THE STATE OF INNOVATION & STARTUPS In South Bend-Elkhart

by Nick Swisher

SEPTEMBER 20181

EXECUTIVE Summary

ver the last few decades, economic growth attainment of the region’s population and 7) income hasO become increasingly concentrated in the growth. nation’s largest cities. Since 2010, America’s biggest metropolitan areas have been responsible for fully As shown in Figures 25 through 28, which are two-thirds of all economic growth and 73 percent explained in greater detail in the body of this of all employment gains. Conversely, America’s report, we found that when averaged, the six smaller cities have actually contributed -6.5 percent highlighted innovation hubs above not only beat to economic growth and only five percent of the national average in each of these seven metrics employment gains over the same period of time.1 by considerable margins, they also exceed metrics While some have called this trend unstoppable,2 for the South Bend-Elkhart region by an even larger the reality is that there have been a number of ones, indicating the significant challenge we face as a smaller metropolitan areas that have bucked this region in our effort to transform our economy. trend spectacularly. Provo-Orem, Utah; Boulder, Colorado; Gainesville, Florida; Austin, Texas; and While Figures 25 to 28 generally show that the area the Midwestern cities of Ann Arbor, Michigan; is not currently an innovation hub, it’s important to and Madison, Wisconsin have each established point out that Provo-Orem, Boulder, Gainesville, themselves as small, but mighty innovation hubs Austin, Madison and Ann Arbor had to start and have experienced strong economic growth as a somewhere. As shown in Figures 12 to 19, which are result. found in the main body of this report, since 2014, South Bend-Elkhart has seen positive growth in five Because of the many economic benefits associated of the seven innovation hub metrics. It has only seen with being an innovation hub, such as fast wage and a small decline in growth of new establishments and employment growth, high productivity and resilience no growth in the number of venture capital deals. against unemployment, we believe the South Bend- The growth of new establishments number did, Elkhart region can and should become one of these however, turn positive in 2015. Data are unavailable smaller, but dynamic, innovation hubs. Getting there, for 2017. however, won’t be easy. As with any journey, we must start by finding out where we are and then plot a For South Bend-Elkhart to become an innovation route to our destination. The purpose of this report is hub, it will need to specialize in a few key tech areas, to do just that. As such, it is not a critique; it is a tool especially those ones we are already strong in or for the many groups in the South Bend-Elkhart area have a foothold in. In addition, we must retain more working towards creating a more robust, dynamic of our college graduates by providing them with economy to use as a baseline. better opportunities, train more tech graduates and get global in focus. These strategies will, over time, In particular, this baseline is comprised of seven help South Bend-Elkhart transform into an innovation measures that economists and others tend to use hub similar to, if not stronger, than the ones we for understanding whether an area is a tech city or compare it to in this report. an innovation hub.3 These metrics are: 1) growth of new businesses, 2) the investment amount of venture capital deals, 3) the number of venture capital deals, 4) the percentage knowledge workers make up of an area’s workforce, 5) the percentage tech workers make up of an area’s workforce, 6) educational

EXECUTIVE SUMMARY 1 Figure 25: South Bend-Elkhart Figure 27: Average VC Investment Compared to Key Innovation Hub Amount Per Person Post 2010

Metrics Part 1 (Percentages) $1,600

160 149.4% $1,400 $1,308 140 134.7% $1,200

120 112.9% 112.1% $1,000 100 $800

80 $600

60 $400 47.9% 40 $225 30.3% $200 24.6% 21.1% $60 20 $7 $0 Comparable United States Indiana South Bend-Elkhart 0 Innovation Percentage of Population (25) With a Income Growth % 1990-2017 Hubs Bachelor’s Degree or Higher in 2016

Comparable Innovation Hubs United States Indiana South Bend-Elkhart Figure 27 Source: PitchBook

Figure 25 Source: Bureau of Labor Statistics and U.S. Census Bureau

Figure 26: South Bend-Elkhart Figure 28: Average No. of VC Deals Post Compared to Key Innovation Hub 2010

Metrics Part 2 (Percentages) 100

35 90 82.77 81.75

30 30.14% 80

70 25

22.69% 60

20 20.46% 19.30% 50 15 40

10 30 8.18%

5 20 3.46% 2.50% 2.0% 10 0.6% 0.15% 0.0% 0 -0.6% 3.86 0 -5 Comparable Indiana South Bend-Elkhart Innovation Total Knowledge Workers Total Tech Workers as a % Avg. New Establishment Hubs as a % of All Workers in 2016 of All Workers in 2017 Growth Rate Post 2010

Comparable Innovation Hubs United States Indiana South Bend-Elkhart Figure 28 Source: PitchBook

Figure 26 Source: Bureau of Labor Statistics

2 EXECUTIVE SUMMARY TABLE OF CONTENTS

Introduction 4

The State of Innovation & Startups in South Bend-Elkhart 4 1. Number of Establishments 6 2. Venture Capital Investment Amounts 7 3. Number of Venture Capital Deals 8 4. Percentage of Knowledge Workers 8 5. Percentage of Tech Workers 9 6. Educational Attainment of Population 9 7. Income Growth 10

South Bend-Elkhart’s Recent Performance 10

Additional Economic Measures: Recession Unemployment Rate, Unemployment Variance and Per Capita GDP 12 Recession Unemployment Rate 12 Unemployment Variation 13 Per Capita GDP 13

South Bend-Elkhart Compared to the Innovation Hubs’ Averages 15

How South Bend-Elkhart Can Become an Innovation Hub 16 1. Specialize to become a hub of innovation 16 2. Focus on an area you’re already strong in 16 3. Get global in focus 17

Conclusion 17

Appendix 1: South Bend-Elkhart Compared to Grand Rapids, Greenville-Spartanburg, Cedar Rapids and Akron 18

