A framework for assessing municipal high-growth high-technology entrepreneurship policy

Abstract

This paper advances a framework for making rudimentary need, impact, and cost–benefit assessments of municipal high-growth high-tech entrepreneurship policy. The framework views ecosystem support organizations like accelerators , incubators, and hubs as components in a city’s venture pipeline. A component’s pipeline size, raise rate, and cost per raise measure its performance. In total, the framework consists of eight objective and reproducible measures based on quantities and qualities of venture capital investment and 16 definitions of related terms-of-the-art. These measures and definitions are illustrated in 26 real-world policy examples, which assess initiatives in Houston and St. Louis over the last 20 years. The examples reveal an enormous variation in welfare effects, and some policies appear welfare destroying. Many non-profit organizations claim success (and win awards and acclaim) using non-standard measures despite performing at less than half benchmark levels. Policy cartels , which control startup policy in many U.S. cities, also engage in non-market actions to protect their rents. • Inductive approach to find ‘best’ standardized framework for city startup policy. • Venture pipelines have sizes, raise rates, and costs per raise. • Economics of startup initiatives rooted in information problems and scarce expertise. • Policy cartels control startup policy and engage in non-market actions. • Enormous variation in policy effects and some startup policies may destroy welfare.