A newly released report on rural innovation shows that since 1978, the number of startups in rural Wisconsin has dropped by 50%. The report, created by the Wisconsin Startup Coalition, University of Wisconsin College of Agricultural & Life Sciences, and Alliant Energy, found that while Wisconsin has an average number of business closings when compared to other states, it has a below average number of new businesses being created.
"Wisconsin is fortunate to have many small communities with innovative people. Our elected officials have a huge opportunity to ensure that entrepreneurship is supported across the state. This report establishes a baseline for impactful, collaborative policy work to make Wisconsin one of the best places for early-stage startups,” said Lydia Zeller, chair of the Wisconsin Startup Coalition Board.
One factor that may contribute to this trend is the fact that rural Wisconsin does not have significant levels of employment in industries that are categorized as research and development. The report also points out the patenting process is “formidable” for small or medium-sized startups.
The study suggests that rural Wisconsin communities develop a framework to consider all the factors needed to attract, support and sustain entrepreneurs. The Community Capitals framework is mentioned as a way to gain a range of input and insight.
Within the Community Capitals framework, there are seven different types of input or capital that need to be gathered to lead to a successful entrepreneurial support system. Those types of input or capital include financial, political, social, human, built, natural and cultural.
Social capital examines the connections among people and organizations within a community. Political capital is the ability to influence public policy. Built capital is the infrastructure that supports a community, such as public transportation. Cultural capital refers to who community members know and feel comfortable with and the level of collaboration across races, ethnicities and generations. Human capital is the skills and abilities of members of a community. Financial capital is the ability to gather financial resources and garner investment. Natural capital looks at how a community is preserving its natural amenities.
“For entrepreneurs, financial capital is perhaps the most crucial community capital. Undercapitalization is one of the main reasons businesses fail,” according to the report.
Recommendations for rural communities looking to address this issue include considering banks, credit unions, rotating loan funds, investor groups, attracting equity and developing community supported enterprise to foster entrepreneurship.
The report also offers both long-term and short-term solutions to help catalyze innovation and entrepreneurship in rural Wisconsin communities. The long-term solution focuses on investing in education that is not narrowly focused on technical skills but includes problem solving and critical thinking skills. The short-term strategy suggests that because entrepreneurs learn the most from other innovators, more networking and mentoring opportunities should be created.