Endnotes 23

TABLE OF CONTENTS 3 THE STATE OF INNOVATION & STARTUPS In South Bend-Elkhart

Introduction

rom “Silicon Slopes” to “Silicon Prairie” Austin, Texas; and the Midwestern cities of Ann andF from “Silicon Beach” to “Silicon Peach,” Arbor, Michigan; and Madison, Wisconsin have each communities around the world have for decades established themselves as leading tech hubs in the tried to replicate the incredible density of innovation nation, just on a smaller scale. that routinely occurs in Silicon Valley. Despite their best efforts, no single region has been able to even This latter issue, namely that these six smaller come close to matching the Bay Area’s dominance. metropolitan areas have established themselves Although it no longer reigns as supreme as it did as growing innovation hubs, is of vital importance from the mid-1980s to approximately 2015, it is still for South Bend-Elkhart. This is because during the undoubtedly the leader of innovation in the nation, if past few decades, economic growth has become not the world. Indeed, 40 percent of of all technology increasingly concentrated in the nation’s largest investments still go to Bay Area companies, a cities. Since 2010, America’s biggest metropolitan number unchanged for some time.4 Moreover, it has, areas have been responsible for fully two-thirds of all by far, the densest concentration of tech companies economic growth and 73 percent of all employment in the world, the largest percentage of high-tech gains. Conversely, America’s smaller cities have workers in the nation and 67 percent of all major actually contributed -6.5 percent to economic company acquisitions since 2006 have been of growth and only five percent of employment gains California-based firms.5 While no single community over the same period of time.8 While some have will likely be able to match Silicon Valley in the called this trend unstoppable,9 the reality is that the foreseeable future, a new trend is showing that a aforementioned six smaller innovation hubs have combination of others have and can capture some of bucked this trend spectacularly. Indeed, Provo- its zeitgeist. Orem, Boulder, Gainesville, Austin, Ann Arbor and Madison have each established themselves In an important report released last year, the as small, but mighty innovation hubs and have Kauffman Foundation found that entrepreneurship experienced strong economic growth as a result. is “increasingly happening beyond the stereotypical The potential exists for the South Bend-Elkhart entrepreneurial hubs of places like Silicon Valley region to become such a small innovation hub. and Boston….[and that] venture capital is more distributed than it was.“6 As Steve Case, co-founder In addition to countering the trend of economic of AOL and a major advocate of funding non-Bay growth concentrating in major cities, each of the Area startups, recently stated, “In recent years, if an six innovation hubs identified in this report have entrepreneur wanted to start a software company, three other important characteristics in common: 1) he or she would probably be better off by moving to they are not on a coast, 2) they are not near major Silicon Valley or Boston. That’s changing.”7 centers of venture capital activity and 3) they each have a major, outward facing research university at In the last eight years, larger cities such as New York their core. City, Washington D.C., Seattle, Denver, Los Angeles, San Diego and now Miami, Nashville and St. Louis Before we explore these smaller innovation hubs have emerged as startup hubs. More interesting and in detail, however, the question of why South Bend- relevant to us, however, has been the rise of less- Elkhart should seek to become one needs to be populated innovation hubs that we believe South briefly answered. After all, what’s in it for us? As it Bend-Elkhart can more easily seek to emulate than turns out, a lot. Simply put, areas that have become these larger cities, let alone Silicon Valley. Provo- startup/innovation hubs are continually ranked Orem, Utah; Boulder, Colorado; Gainesville, Florida; as having the best performing economies in the

4 THE STATE OF INNOVATION & STARTUPS IN SOUTH BEND-ELKHART Six Comparable Mid-Sized Innovation Hubs

Ann Arbor, MI Gainesville, FL

Austin, TX Madison, WI

Boulder, CO Provo-Orem, UT nation. Indeed, the startups hubs of San Francisco, entrepreneurial activity “...had 125 percent higher San Jose, Austin, Seattle, Denver, Nashville, Boston employment growth, 58 percent higher wage growth and Washington, D.C. make up eight out of the and 109 percent higher productivity” than those top 10 best performing economies in the country.10 without.12 Furthermore, startup hubs dominate where wages are growing the fastest. The startup leaders of San Moreover, as discussed in our series “The Big Francisco, San Jose, Seattle, Miami, St. Louis, San Small,” startups, particularly high potential ones, Diego, Denver, Austin and Washington, D.C. make are responsible for all net job growth in the United up the top 10 areas where wages are rising rapidly.11 States, experience growth rates substantially Expanding on this, a report by the Small Business higher than other firms, are responsible for a Administration found that those regions with bustling great deal of the innovation that happens in the

THE STATE OF INNOVATION & STARTUPS IN SOUTH BEND-ELKHART 5 world and routinely open new markets and upend be noted that the slow growth South Bend-Elkhart others. Simply put, the more startups, the more has experienced in business creation is not unusual businesses and innovation, and the more businesses for a community its size. As noted by the Kauffman and innovation, the more good jobs we have and Foundation, “There are increasingly fewer startups therefore the higher the standard of living we enjoy. in rural parts of America. Moreover, while many mid-size metros are doing well, smaller metros are We believe the South Bend-Elkhart region can and registering low rates of firm formation.”14 should capture these benefits and become a hub of innovation similar to the aforementioned six areas The number of establishments in South Bend-Elkhart of Provo-Orem, Boulder, Gainesville, Austin, Ann peaked in 1997 at 22,375. In 2016, the area had Arbor and Madison. The question is: how will we 20,192. Before the recession in 2008, it had 21,743. As know when we get there and how do we know we’re such, the area still has not recovered the number of not there already? To answer this, we pulled data on firms it lost during the recession, or in the preceding metrics economists and others often use to measure decade for that matter. Except for the Ann Arbor whether an area is a tech city or an innovation hub.13 area, 2016, the last year data were available, was We did this not only for the South Bend-Elkhart region the year in which the number of establishments but also for the six innovation hubs, Indiana and peaked for the six innovation hubs. This means that the United States and compared how South Bend- the growth of new establishments in these areas is Elkhart ranks against them. These seven metrics of robust and has bucked the national trend of growth innovation are: 1) growth of new businesses, 2) the concentrating in major metro areas. investment amount of venture capital deals, 3) the number of venture capital deals, 4) the percentage Figure 1: Average New Establishment knowledge workers make up of an area’s workforce, 5) the percentage tech workers make up of an area’s Growth Rate Post 2010 workforce, 6) educational attainment of the region’s population and 7) income growth. 4.0 3.5

3.0 3.17%

While these seven measures generally define what 2.77% 2.5 an innovation hub is, at the end of this report we also

2.0 2.00% compare South Bend-Elkhart to the six innovation 1.5 1.27% hubs for recession unemployment, unemployment 1.0 0.87% 0.78% variance and per capita GDP. And, in Appendix 1, 0.5 0.61% 0.33%

we compare South Bend-Elkhart to four areas with 0 0.01% similar economic makeups as ours but are generally -0.5 doing better economically: Grand Rapids, MI; -1.0 Greenville-Spartanburg, SC; Cedar Rapids, IA; and -1.5 -0.56% Akron, OH. -2.0

Finally, it’s important to point out that the purpose Indiana Austin, TX of this report is to establish a baseline for the many Boulder, COMadison, WI Gainesville, UnitedFL StatesAnn Arbor, MI groups in the South Bend-Elkhart area working Provo-Orem, UT towards creating a more robust, dynamic economy. South Bend-Elkhart

It is not intended as a critique. As with any journey, Comparable Innovation Hubs we need to find out where we are first and then plot a route to our destination. This report seeks to do Figure 1 Source: U.S. Census Bureau, County Business Patterns both. 1. Number of Establishments

In order for an area to be a startup hub, it must create considerably more businesses than it sheds. As shown in Figure 1, from 2010 to 2016 (post recession) the United States averaged only a 0.61 percent new establishment growth rate. Innovation hubs such as Austin and Provo-Orem, however, averaged rates of 3.17 percent and 2.77 percent respectively, with some years being as high as 5 percent (Figure 2). The six combined innovation hubs, which we are terming “Comparable Innovation Hubs” in the figures, averaged a two percent growth rate. South Bend-Elkhart averaged -0.56 percent and Indiana 0.01 percent over the same period. It should

6 THE STATE OF INNOVATION & STARTUPS IN SOUTH BEND-ELKHART When the numbers are adjusted for population, Figure 2: Percentage Growth in New as they are in Figure 4, Austin again leads with an Establishments Post 2010 average venture capital investment per person of $2,308, with Boulder not far behind at $2,111. The 6 six innovation hubs average $1,308 per person. South Bend-Elkhart’s per person average is $7 while 5 Indiana’s is slightly higher at $60. Both of these are considerably behind the United States’ average of 4 $225 per person.

