Education Week - February 26, 2014 - 10

INDUSTRY & INNOVATION > Tracking business trends and emerging models in K-12
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Diplomas, Degrees Spur
Startup Growth in Cities
CONTINUED FROM PAGE 1
startup rate," they write.
It was a finding that surprised Yasuyuki
Motoyama, a senior scholar
in research and policy at the Kauffman
Foundation, a Kansas City,
Mo.-based philanthropy that works
to foster economic independence by
advancing education and entrepreneurship.
He is a co-author of the
new study, "Beyond Metropolitan
Startup Rates: Regional Factors Associated
With Startup Growth."
Contrary to conventional understanding
in the research literature,
the study found that there are few
significant factors that the public
sector can affect to influence startup
rates and growth in metropolitan
areas. For the new report, released
last month, a team of researchers
examined the subject from three
angles: the startup rate for all industries,
for high-tech sectors, and
for high-growth firms.
Among other findings, the re-
search showed that metropolitan
areas with more college graduates
will produce more startups, and that
greater high school completion rates
will further fuel startup activity.
But just because a city has a high
college-completion rate does not necessarily
mean that it has a high rate
of high school completion, according
to the study.
"Until I looked at the data, I assumed
that if a city has a high level
of college-completed adults, that city
would also have a high level of high
school-completed adults. But that
is not true," said Mr. Motoyama, an
expert in city and regional planning.
Expanding Skill Sets
Promoting high school completion
would seem a logical outgrowth of
the study. But states are "already
all over high school completion,"
said Kathy Christie, the vice president
of knowledge/information management
and dissemination for the
Denver-based Education Commission
of the States. "That train's been
out on the tracks for a long time."
Rather, she said, the biggest "aha"
from the study is the fact that college
graduation is not the only significant
educational factor generating
startups.
In fact, the study cites older data
from 2008 showing that 53 percent
of entrepreneurs had actually not
attained four-year college degrees.
Exec
"We're starting to hear from communities,
'Quit simply talking about
four-year college completion, and
recognize that there are lots of skills
and credentials out there that make
a difference for the earning power
and long-term future for young people,'"
Ms. Christie said.
Katherine Lucas McKay, a senior
policy analyst for the Corporation
for Enterprise Development, a
Washington-based nonprofit that
is dedicated to expanding economic
opportunity for low-income families
and communities in the United
States, said the Kauffman study
did not focus sufficiently on "microbusinesses,"
which are essentially
self-employed individuals who have
up to five employees. Inclusion of
those businesses might have affected
the results of the study, she
said, by showing that a four-year
college degree could be even less
vital to entrepreneurial success.
"These are striving, successful
'Main Street' businesses that may not
ever become Google, or even a firm
that grows to 100 employees," she
said, "but they add more than $1 trillion
in economic activity every year."
Ms. McKay, who co-authored a
January 2014 report called "Enhancing
Support for Lower-Income
Entrepreneurs Through Major Public
Systems," said it's important for
education policymakers to look at
the skills that entrepreneurs want
help with-such as how to forecast
earnings-as part of the financial
education taught in secondary
schools. Learning those skills,
she said, should be in addition to
personal financial literacy, such as
"how to create a budget" or "how to
handle a bank account."
David T. Conley, the chief executive
officer of the nonprofit Educational
Policy Improvement Center in
Eugene, Ore., and an education
professor at the University of Oregon,
based in the same city, added:
"Why not have all students do a
business plan? That would be kind
of cool."
Pathways to Success
Mr. Conley also said the finding
that students with a high school
education contribute significantly
to the startup economy doesn't surprise
him.
"What does it take to be an entrepreneur?
It takes perseverance, a
willingness to take risks, some social
skills to work with people." he
said. "But does it take Algebra 2?
Not necessarily."
The fact that roughly half of entrepreneurs
do not hold four-year
college degrees didn't faze Brian K.
Fitzgerald, the CEO of the BusinessHigher
Education Forum, a membership
organization of Fortune
500 chief executives and research
university presidents that seeks to
advance innovation in education
and the workforce and bolster U.S.
competitiveness.
"Look at Bill Gates. They had to
give him an honorary degree. Steve
Jobs dropped out of college, too," Mr.
Fitzgerald said.
What's important, Mr. Fitzgerald
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said, is building talent pathways
between colleges and employers in
areas such as cybersecurity, risk
analysis and management, and sustainability.

"We're working on seeding new
high-school-to-college pathways that
don't exist now," he said.
Not every student needs a college
degree, he added. "We're saying
every student should have a
pathway to go as far as he or she
sees fit," Mr. Fitzgerald said. "If
they have the technical skills and
knowhow with an associate's degree,
then God love 'em. Go and be
an entrepreneur."
But that may not be as easy as it
sounds, because the vast majority of
startups fail, according to experts.
Plus, the study points out that
more research needs to be done to
assess the correlation between educational
attainment and entrepreneurial
success.
Coverage of entrepreneurship and
innovation in education and school design
is supported in part by a grant from
the Carnegie Corporation of New York.
Education Week retains sole editorial
control over the content of this coverage.
Scan this tag with your
smartphone for a link to
"Beyond Metropolitan Startup
Rates: Regional Factors
Associated with Startup
Growth." wwww.edweek.org/links
WHAT DOESN'T PROMOTE
BUSINESS STARTUPS
AND GROWTH
RESEARCH
Billions of dollars in government
research expenditures don't
translate into more startups
VENTURE CAPITAL
Investment levels of financial
organizations, primarily from
venture capitalists, do not
correlate to high startup rates.
HIGH-TECH SECTORS
These only generate more hightech
startups
WHAT CORRELATES TO
MORE ENTREPRENEURS
IN AN AREA
EDUCATION
A high ratio of college graduates,
coupled with a substantial rate
of high school completion
SIZE OF METRO AREA
Large areas tend to have higher
entrepreneurial rates than
smaller ones
SOURCE: The Ewing Marion Kauffman
Foundation
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Education Week - February 26, 2014

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