. The campaign generated approximately 150 million media impressions in just six months. Celebrate Scaleup Mentors (Monosson Prize) Entrepreneurs don’t just need early-stage mentors; they need them at all stages of their lifecycles. By raising the visibility of local mentors, Louisville can encourage more and higher-quality mentorship. MIT’s Adolf F. Monosson Prize for Entrepreneurial Mentoring has done just this in Boston. There, a committee comprised of leaders of local entrepreneurship organizations accept nominations for great mentors, and honor the recipients at an annual ceremony. Mentors tend to mention the award prominently in their bios, encouraging other local business leaders and successful entrepreneurs to give back to the entrepreneurship ecosystem. Promote and Facilitate Startup Mentorship (ENLACE E+E) Early-stage mentorship can help entrepreneurs take ideas and turn them into scalable business models. ENLACE E+E is a program designed by Mexican entrepreneurs and the leading technical university institute in the country, the Monterrey Institute of Technology and Higher Education (TEC). Entrepreneurs who join the program are matched with three mentors who guide and support their development. The mentor network of ENLACE E+E includes many successful entrepreneurs as well as experienced business leaders, and the program focuses on businesses that can scale rapidly.


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ENDNOTES 1. Kate Rogers, “Louisville’s Economic Comeback: How it Regained its Manufacturing Prowess,” Fox Business, 15 October 2015 <http://www.foxbusiness.com/government/2013/06/06/louisvillekentucky-boomtown-turnaround/>. 2. “Unemployment Rate in Louisville-Jefferson County, KY-IN (MSA)”, Federal Reserve Bank of St. Louis, 15 October 2015 <https://research.stlouisfed.org/fred2/series/LOIURN>. 3. U.S. Department of Commerce, Regional Data, Bureau of Economic Analysis, 15 October 2015 <http://www.bea.gov/iTable/iTable.cfm?reqid= 70&step=1#reqid=70&step=10&isuri=1&7003=1000&7035=-1&7004=nai cs&7005=1&7006=00998,31140&7036=-1&7001=21000&7002=2&7090=70&7007=2013&7093=levels>. 4. Ibid 5. Ibid. 6. “Economic Innovation Group Study, Insider Louisville, 15 October 2015 < http://insiderlouisville.com/ metro/two-studies-show-economic-inequality-louisville-metro-area-among-nations-highest/>. 7. Endeavor Insight analysis based on 2012 NETS Database data for the Louisville-Jefferson County Metropolitan Statistical Area. 8. Ibid. 9. Zoltan J. Acs, William Parsons, and Spencer Tracy, “High-Impact Firms: Gazelles Revisited”, (Washington: Small Business Administration Office of Advocacy, 2008) 2. 10. Endeavor Insight analysis based on 2012 NETS Database data for the Louisville-Jefferson County Metropolitan Statistical Area. 11. Gary Kunkle, Building Scale and Sustaining Growth: The Surprising Drivers of Job Creation, (Cassopolis: Edward Lowe Foundation, February 2013) 3. 12. Rhett Morris, How Did Silicon Valley Become Silicon Valley?, (New York: Endeavor Insight, 2014) 3-14. 13. Ibid. 14. Ibid. 15. Ibid. 16. Ibid.


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Methodology These findings are based on interviews with more than 50 high-growth and high-potential companies, conducted between May and October of 2015. This report was created by Max Cook and Rhett Morris. They wish to thank their colleagues Maryann Chu, Matt Lerner, and Lili Torok, as well as Jackson Andrews and Candice Orm of Endeavor Louisville, and all of the local entrepreneurs who participated. This report was made possible by generous support from the founding board of Endeavor Louisville Endeavor Louisville has also received and gratefully acknowledges significant funding from the Paul Ogle Foundation, the James Graham Brown Foundation, the Blue Sky Network, and The Gheens Foundation. For additional information, please contact Endeavor Louisville’s team at louisville@endeavor.org.


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About Endeavor Louisville Endeavor Louisville is a local/global partnership connecting talent, markets, and investors around the world to benefit entrepreneurs and companies in their home region that can Scale-Up, Go Big, and Give-Back. Endeavor Global has helped entrepreneurs build more than 700 companies across 23 markets, generating combined revenues of nearly $8 billion in 2014 and creating over 500,000+ jobs. Louisville is only the 3rd North American Endeavor City to launch.

About Endeavor Insight Endeavor Insight, Endeavor’s research arm, studies high-impact entrepreneurs and their contribution to job creation and economic growth. Its research educates policy makers and practitioners on how to accelerate entrepreneurs’ success and support the development of strong entrepreneurship ecosystems. In 2013, Endeavor Insight joined with the Kauffman Foundation and the World Bank to co-found the Global Entrepreneurship Research Network.


Endeavor Insight October 2015 Copyright Š Endeavor Global www.endeavor.org/insight /endeavorglobal @endeavor_global /endeavorglobal


Scaling Up In River City