3 Figure 3: Average VC Investment 2 Amount Post 2010 (in millions)

$3.5M 1

$3.0M 0 $2,658 $2.5M -1 $2.0M -2 $1.5M 2010 2011 2012 2013 2014 2015 2016

$1.0M South Bend-Elkhart Boulder, CO Gainesville, FL Ann Arbor, MI $689 $658 $0.5M $413 Austin, TX Provo-Orem, UT Madison, WI $398 $216 $143 $30

$0.0M $3 Comparable Innovation Hubs Indiana United States

Figure 2 Source: U.S. Census Bureau, County Business Patterns Indiana Austin, TX Boulder, CO Madison, WI Ann Arbor, MI Gainesville, FL Provo-Orem, UT 2. Venture Capital Investment Amounts South Bend-Elkhart

All innovation hubs have a considerable number of Comparable Innovation Hubs venture capital deals. Richard Florida of CityLab said that this “...is the single best [measure] for Figure 3 Source: PitchBook distinguishing real centers of high-tech industry… [as it is] a direct monetary gauge of high-tech hubs: It reflects the places actual venture capitalists Figure 4: Average VC Investment are betting on high-tech businesses.”15 It is also a Amount Per Person Post 2010 measure of the quality of the startups in particular areas as venture capital companies tend to be picky $2,800 investors. $2,400 $2,308

Previously, venture capital deals were concentrated $2,000 $2,111 in the major metro area startup hubs like Silicon $1,600 Valley, Boston and New York. Now, according to the Kauffman Foundation, “Venture capital is more $1,200 $1,308 distributed than it was…”,16 a development that is $800 encouraging for emerging innovation hubs. $725 $604 $400 $278 $225 As shown in Figure 3, of the six innovation hubs, $189 $60 Austin easily leads the pack with an average of $2.66 $0 $7 billion invested per year from venture capital firms from 2010 to 2016. The average amongst the six Indiana Austin, TX innovation hubs is $689 million. Boulder, CO Madison, WI Ann Arbor, MI United StatesGainesville, FL Provo-Orem, UT South Bend-Elkhart What’s remarkable about these data, is that the

Boulder area, with a population of 321,173 in Comparable Innovation Hubs 2016, averaged 73 percent more venture capital investment than the entire state of Indiana from 2010 Figure 4 Source: PitchBook to 2016, which had a population of 6.6 million in 2016.

THE STATE OF INNOVATION & STARTUPS IN SOUTH BEND-ELKHART 7 Figure 5: VC Investment Amounts Post Figure 6: Average No. of VC Deals Post 2010 (in millions) 2010

$6B 350

300 $5B 250 261.88

$4B 200

150 $3B 100 95.63 82.77 81.75

$2B 50 53.88 41.5 30.25 13.5

0 3.86 $1B

Indiana $0 Austin, TX Boulder, CO Madison, WI Ann Arbor, MIGainesville, FL Provo-Orem, UT South Bend-Elkhart 2010 2011 2012 2013 2014 2015 2016 2017

Comparable Innovation Hubs Austin, TX Comparable Innovation Hubs Provo-Orem, UT Figure 6 Source: PitchBook Boulder, CO Ann Arbor, MI Indiana Madison, WI Gainesville, FL South Bend-Elkhart Figure 7: No. of VC Deals Post 2010

Figure 5 Source: PitchBook 350

3. Number of Venture Capital Deals 300

As shown in Figure 6, among the six innovation hubs, 250 Austin averaged 262 venture capital deals per year from 2010 to 2016 on the high end and Gainesville 200 averaged 14 on the low end. Over the same period, the combined innovation hubs averaged 83 venture 150 capital deals and South Bend-Elkhart averaged around four. Once again, Boulder comes out on top 100 over the entire state of Indiana as it averaged more deals than the state with Austin averaging three 50 times more. 0

-50 2010 2011 2012 2013 2014 2015 2016 2017

Austin, TX Boulder, CO Indiana Comparable Innovation Hubs

Ann Arbor, MI Madison, WI Provo-Orem, UT Gainesville, FL

South Bend-Elkhart

Figure 7 Source: PitchBook 4. Percentage of Knowledge Workers

Innovation hubs have a higher percentage of workers who fall under the “knowledge workers” category than the national average. These workers comprise one of the main pools of talent high tech companies pull from when staffing their firms.

8 THE STATE OF INNOVATION & STARTUPS IN SOUTH BEND-ELKHART Knowledge workers make up the Bureau of Labor As shown in Figure 9, 11 percent of Boulder’s Statistics’ categories of: management occupations; workforce is tech workers with 8 percent being the computer and mathematical occupations; average among the six innovation hubs. Indiana’s architecture and engineering occupations; life, workforce is 2.5 percent tech workers but South physical and social science occupations; education, Bend-Elkhart’s is only 0.78 percent. We should note, training and library occupations; and healthcare however, that this latter number is probably lower practitioners and technical occupations. than it really is due to some categories not being reported by the Bureau of Labor Statistics for the As shown in Figure 8, 38 percent of Ann Arbor’s area. Even so, South Bend-Elkhart’s tech workers workforce in 2016 was made up of knowledge percentage is very likely no higher than Indiana’s workers. The six innovation hubs averaged 30 average as only categories with few workers go percent while Indiana and South Bend-Elkhart’s unreported by the Bureau of Labor Statistics, the workforces are 20 percent and 19 percent source of these data. knowledge workers, respectively. Figure 9: Total Tech Workers as a Figure 8: Total Knowledge Workers as Percentage of All Workers in 2017 a Percentage of All Workers in 2016 14 50 12 45 11.12% 40 10 38.3% 9.19% 35 8.89% 8.18% 8 7.94% 32.1% 31.6%

30 30.1% 28.2%

25 26.1% 6 24.5% 22.7% 4.83%

20 20.5% 19.3% 4 15 3.46% 2.50% 10 2 2.08% 0.78% 5 0 0

Indiana Austin, TX Indiana Boulder, CO Madison, WI Ann Arbor, MIUnited States Gainesville, FL Austin, TX Provo-Orem, UT Boulder, CO Madison, WI Ann Arbor, MI Gainesville, FL United States South Bend-Elkhart Provo-Orem, UT South Bend-Elkhart

