What The Eugene/Springfield Entrepreneurial Ecosystem Looks Like
What do you think Eugene’s entrepreneurial ecosystem is like? Let’s take a closer look.
There are many organizations and individuals here that seek to be an ecosystem connector — they may not have all the answers themselves, but they serve as a central hub where efforts can (hopefully) be synchronized and maximized.
One example is the work done to help Algo-Tek. Two of the three folks at Algo-Tek are material and product studies majors and all participated in the University of Oregon’s 2017 Sustainable Invention Immersion Week, an annual entrepreneurial boot camp and competition for green business ideas. Algo-Tek was also among Eugene Regional Accelerator’s (that’s us . . . formerly known as Eugene RAIN) 2018 cohort of entrepreneurs.
Algo-Tek wants to disrupt the plastics packaging industry by creating an algae-based plastic for a new form of packaging. The students had the idea . . . but they needed some help making it real, and making it realistic. Julie Haack, one of the UO’s instructors in the department of chemistry and a nationally recognized expert in green chemistry, product life cycle, and the science of sustainability, mentored the team on perfecting their new material.
Kate Harmon, a faculty member in the Lundquist Center for Entrepreneurship, flew to Texas with the team to help with a pitch competition. Harmon (who is also active with Eugene Regional Accelerator events) and her colleagues in the Lundquist center worked continuously with the team on developing their business model, connecting them to grant and accelerator opportunities, and helping them grow their professional network. The center also invested more than $4,000 in the team through grants and paying for their travel to business competitions. Where did they develop these ideas? The Eugene Regional Accelerator at 942 Olive St. was their workspace. This is just one example of how many people in the startup community come together to help support innovative visions, no matter what those visions might be.
Tracking very early business development is hard to do. There are no reliable sources of numbers that represent people developing their side hustle, or turning their side hustle into a full-time business. Everyone knows the economy took a huge hit over the past 10 years. But, we’ve very nearly recovered to pre-recession levels of business development, and business success markers are high. June 2019 numbers from the Bureau of Labor Statistics show more new businesses being established throughout Oregon from 2015 onward, especially relative to the early recovery from 2009 to 2014. Businesses that survive one year are up to nearly 80 percent, after bottoming out at about 70 percent in 2009.
Historical numbers, though, tell a different story in Lane County. This report shows more than 1,000 new employer establishments in 1977 and 1978. In 2015, we averaged around 450 new establishments per year. That might seem ominous. Less businesses are being formed nationwide, but, importantly, these graphs don’t include the small-scale entrepreneurs who don’t employ anybody – so-called “nonemployers.”
In Lane County, the number of nonemployers has more or less stayed consistent with population growth in the last 20 years. Nationally, four in five businesses are nonemployers. The number of nonemployer firms has risen 58% since 1997, from 15.4 million in 1997 to 24.3 million in 2015, while the number of employer firms has grown 6% in the same period. On average, nonemployer firms earn about $47,000 annually.
These numbers are slightly outdated, but the top three fastest-growing sectors between 2012 and 2016 were 1) hospitality and food, 2) educational services, and 3) transportation and warehousing. In fact, food grew faster in Lane County than it did in the state (I think our abundance of food trucks, restaurant openings, and expansions greatly contributes to that).
“We’ve seen an increase in new businesses forming recently, although the reality for Lane County as well as the nation is that we are still far below historical levels, and economists aren’t entirely sure why,” says Henry Fields, Lane County’s workforce analyst. “It probably has something to do with changing business patterns (increasing consolidation of larger companies, for example), personal circumstances (increasing student debt and dependence on employment for health care), and demographic shifts, among other issues. In that light, the work that the accelerators do could serve to reduce risk and play an important role in creating a culture of entrepreneurship that opens up new possibilities.”
That’s the point, entirely. Accelerators accelerate. They create a culture of entrepreneurship. They open up new possibilities. They don’t create businesses, and they won’t build your business for you. Your idea needs to be good, and you must do the hard work of seeking out information and making connections to people that can help you, but accelerators and the people that are part of the entrepreneurial ecosystem can help you do that. And they’re willing to do that if you connect with them.
Kevin Barrett, founder of Swallowtail Spirits in Springfield, graduated from the RAIN Eugene/ Eugene Regional Accelerator program in January 2016. Upon graduation, the vision for his company was very different than when he entered in the fall. Barrett has raised more funds than he originally envisioned, which allowed him to hire two employees sooner than expected, and in late summer he expanded into a new tasting room in Springfield, where he can sell bottles and mixed cocktails.
“I had been following RAIN for a little while and saw that they were taking applications, so I applied and met with Joe and Shane,” recalls Barrett.
The first time Barrett applied he was not accepted into the cohort, because the focus at that time was more on tech, but also because he already had a product on the shelf and the organizers were looking for early-stage business development. They told him to try again later. He did and met with the mentors again to explain more about why he needed RAIN’s help even though his product was increasing in sales by 20% from month to month.
“I told them, I know how to make alcohol and I know how to sell alcohol, but I don’t know how to run a business and this isn’t going to be just me in the future,” says Barrett. “I don’t know how to grow the business. I don’t know how to expand. I don’t know how to negotiate contracts. I don’t know how to put together a business plan. I don’t know how to do the financial stuff. I don’t know how to do, just, all of it.”
Barrett made learning business development and expanding his business his full-time job, living off of the savings he had planned to put into the business.
“Doing my research and talking to anybody who would listen,” he says. “I got to meet a lot of the other advisors and the RAIN board of directors and that was a lot of value to me. But along in that process, they were introducing me to so many more people than I would’ve ever had access to on my own. Whether they were in the same field or not, they all have some sort of a piece of information that was invaluable to me in one way or another.”
After being accepted to the cohort, Barrett says he had access to “a wealth of knowledge.” “I could say hands down that I would not be where I am right now without having done that,” he says.
The Eugene Regional Accelerator didn’t launch his product, nor did they help with sales, but Barrett says they helped in so many other aspects of things that he simply had no understanding of, and it connected him to people and resources that he didn’t know was out there.
He’s now launched his second facility, a beautiful new retail store and bar on Main Street in Springfield, within a year and a half of graduating from the accelerator.
Barrett says he’s scared sometimes, because he’s in debt, and like all small business owners, he can’t see the future. But, he’s working for himself, providing jobs for other people, and living the way he wants to, doing something that is meaningful to him.
“Without having gone through that and without having been one-on-one with these people, I wouldn’t have known how to even start,” he says. “So, it’s not just a startup launch, it’s a career launch. It’s got to succeed because this is my life now, and I’ve got the support and the people behind me to help make that happen.”
RAIN Eugene is a sponsor of Startup Weekend Eugene Food, a startup weekend from November 8-10, 2019, in Eugene, dedicated to bringing to life food-related businesses. The event has lined up mentors from many large and small Oregon-based companies to help others find their own starting point.