The Ewing Marion Kauffman Foundation is not releasing its annual Kauffman Index of Entrepreneurship series this year, and the Seed Accelerator Rankings Project has delayed its release of the top U.S. accelerators for 2018.
The respected Kauffman Index is much maligned in Milwaukee, since the city routinely ranks low on the list of U.S. cities in terms of new business creation and growth. So does the state of Wisconsin.
In the 2017 Kauffman Index of Startup Activity, the metropolitan Milwaukee area ranked 39th, tied with Pittsburgh for the lowest ranked major metro area. Meanwhile, Wisconsin ranked last (25th) of the larger states rankings for the Kauffman Index of Startup Activity. The state also ranked last in 2016.
In the 2017 Index of Growth Entrepreneurship, the Milwaukee-Waukesha-West Allis metropolitan area ranked 33rd among the 40 largest metropolitan areas in the U.S. in growth entrepreneurship, down from 26th in 2016. Statewide, Wisconsin was ranked 23rd among the 25 “large” states in growth entrepreneurship, the same as its 2016 ranking.
Now, on its Kauffman Index site, the Kauffman Foundation has a message that reads, in part:
“Due to the availability and timing of some underlying data sources and a new direction for its research strategy, the Kauffman Foundation will not be producing reports in 2018 for the Kauffman Index of Entrepreneurship series.
“While the Kauffman Index series has produced valuable data, there is a need for more actionable research that can be applied to support entrepreneurs and communities working to support entrepreneurs. A redesign of the Index would better fit this new research approach.”
A Kauffman representative contacted by BizTimes did not elaborate beyond the statement regarding the reason for the change in the Index.
Meanwhile, another measure of national startup activity, the Seed Accelerator Rankings Project, has not released its ranking for 2018. In 2015 and 2016, the SARP released its rankings in March, and in 2017, they came out in June.
Milwaukee- and Madison-based startup accelerator gener8tor was ranked 14th on the 2015 list (out of 20) and “gold” on the 2016 (out of 23) and 2017 (out of 30) lists.
The SARP uses confidential data on startup outcomes provided by the accelerator programs, as well as surveys of the startup founders who graduated from the accelerators. Factors measured include valuation, qualified exit, qualified fundraising, survival, founder satisfaction and alumni network.
Contacted about the delay, leaders of SARP indicated the 2018 release has been delayed, but they expect it to come out later this year.
Wisconsin entrepreneurship leaders applauded the Kauffman Foundation’s decision to re-evaluate its process.
“We are grateful to the Kauffman Foundation for highlighting the importance of entrepreneurship in communities such as Milwaukee through reports such as the Index,” said Joe Kirgues, co-founder of gener8tor. “We hope they continue to do their best to measure our community’s success in investing itself so that we might continue to advance in our efforts to build a stronger region.”
Kirgues declined to comment on the SARP rankings delay.
“It’s encouraging that Kauffman, after many years of doing the survey in a certain way, has taken a time out to reassess how it is conducted,” said Tom Still, president of the Wisconsin Technology Council. “Anecdotally, we have never believed that Wisconsin had the lowest startup rate in the country and continue to believe that we’re not No. 50.”
“I’m happy that these groups are reevaluating the ways that they’re measuring entrepreneurial activity,” said Matt Cordio, founder and president of Startup Milwaukee. “I’ve often felt they don’t necessarily give a timely or accurate picture of the state of the ecosystem here in southeastern Wisconsin.”
Entrepreneurship leaders pointed to other rankings they use to evaluate startup activity, but cautioned no measure is perfect.
“I would say a good indicator of entrepreneurship activity is the number of early stage financings in the state,” Cordio said. “It’s extremely challenging to actually provide a true snapshot of really where a startup ecosystem is at. In the accelerator space, the seed accelerator rankings, it’s hard to truly also measure the impact they have on the local ecosystem.”
Scott Resnick, entrepreneur-in-residence at StartingBlock Madison Inc. and chief operating officer of Hardin Design & Development, said he also gauges some measure of startup activity from the statewide venture capital reports from PitchBook and the Wisconsin Technology Council, as well as from the Center for American Entrepreneurship’s recent report on “America’s Rising Startup Communities.”
“This will give Kauffman the proper amount of time to look at the data and hopefully come back with reports that are more useful for ecosystem leaders,” Resnick said. “We can clearly see both from other reports and other metrics that Wisconsin, although it has room to grow, is still a healthy place to start and grow a startup company. There’s only so much value you can draw from statewide numbers.”