Comparable Innovation Hubs

Comparable Innovation Hubs Figure 9 Source: Bureau of Labor Statistics Figure 8 Source: Bureau of Labor Statistics 6. Educational Attainment of Population 5. Percentage of Tech Workers According to data from the Kauffman Foundation, Similar to knowledge workers, but more specific, “Adults without formal education—regardless of and slightly more important to innovation hubs, race—are much less likely to be entrepreneurs than are tech workers. Tech workers are essential for a their educated counterparts.”17 Moreover, high tech community to become an innovation hub as they startups require a pool of workers who are highly comprise the key group of employees who perform educated. Not surprisingly, innovation hubs have a the core, complex tasks high tech companies large percentage of their population over the age of require. 27 percent of San Jose, California’s 25 with a bachelor’s degree or higher. As shown in workforce, for instance, are tech workers but the Figure 10, of the six innovation hubs in 2016, Boulder United States’ average is only 3.5 percent. leads with 59.3 percent of its working population having a bachelor’s degree or higher. The average Tech workers make up the NAICS categories of: of the six innovation hubs was 47.9 percent. 30.3 computer systems design and related services; percent of the population over 25 in the United States pharmaceutical and medicine manufacturing; has a bachelor’s degree or higher while only 24.6 computer and peripheral equipment manufacturing; percent and 21.1 percent do so in Indiana and South software publishers; telecommunications; data Bend-Elkhart, respectively. processing, hosting, and related services; and medical and diagnostic laboratories.

THE STATE OF INNOVATION & STARTUPS IN SOUTH BEND-ELKHART 9 Figure 10: Percentage of Population (25 Figure 11: Income Growth % 1990-2017 and over) With a Bachelor's Degree or 220 Higher in 2016 200

180 179.1% 179.0% 80 160 149.4%

70 146.5% 140 140.2% 139.9% 134.7% 120

60 59.3% 114.1% 112.9% 112.1% 100 50 53.3% 49.0% 47.9% 80 46.4%

40 41.5% 60 38.1% 40

30 30.3% 20 24.6%

20 21.1% 0

10

Indiana 0 Austin, TX Boulder, CO Madison, WI Gainesville, FL United StatesAnn Arbor, MI Provo-Orem, UT South Bend-Elkhart Indiana Austin, TX Boulder, CO Madison, WI Ann Arbor, MI Gainesville, FL United States Comparable Innovation Hubs Provo-Orem, UT South Bend-Elkhart

Figure 11 Source: Bureau of Labor Statistics Comparable Innovation Hubs South Bend-Elkhart’s Recent Performance Figure 10 Source: U.S. Census Bureau While South Bend-Elkhart lags the six innovation 7. Income Growth hubs, the U.S. and Indiana across all seven innovation hub metrics, it’s important to point out If rapid growth surrounds innovation hubs, then that since 2014 it has seen positive growth in five of there should be a corresponding growth in income the seven measures. It has only seen a small decline to match it. Putting it differently, if incomes are not in growth of new establishments (Figure 12) and has rising faster than the national average in innovation seen no change in the number of venture capital hubs, then what is the point of a region trying to deals (Figure 15). The number of new establishments become an innovation hub? number did, however, turn positive in 2015. Data is unavailable for 2017. We chose to measure income growth from 1990 to 2017 for Figure 11. The long time period was used for two reasons: incomes tend to grow slowly in this Figure 12: South Bend-Elkhart's New country and a few years averaged together rarely Establishment Growth Rate 2014-2016 show a trend but nearly three decades do. 1.9 As shown in Figure 11, income growth in each of the innovation hubs except Ann Arbor exceeded the 0.8 national average of 135 percent from 1990 to 2017. 0.6 The average income growth of the six innovation 0.45% hubs was 149 percent with incomes growing much 0.4 faster in Austin and Boulder, each at 179 percent. 0.15% Incomes grew 113 percent in Indiana and 112 0.2 percent in the South Bend-Elkhart region over the same period of time, respectively. -0.1

-0.3 These data show that incomes do indeed rise as a region becomes an innovation hub, growing by -0.5 nearly 15 percent more than the national average. And, in some instances, namely Austin and Boulder, -0.7 -0.80% average wages nearly tripled from 1990 to 2017. -0.9 2014 2015 2016

Figure 12 Source: U.S. Census Bureau, County Business Patterns

10 THE STATE OF INNOVATION & STARTUPS IN SOUTH BEND-ELKHART Figure 13: South Bend-Elkhart's VC Figure 15: South Bend Elkhart's No. of Investment Amounts 2014-2016 VC Deals 2014-2016

$20M 7.0

$18M $17,780,000 6.5

$16,180,000 6 $16M 6.0

$14M 5.5

$12M 5.0

$10M 4.5

$8M 4.0

$6M 3.5

$4M 3.0 $2,670,000 3 3 $2M 2.5 2014 2015 2016 2014 2015 2016

Figure 13 Source: PitchBook Figure 15 Source: PitchBook

Figure 14: South Bend-Elkhart's VC Figure 16: South Bend Elkhart's Total Investment Amount Per Person Knowledge Workers as a Percentage 2014-2016 of All Workers 2014-2016

$22 19.5

$20 $19.43 19.4 19.30% $18 $17.70 19.3 19.2 $16 19.1 $14 19.0 $12 18.9 $10 18.8 $8 18.7 $6 18.6 18.49% $4 $2.92 18.5 18.48% $2 18.4 2014 2015 2016 2014 2015 2016

Figure 14 Source: PitchBook Figure 16 Source: Bureau of Labor Statistics

THE STATE OF INNOVATION & STARTUPS IN SOUTH BEND-ELKHART 11 Figure 17: South Bend Elkhart's Total Figure 19: South Bend-Elkhart's Tech Workers as a Percentage of All Income Growth 2014-2016

Workers 2014-2016 $43,600

0.84 0.83% $43,400 $43,387 0.82 $43,200 0.80

0.78 $43,000

0.76 $42,800 0.74 $42,600 0.72

0.70 $42,400

0.68 $42,245 $42,200 0.66 0.65% $42,000 0.64 $41.956 0.62 $41,800 2014 2015 2016 0.60 0.62% 2014 2015 2016 Figure 19 Source: Bureau of Labor Statistics Figure 17 Source: Bureau of Labor Statistics Additional Economic Measures: Recession Unemployment Rate, Unemployment Variance and Per Capita GDP

Figure 18: South Bend-Elkhart's Recession Unemployment Rate Percentage of Population (25 and over) Although the unemployment rate is not one of the With a Bachelor's Degree or Higher seven major measures that define an innovation hub, we are including comparisons of this measure in this 2014-2016 report to highlight the benefits innovation hubs have 21.2 in this area.

21.1 21.1% As shown in Figure 20, each of the six innovation hubs had average unemployment rates considerably 21.0 below the U.S. average of 8.8 percent during the Great Recession of 2008 to 2010. The unemployment 20.9 rate during this downturn in the economy is 20.8 measured rather than current unemployment rates because unemployment is very low across the 20.7 United States right now and is, therefore, not as 20.7% meaningful of a measure as when it counted more 20.6 during 2008 to 2010.

20.5 The average unemployment rate of the six innovation 20.4 hubs during the Great Recession was 6.1 percent 20.4% with Madison averaging five percent on the low end 20.3 and Ann Arbor 7.4 percent on the high end. Indiana 2014 2015 2016 averaged 8.9 percent while South Bend-Elkhart Figure 18 Source: U.S. Census Bureau averaged 10.7 percent.

