Not long ago my heart sank when I read that the Pittsburgh metropolitan area ranked 48th among the 50 top cities in Entrepreneur magazine’s list of the best cities for entrepreneurs.
Entrepreneurship is a Pittsburgh tradition and the life-blood of our future growth. So how can we move up the entrepreneurial ladder?
Water the acorns
Because venture capital firms can only invest in companies with addressable markets exceeding $500 million, they usually don’t make bets on small startups.
Seed money for these companies must come from high net-worth individuals in the private sector, sometimes called “angels.” Places like Palo Alto, Calif., Boston, Mass., Raleigh, N.C. and Austin, Texas, have become technology hotbeds.
Why? Because young tech-company founders, whose companies have grown into mighty financial oaks, showered startup capital on acorns that had fallen nearby — folks with good ideas.
In Pittsburgh, we need to create an environment where there are incentives for successful local entrepreneurs to reinvest their personal wealth in local startups. A nice complement to our state’s venture capital program would be tax breaks for angel investors who deploy capital intrastate for startups or invest in venture capital firms based within state lines.
Teach your children well
Entrepreneurial education on a high school, collegiate and executive seminar basis is a must. Every major university in our region has entrepreneurial education programs. Many are taught on a graduate and undergraduate level. Organizations such as the Network for Teaching Entrepreneurship help high schools, often in low-income districts, to provide classes in business, finance and technology.
Why couldn’t the Commonwealth of Pennsylvania create a program such as the Job Training Partnership Act to provide tuition dollars for this type of education for adult entrepreneurs? Why can’t an introduction to entrepreneurship be part of a life skills curriculum that is mandated for high schools across the state?
Our gang of several
The Group of Eight (G8) is an international association that represents 65 percent of the world’s economy and includes the United States, Canada, France, Germany, Italy, Japan, Russia and the United Kingdom. The leaders of these countries get together every year to find ways that they can work together to better our global economy.
Could we bring together the leaders of local economic development agencies to form a group that functions in a regional way, much the same as the international version?
What if the state gave this local group of leaders a chunk of its venture capital program dollars, with the proviso that the group hires a staff of experienced venture capitalists to administer the fund? After all, members do have day jobs running their own organizations. The profits of this venture fund would then be redeployed regionally in the form of economic development grants.
Green cards with diplomas
You know how we beat China and India in the world economy, technology and talent? We should take the advice of a highly successful local venture capitalist. The diploma any foreign student receives from a local college should have a green card stapled to it.
How about we create a local bureau of immigration lawyers that provides free legal service to foreign kids coming out of local schools? If we get them a green card, they must commit to living in the region for another five years.
Chris Allison is the former CEO of Tollgrade Communications Inc. where he spent 16 years taking the telecomm venture from tech startup to publicly-traded company with a market capitalization of $2 billion. Allison now devotes his time to shaping future business leaders as Entrepreneur-in-Residence at Allegheny College, where he teaches entrepreneurship and managerial economics. He is the author of “You’ll Manage: Lessons Learned from a Former CEO.” For more information, visit chrisallison.biz.