12 THE STATE OF INNOVATION & STARTUPS IN SOUTH BEND-ELKHART Figure 20: Average Recession Figure 21: Unemployment Deviation Unemployment Rate 2008-2010 Rate 1990-2017

12 2.2 2.0 10.7% 10

1.8 1.81% 8.9% 8.8% 1.6 8 1.46% 7.4%

1.4 1.38% 6.5% 1.24% 6.1% 1.22% 6.0% 6 5.9% 1.2 5.7% 1.05% 5.0% 1.01% 1.01% 1.00%

1.0 0.98% 4 0.8 0.6 2 0.4

0 0.2 0.0

Indiana Austin, TX Boulder, CO Madison, WI Indiana Gainesville, AnnFL Arbor, MIUnited States Provo-Orem, UT Austin, TX Madison, WIBoulder, CO South Bend-Elkhart Gainesville,United FL StatesAnn Arbor, MI Provo-Orem, UT South Bend-Elkhart Comparable Innovation Hubs Comparable Inn. Hubs

Figure 20 Source: Bureau of Labor Statistics Figure 21 Source: Bureau of Labor Statistics

Unemployment Variation Per Capita GDP

Figure 21 measures the average deviation an area Per capita GDP divides an area’s gross domestic had from its average 1990 to 2016 unemployment product by its total population. It is a useful measure rate. The lower the number, the more stable the for looking at an area’s per person productivity. unemployment rate. The higher the number, the GDP in general is, however, an imperfect measure. more unstable the unemployment rate. A low As McKinsey and Company states, “Designed number for an area indicates that the unemployment to measure the physical production of goods in rate didn’t fluctuate as much there as compared to the market economy, GDP is not well suited to areas with higher numbers. accounting for private-and public-sector services with no output that can be measured easily When the six innovation hubs are averaged together, by counting the number of units produced…. their unemployment rate deviation is very low, at Transformative change in technology is not easy 0.98 percent. Of the six innovation hubs, only Ann to measure using GDP because so much of the Arbor’s unemployment rate deviation of 1.38 percent benefit accrues to consumers.”18 In other words, is higher than the national average of 1.24 percent. GDP is quite good at capturing tangible products Indiana and South Bend-Elkhart have unemployment but struggles to capture new technology that is deviation rates of 1.46 percent and 1.81 percent, intangible, such as cloud-based software. As such, respectively. What this means is that the innovation GDP in innovation hubs may be underreported due hubs have, in general, more stable unemployment to the fact that much of it is new and, in many cases, patterns than the U.S. as a whole, Indiana and the intangible. South Bend-Elkhart region. Figure 22 compares the average per capita GDP post 2010 between the six innovation hubs, Indiana, South Bend-Elkhart, and the U.S. The average of the six innovation hubs, $72,286, is significantly higher than the U.S. average of $52,663. This is, however, skewed by the high per capita GDP numbers of Austin ($99,407) and Madison ($80,497) because both Gainesville ($44,899) and Provo-Orem ($33,445) are significantly below the U.S. average.

That said, Provo-Orem has been growing rapidly since 2010, experiencing an average GDP growth rate of 6.45% (Figure 23). South Bend-Elkhart followed the same pattern as Provo-Orem, experiencing a below-average per capita GDP rate

THE STATE OF INNOVATION & STARTUPS IN SOUTH BEND-ELKHART 13 post 2010 ($27,296) but achieving rapid GDP growth When GDP growth is examined over a longer period (6.85%) over the same period of time. of time, namely from 2002 to 2016, the pattern changes. As shown in Figure 24, the average growth Figure 22: Average Per Capita GDP Post rate of the six innovation hubs over these 14 years is 4.97 percent while the U.S.’s average is 3.85 percent. 2010 Provo-Orem leads with a 6.65 percent growth rate

$120K while Ann Arbor lags with a growth rate of only 2.1 percent. While this area’s per capita GDP post 2010 rate of $57,339 is above the U.S. average of $52,663, $100K $99,407 its GDP growth rate lagged not only the U.S., but

$80K $80,497 also South Bend-Elkhart from 2002 to 2016 as well as $72,286 $69,276 in more recent years. Ann Arbor’s GDP growth faced $60K $57,339 significant counterweights in the form of residing in $52,663 $47,636

$44,899 Michigan, a state with the nation’s worst economy for $40K

$33,445 many years, having a large Pfizer research center $27,296 $20K close in 2007 and a large GM manufacturing plant do the same in 2010, resulting in a combined loss of 19 $0K 6,000 high-paying jobs.

Boulder’s GDP from 2002 to 2016 also lags South Indiana Austin, TX Bend-Elkhart, the United States and Indiana but this Madison, WI Boulder, CO Ann Arbor, MIUnited States Gainesville, FL Provo-Orem, UT is largely because of challenging years the region South Bend-Elkhart faced in the early to mid 2000s from manufacturing and dot-com mass layoffs. It has grown more Comparable Innovation Hubs robustly since 2010 as shown in Figure 23.

Figure 22 Source: Bureau of Economic Analysis Figure 24: Average GDP Growth Rate As shown in Figure 23, the six innovation hubs 2002-2016 averaged a 5.63 percent GDP growth rate post 2010. 8 The U.S. average was 3.74%. Nonetheless, two of the innovation hubs, Gainesville and Ann Arbor, had 7 below average growth rates of 2.59 percent and 2.44 6.65% 6 6.13% percent, respectively.

5 4.97% 4.44% 4.30%

4 4.00% Figure 23: Average GDP Growth Rate 3.84% 3.52%

Post 2010 3 2.96%

9 2 2.10%

8 1 7.33% 7 0 6.85% 6.45% 6

5.63% Indiana 5 Austin, TX Madison, WI Boulder, CO Gainesville, FL United States Ann Arbor, MI 4.31% Provo-Orem, UT 4.03%

4 3.99%

3.74% South Bend-Elkhart 3 2.59%

2.44% Comparable Innovation Hubs 2

1 Figure 24 Source: Bureau of Economic Analysis

0

Indiana Austin, TX Madison, WI Boulder, CO United StatesGainesville, FLAnn Arbor, MI Provo-Orem, UT South Bend-Elkhart

Comparable Innovation Hubs

Figure 23 Source: Bureau of Economic Analysis

14 THE STATE OF INNOVATION & STARTUPS IN SOUTH BEND-ELKHART South Bend-Elkhart Compared to the Innovation Hubs’ Averages Figure 26: South Bend-Elkhart Compared to Key Innovation Hub Figures 25-28 compare South Bend-Elkhart to the Metrics Part 2 (Percentages) averages of the six innovation hubs across the above seven innovation hub measures. In no category 35 does South Bend-Elkhart match the average of these hubs. Indeed, it is considerably behind in every one. 30 30.14%

25 And as shown in Figures 1 through 11, the area is 22.69%

behind the national and state of Indiana averages in 20 20.46% every measure as well. 19.30% 15

Figure 25: South Bend-Elkhart 10 Compared to Key Innovation Hub 8.18% 5 3.46% 2.50%

Metrics Part 1 (Percentages) 2.0% 0.6% 0.15% 0.0%

0 -0.6% 160 149.4% -5 140 134.7% Total Knowledge Workers Total Tech Workers as a % Avg. New Establishment as a % of All Workers in 2016 of All Workers in 2017 Growth Rate Post 2010 120 112.9% 112.1% Comparable Innovation Hubs United States Indiana South Bend-Elkhart 100 Figure 26 Source: Bureau of Labor Statistics 80

60 Figure 27: Average VC Investment 47.9% Amount Per Person Post 2010 40 30.3% 24.6% $1,600 20 21.1% $1,400 0 $1,308 Percentage of Population (25) With a Income Growth % 1990-2017 $1,200 Bachelor’s Degree or Higher in 2016

Comparable Innovation Hubs United States Indiana South Bend-Elkhart $1,000

Figure 25 Source: Bureau of Labor Statistics and U.S. Census Bureau $800

$600

$400

$225 $200 $60 $7 $0 Comparable United States Indiana South Bend-Elkhart Innovation Hubs

Figure 27 Source: PitchBook

THE STATE OF INNOVATION & STARTUPS IN SOUTH BEND-ELKHART 15 Given the challenges South Bend-Elkhart faces, Figure 28: Average No. of VC Deals Post how can the region become another Ann Arbor, 2010 Madison, Provo, Gainesville, Austin or Boulder? According to an important report entitled, “Global 100 Startup Ecosystem Report 2018: Succeeding in the 90 New Era of Technology,” by Startup Genome and the 82.77 81.75 Global Entrepreneurship Network released this year, 80 regions can become innovation hubs by focusing 70 on three strategies: 1) specializing in specific tech sectors, 2) focusing on an area they’re already strong 60 in and 3) getting global in focus.21 50 1. Specialize to become a hub of innovation. 40 According to the authors of this report, it will be 30 very difficult for an emerging innovation hub to encompass all tech sectors like Silicon Valley and 20 Boston do. Instead, they should “...pay attention 10 to and invest in specific Startup Sub-Sectors. 3.86 0 This is especially true for smaller ecosystems. Comparable Indiana South Bend-Elkhart It’s impossible for an emerging ecosystem to be Innovation competitive across all tech sectors, but it is eminently Hubs feasible for a smaller ecosystem to become a hub of excellence for one or more Startup Sub-Sectors.” Figure 28 Source: PitchBook 2. Focus on an area you’re already strong in. Similar How South Bend-Elkhart Can Become an to number one, the report states that, “An ecosystem Innovation Hub should focus on a startup sub-sector most closely related to its strongest traditional strengths relative The data are clear: South Bend-Elkhart is not to global competition. These constitute the core currently an innovation hub. It lags each of the competencies of a startup ecosystem: the business comparable innovation hubs, the nation and the cluster of related traditional industries, research State of Indiana in every measure. centers and institutions of higher educations, intellectual property, and successful corporations That said, while the above measures may not be produced by that innovative sub-sector.” encouraging for South Bend-Elkhart now, each of the innovation hubs in our report had to start According to data from the Bureau of Economic somewhere. Take Ann Arbor for instance. According Analysis, the South Bend-Elkhart region’s top five to Paul Krutko, president and CEO of Spark, a industries along with their top sub-industries are, in nonprofit economic development firm in Ann Arbor, order: in the mid-2000s, “This was a region that had tremendous research capabilities and the potential 1. Manufacturing: 1) Motor vehicles, bodies and to drive the economy with new technologies that trailers, and parts manufacturing; 2) Fabricated could create new companies and jobs, but wasn’t 20 metal products; and 3) Chemical products performing at the level you would expect.” Since manufacturing. 2006, Ann Arbor has experienced significant growth 2. Educational services, health care, and social in its startup and innovation measures. In 2006, assistance: 1) Health care and social assistance; the area only had seven venture capital deals and and 2) Educational services. $12 million in venture capital investments. That’s 3. Professional and business services: 1) approximately where South Bend-Elkhart is today, Professional, scientific, and technical services; with six venture capital deals and $13 million in 2) Management of companies and enterprises; venture capital investments. In 2017, Ann Arbor had and 3) Administrative and waste management 61 venture capital deals and $218 million in venture services. capital investments, a significant increase in 12 4. Finance, insurance, real estate, rental, and years. It’s also important to note that, as mentioned leasing: 1) Real estate and rental and leasing; earlier, Ann Arbor is in the metro Detroit region, an and 2) Finance and insurance. area that has experienced significant economic 5. Wholesale trade. decline since the 1980s. Despite this handicap, Ann Arbor has shielded itself from the economic According to Startup Genome and the Global challenges Detroit has faced and has transitioned to Entrepreneurship Network, South Bend-Elkhart become an innovation hub. would do well to build on its core competencies of manufacturing, education, health care, professional services, finance and wholesale trade. It’s vital,

16 THE STATE OF INNOVATION & STARTUPS IN SOUTH BEND-ELKHART however, that the new companies that emerge in dollar valuation, they Trigger Global Resource these industries are cutting-edge and at the forefront Attraction to an ecosystem, fueling its accelerated of innovation and high tech. In other words, the growth and more Global Connectedness. This is startups that, for example, emerge in motor vehicles, the virtuous cycle of the most successful startup fabricated metal products and chemical products, ecosystems.” must strive to be as disruptive as Airbnb has been to the lodging industry or as SpaceX has been to the Conclusion space industry or they will not grow as fast or have the potential to become industry leaders. South Bend-Elkhart will not be another Silicon Valley, Silicon Slopes, Silicon Prairie or any other Silicon A note about education. According to Elevar enter-your-favorite-geographic-term-here. Rather, Insights, of the six factors common to all innovation it has a far greater chance of becoming similar hubs, three have to do with an area’s workforce: 1) to other smaller innovation hubs in the nation like an abundance of high-wage, white-collar jobs, 2) Boulder, Austin, Provo-Orem, Gainesville, Ann Arbor access to a deep pool of talent and 3) sufficient and Austin. To do this, though, it must improve in number of specialists to fill positions.22 The data the areas that are common to all innovation hubs: in Figures 8, 9 and 10 support this claim: all of growth of new businesses, the number of venture the innovation hubs have a high percentage of capital deals, the investment amount of venture knowledge and tech workers as well as a high capital deals, the percentage knowledge workers percentage of its population with bachelor’s degrees and tech workers make up of the area’s workforce or higher. Given the low level of workers in South and educational attainment of our region’s Bend-Elkhart with bachelor’s degrees and the population. This is because it lags not only the above low level of workers who are knowledge and tech innovation hubs, but the nation and Indiana as well. workers, it’s very unlikely a high tech company But, the good news is that the South Bend-Elkhart would consider setting up shop here at this time. region is growing in most of these metrics. Any resources devoted to this endeavor would, in our opinion, be better spent on building up the Groups such as the South Bend - Elkhart Regional foundation of talent that innovation hubs require. Partnership, the University of Notre Dame, the IDEA Indiana’s universities do a fantastic job of educating Center at Notre Dame, enFocus, INVANTI and people but we as a state do a poor job of retaining Indiana University South Bend are all determined them once they graduate. The state’s official motto, to turn this region into the next innovation hub in “the Crossroads of America,” which was coined the nation. None of these groups will be able to because of the many national roads that run through do it by themselves, however, nor will they be able the state, ironically speaks to this “passing through” to accomplish this without real cooperation from mentality. The tendency to solve this problem is elected officials, local schools, the state of Indiana often put on the educational institutions themselves. and big businesses in the area. While they certainly have an important role to play in achieving this goal, they are but one player. The If the region and the state put resources and very smart people we train here need more exciting dedication towards making South Bend-Elkhart and enticing opportunities to remain here. As the an innovation hub, similar to how the same was many groups working towards moving the South done for Boulder, Austin, Provo-Orem, Gainesville, Bend-Elkhart economy forward begin creating Ann Arbor and Austin, we can, like these areas, more innovative and tech-oriented startups, we buck the trend of economic growth concentrating believe more of our graduates will stay here for the in the nation’s largest metro areas and experience simple fact that these kinds of companies and the exceptional growth again like we did from the 1870s opportunities they present are highly attractive to to the 1950s. the more educated. In other words, we believe this is a lag measure and will rise as more startups, particularly high-potential ones are established in the region.

3. Get global in focus. Startup Genome and the Global Entrepreneurship Network looked at data from across the globe and found that those startups that considered global demand from the beginning, not just regional or national demand, had a much greater chance of becoming high potential startups and experiencing rapid growth than the alternative: “...startups that focus on and penetrate global markets from their earliest stage are able to grow revenues twice as fast. At the ecosystem level, if several of those scaleups reach or exit at a billion-

THE STATE OF INNOVATION & STARTUPS IN SOUTH BEND-ELKHART 17 APPENDIX 1 South Bend-Elkhart Compared to Grand Rapids, Greenville-Spartanburg, Cedar Rapids and Akron

he areas of Grand Rapids, MI; Greenville- Figure A2: Percentage Growth in New Spartanburg,T SC; Cedar Rapids, IA; and Akron, OH have similar economic makeups to South Establishments Post 2010

Bend-Elkhart, but as shown in the figures in this 2.5 appendix, are generally doing better across the seven innovation hubs metrics as well as with their 2.0 recession unemployment rates, unemployment variance and per capita GDPs. 1.5 1.3

Figure A1: Average New Establishment 0.5 Growth Rate Post 2010 0.0 1.2 -0.5 1.0 0.8 0.78% -1.0 0.6 0.61% 0.4 0.41% -1.5 0.2 0.14% -2.0 0.0 0.01% -0.2 -2.5 -0.4 2010 2011 2012 2013 2014 2015 2016 -0.6 -0.51% -0.56% -0.8 South Bend-Elkhart Grand Rapids, MI Akron, OH -1.0 Cedar Rapids, IA Greenville-Spartanburg, SC Indiana

United States Indiana Akron, OH United States Figure A2 Source: U.S. Census Bureau, County Business Patterns Grand Rapids, MI Cedar Rapids, IA South Bend-Elkhart

Greennville-Spartanburg, SC

Figure A1 Source: U.S. Census Bureau, County Business Patterns

18 APPENDIX 1 Figure A3: Average VC Investment Figure A5: VC Investment Amounts Amount Post 2010 (in millions) Post 2010

$500M $800M $450M $700M $400M $398

$350M $600M $300M $500M $250M

$200M $400M $150M $300M $100M $64 $50M $50 $50 $200M $13 $0M $3 $100M

Indiana $0M Akron, OH

Grand Rapids, MI Cedar Rapids, IA -$100M South Bend-Elkhart 2010 2011 2012 2013 2014 2015 2016 2017

Greennville-Spartanburg, SC Indiana Grand Rapids, MI Akron, OH Cedar Rapids, IA

Figure A3 Source: PitchBook Greenville-Spartanburg, SC South Bend-Elkhart

Figure A5 Source: PitchBook

Figure A4: Average VC Investment Figure A6: Average No. of VC Deals Post Amount Per Person Post 2010 2010

$240 100 $225 90 $200 80 81.75 $160 70 60 $120 $114 $102 50 $95 $92 $80 40 $60 30 $40 20 17.13 16.5 $0 $7 10 10.75 9.75 3.86 0

Indiana Akron, OH United States Indiana Cedar Rapids, IAGrand Rapids, MI Akron, OH South Bend-Elkhart

Grand Rapids, MI Cedar Rapids, IA South Bend-Elkhart Greennville-Spartanburg, SC

Greennville-Spartanburg, SC Figure A4 Source: PitchBook Figure A6 Source: PitchBook

APPENDIX 1 19 Figure A7: No. of VC Deals Post 2010 Figure A9: Total Tech Workers as a

120 Percentage of All Workers in 2017

5.0

100 4.5 4.0 3.97%

80 3.5 3.46% 3.0 2.5 2.58% 60 2.50% 2.0 2.01% 1.5 40 1.0 1.12% 0.78% 0.5 20 0.0

0 Indiana 2010 2011 2012 2013 2014 2015 2016 2017 Akron, OH United States

Cedar Rapids, IA Grand Rapids, MI South Bend-Elkhart Indiana Grand Rapids, MI Akron, OH Cedar Rapids, IA

Greenville-Spartanburg, SC South Bend-Elkhart Greennville-Spartanburg, SC

Figure A9 Source: Bureau of Labor Statistics Figure A7 Source: PitchBook

Figure A8: Total Knowledge Workers as Figure A10: Percentage of Population a Percentage of All Workers in 2016 (25 and over) With a Bachelor's Degree

35 or Higher in 2016

45 30 40 25 25.2% 35 34.7% 22.7% 21.7% 20.5% 32.2% 31.3% 20 19.9% 19.3% 30 30.3% 18.3% 15 25 24.8% 24.6% 21.1% 20 10 15 5 10

0 5

0 Indiana Akron, OH United States Indiana Cedar Rapids, IA Grand Rapids, MI Akron, OH South Bend-Elkhart United States

Grand Rapids, MICedar Rapids, IA South Bend-Elkhart Greennville-Spartanburg, SC

Figure A8 Source: Bureau of Labor Statistics Greennville-Spartanburg, SC Figure A10 Source: U.S. Census Bureau

20 APPENDIX 1 Figure A11: Income Growth % 1990-2017 Figure A13: Unemployment Deviation

180 Rate 1990-2017

160 2.2

140 2.0 134.7% 134.2% 1.8 1.81% 120 121.6% 112.9% 112.1% 1.6 1.61% 1.65% 100 101.8% 98.0% 1.46% 1.4 1.24% 80 1.2 1.18% 60 1.0 1.02%

40 0.8 0.6 20 0.4 0 0.2 0.0 Indiana Akron, OH United States Indiana Cedar Rapids, IA Grand Rapids, MI Akron, OH South Bend-Elkhart United States

Cedar Rapids, IA Grand Rapids, MI South Bend-Elkhart Greennville-Spartanburg, SC

Greennville-Spartanburg, SC Figure 11 Source: Bureau of Labor Statistics Figure A13 Source: Bureau of Labor Statistics

Figure A12: Recession Unemployment Figure A14: Average Per Capita GDP Rate (2008-2010) Post 2010

14 $100K $90K 12

$80K $79,422 10.7% $76,430 10 $70K

8.9% 8.9% 9.2% 9.2% $63,044 8.8% $60K $59,676 8 $50K $52,663 $47,636 6 $40K 5.4% $30K 4 $27,296 $20K 2 $10K $0K 0

Indiana Indiana Akron, OH Akron, OH United States United States

Cedar Rapids, IA Grand Rapids, MI Grand Rapids, MICedar Rapids, IA South Bend-Elkhart South Bend-Elkhart

Greennville-Spartanburg, SC Greennville-Spartanburg, SC

Figure A12 Source: Bureau of Labor Statistics Figure A14 Source: Bureau of Economic Analysis

APPENDIX 1 21 Figure A15: Average GDP Growth Rate Figure A16: Average GDP Growth Rate Post 2010 2002-16

9 5.0

8 4.5 4.16% 4.0 4.00% 7 6.85% 3.84% 3.5 3.57% 3.54% 3.52% 6 3.31% 5.61% 3.0 5 4.76% 2.5 4 4.03% 3.89% 3.74% 2.0 3 1.5 2.42% 2 1.0 0.5 1 0.0 0

Indiana Indiana Akron, OH Akron, OH United States United States Cedar Rapids, IA Grand Rapids, MI South Bend-Elkhart Grand Rapids, MI Cedar Rapids, IA South Bend-Elkhart

Greennville-Spartanburg, SC Greennville-Spartanburg, SC

Figure A16 Source: Bureau of Economic Analysis Figure A15 Source: Bureau of Economic Analysis

22 APPENDIX 1 ENDNOTES

1. Mark Muro and Jacob Whiton, “Geographic gaps are widening while U.S. economic growth increases,” Brookings Institution, January 23, 2018, accessed July 28, 2018, https://www.brookings.edu/blog/the- avenue/2018/01/22/uneven-growth/. 2. Eduardo Porter, “Why Big Cities Thrive, and Smaller Ones Are Being Left Behind,” New York Times, October 10, 2017, accessed July 28, 2018, https://www.nytimes.com/2017/10/10/business/economy/big- cities.html. 3. “Tech Cities 1.0: A First Looking at Metrics to Watch,” Cushman and Wakefield, June 8, 2017, accessed July 28, 2018, http://www.cushmanwakefield.us/en/research-and-insight/2017/tech-cities-report. 4. Seung Lee, “Bay Area still dominates U.S. venture capital industry but cracks may be showing,” Mercury News, April 16, 2018, accessed July 28, 2018, https://phys.org/news/2018-04-bay-area-dominates-venture- capital.html. 5. Mark Weiss, “Raising Venture Capital: San Francisco vs. London,” RocketSpace, July 11, 2017, accessed July 28, 2018, https://www.rocketspace.com/tech-startups/raising-venture-capital-san-francisco-vs.- london. & Tim Hsia, “Universities and Entrepreneurial Ecosystems: Elements of the Stanford-Silicon Valley Success,” Kauffman Fellows, accessed July 28, 2018, https://www.kauffmanfellows.org/journal_posts/ universities-and-entrepreneurial-ecosystems-stanford-silicon-valley-success. 6. “State of Entrepreneurship 2017: Zero Barriers: Three Mega Trends Shaping the Future of Entrepreneurship,” The Ewing Marion Kauffman Foundation, February 2017, accessed July 28, 2018, https://www.kauffman.org/-/media/kauffman_org/resources/2017/state_of_entrepreneurship_address_ report_2017.pdf?la=en. 7. The Ewing Marion Kauffman Foundation, “State of Entrepreneurship 2017.” 8. Muro and Whiton, “Geographic gaps are widening.” 9. Porter, “Why Big Cities Thrive.” 10. Andy Kiersz, “The economies of the 40 biggest US cities, ranked from worst to best,” Business Insider, June 20, 2018, accessed July 28, 2018, https://www.businessinsider.com/us-economy-by-metro-area-ranked-san- francisco-seattle-austin-2018-4. 11. Karsten Strauss, “The Cities With The Fastest-Growing Wages In 2017,” Forbes, July 10, 2017, accessed July 28, 2018, https://www.forbes.com/sites/karstenstrauss/2017/07/10/the-cities-with-the-fastest-growing- wages-in-2017/#2c8122a0d6e8. 12. S. Michael Camp, “The Innovation-Entrepreneurship Nexus: A National Assessment of Entrepreneurship and Regional Economic Growth and Development,” Small Business Research Summary, no. 256 (April 2005): 1-69. 13. Cushman and Wakefield, “Tech Cities 1.0.” 14. The Ewing Marion Kauffman Foundation, “State of Entrepreneurship 2017.” 15. Richard Florida, “Where’s the Real ‘Next Silicon Valley’?,” CityLab, June 20, 2017, accessed July 28, 2018, https://www.citylab.com/life/2017/06/wheres-the-real-next-silicon-valley/530352/. 16. The Ewing Marion Kauffman Foundation, “State of Entrepreneurship 2017.” 17. The Ewing Marion Kauffman Foundation, “State of Entrepreneurship 2017.” 18. Richard Dobbs, James Manyika, Jaana Remes, and Jonathan Woetzel, “Is GDP the best measure of growth?,” McKinsey and Company, January, 2015, accessed July 28, 2018, https://www.mckinsey.com/ featured-insights/employment-and-growth/is-gdp-the-best-measure-of-growth. 19. Rick Haglund, “Scoring the ‘00s: How Michigan’s 14 regions changed,” Bridge, September 1, 2011, accessed July 28, 2018, https://www.bridgemi.com/economy/scoring-00s-how-michigans-14-regions- changed. 20. Anna Hensel, “Ann Arbor cements its status as a tech hub to watch with first unicorn,” VentureBeat, November 6, 2017, accessed July 28, 2018, https://venturebeat.com/2017/11/06/ann-arbor-cements-its- status-as-a-tech-hub-to-watch-with-first-unicorn/. 21. “Global Startup Ecosystem Report 2018: Succeeding in the New Era of Technology,” Startup Genome and Global Entrepreneurship Network, April 17, 2018, accessed July 28, 2018, https://startupgenome.com/ reports/2018/GSER-2018-v1.1.pdf. 22. “What Makes a City a Top Startup Innovation Hub?,” Elevar Insights, April 19, 2016, accessed July 28, 2018, https://medium.com/@elevarco/what-makes-a-city-a-top-startup-innovation-hub-6bca2ce33efa.

ENDNOTES 23