Startup Formation Research Articles

ENTREPRENEURIAL ECOSYSTEMS IN THE USA: A COMPARATIVE REVIEW WITH EUROPEAN MODELS

This Review provides a concise overview of a comparative review exploring entrepreneurial ecosystems in the United States and their counterparts in Europe. The examination seeks to identify key characteristics, strengths, and challenges within these ecosystems, shedding light on the factors influencing entrepreneurship on both sides of the Atlantic. The entrepreneurial landscape in the United States has long been considered a global benchmark, characterized by a dynamic ecosystem that nurtures innovation, risk-taking, and venture capital. This review engages in a comparative analysis, juxtaposing the American entrepreneurial ecosystem with models prevalent in Europe. It delves into the structural elements, support mechanisms, and cultural factors that shape and differentiate these ecosystems. In the USA, a robust ecosystem is marked by a convergence of factors such as world-class universities, a prolific venture capital landscape, and a culture that embraces risk and failure as integral to the entrepreneurial journey. The review scrutinizes how these elements contribute to the rapid formation and scaling of startups, fostering a culture of innovation and resilience. Contrastingly, European entrepreneurial ecosystems exhibit a diverse range of models influenced by regional variations in culture, regulatory environments, and historical contexts. The analysis probes into the strengths and challenges inherent in these ecosystems, exploring how they navigate issues such as access to capital, risk aversion, and the balance between innovation and regulatory frameworks. The comparative review aims to distill insights that can inform policymakers, entrepreneurs, and stakeholders on both sides of the Atlantic. By understanding the nuances of each ecosystem, the goal is to identify transferable best practices, foster cross-cultural collaborations, and contribute to the evolution of more resilient and globally competitive entrepreneurial environments. In summary, this review illuminates the distinct characteristics of entrepreneurial ecosystems in the USA and Europe, offering a comparative lens to understand the intricacies that drive innovation and economic growth. As the global landscape continues to evolve, this review serves as a valuable resource for shaping policies, fostering collaboration, and advancing the collective understanding of what propels successful entrepreneurship in diverse and dynamic contexts.
 Keywords: Entrepreneurial, Ecosystem, European, Models, Policies.

Global Country Classification of Sustainable Startups Levels

In today's world, the pursuit of sustainable development has become a global priority. However, the integration of sustainability practices in entrepreneurial ventures, particularly in new startups, lags behind. This article aims to bridge the gap between sustainable development and entrepreneurship by examining the role of sustainability in the formation of sustainable startups. Through the use of cluster analysis, this study classifies countries based on their environmental and social objectives in the context of sustainable startups. The analysis reveals distinct clusters of countries with varying degrees of emphasis on environmental and social considerations. The results of the analysis provide valuable insights into the distribution of countries across different clusters, delineating the sustainable goals of startups in those countries. These findings align with existing research on sustainable entrepreneurship and contribute to the broader discourse in the field. The implications of these findings are significant for promoting sustainable entrepreneurship. While the study acknowledges several limitations, future research can expand upon these findings to develop a more comprehensive understanding of sustainable entrepreneurship on a global scale.

Artificial Intelligence, Education, and Entrepreneurship

ABSTRACTWe document an unprecedented brain drain of Artificial Intelligence (AI) professors from universities from 2004 to 2018. We find that students from the affected universities establish fewer AI startups and raise less funding. The brain‐drain effect is significant for tenured professors, professors from top universities, and deep‐learning professors. Additional evidence suggests that unobserved city‐ and university‐level shocks are unlikely to drive our results. We consider several economic channels for the findings. The most consistent explanation is that professors' departures reduce startup founders' AI knowledge, which we find is an important factor for successful startup formation and fundraising.

What drives solo and team startups at European universities? The interactive role of entrepreneurial climate, gender, and entrepreneurship course participation

ABSTRACT Student entrepreneurship can take the form of solo or team efforts. While a positive and supportive university context is likely to increase entrepreneurial activities in general, it is unclear whether this effect is equally strong on both forms of entrepreneurship and for all types of students. Focusing on students embedded in universities, we study the entrepreneurial climate of universities and its combined effects with gender and entrepreneurship education on solo and team entrepreneurship. Drawing from organizational theory and team formation literature, we hypothesize that a positive entrepreneurial climate stimulates both, solo and team entrepreneurship. Yet, we argue that this effect is contingent on individuals’ intrinsic preferences for independence or growth which may differ by gender and entrepreneurship course participation. We test our hypotheses by means of a multilevel and longitudinal research design, using a large international dataset on student entrepreneurs (GUESSS). We find that a positive entrepreneurial climate indeed fosters solo and team startups of students, with gender and entrepreneurship education having an interactive effect. Our results suggest that a positive climate leads to more solo startups of women and more team startups of men. We contribute to a better understanding of student entrepreneurship and, specifically, the formation of solo and team startups. Our results elucidate the hitherto overlooked person-context dynamics and help explain why a supportive university context can unintentionally widen the gender gap in team startups.

Declining science‐based startups: Strategic human capital and the value of working in startups versus established firms

AbstractResearch SummaryWe document that since 1997, the rate of startup formation has precipitously declined for firms operated by US PhD recipients in science and engineering. We explore how increasing knowledge complexity can be associated with fewer science‐based startups. The decline in startup formation is accompanied by an earnings decline, increasing work complexity in R&D, and more administrative work for science‐based founders. Founding a startup appears to have become increasingly harder over the past 20 years, while established firms are becoming more attractive workplaces for PhDs.Managerial SummaryThe increase in knowledge complexity has changed the balance of incentives between starting own business versus working for an incumbent firm in favor of the latter for PhDs. If maintaining a steady flow of new businesses in the high‐tech sector is important to keep the flow of commercialization of new ideas coming, managerial practitioners and policy makers may need to find ways to make the job of the founder more attractive. The findings in this article point to the importance of secularly increasing value of complementary assets in work practices, especially for founders and employees that are high value generators. Alternatively, the increasing dominance of a few very large tech firms that the increasing burden of knowledge is fueling could be just fine, and startups need not play an important role in economic development.

Start-ups formation in Italy: the role of regional innovation systems

ABSTRACT What is the role of regional innovation systems in start-up formation? To explain regional variation in start-up rates, we conducted a mixed-methods study based on data from Italy. Through in-depth interviews with entrepreneurs, we assessed the role of RIS in the start-up process. Next, we estimated a multivariate OLS regression model. We found that in Italian regions start-up formation depends on the knowledge generation and diffusion subsystem: quality of research, entrepreneurial education, networking opportunities and access to resources. The innovativeness of regional industrial bases has a limited effect on start-up formation. We interpret the results as an effect of an institutional setting that creates limited incentives for innovative entrepreneurship. Overall, we find that the innovation performance of Italian regions is not associated with start-up formation rates.

Strategic management of startups in the context of local economic development

Metods. The research was implemented using the following methods: abstraction – to deepen the understanding of startups as subjects and objects of strategic management in the context of local economic development; analysis and generalization – to determine the features of the formation and development of successful startups in various ecosystems and territorial communities, taking into account the life trajectory of startup founders; systematization – to determine the relationships between groups of entities that carry out strategic management of startup projects and are interested in the development of local socio-economic systems. Results. Generalized approaches to understanding startups as subjects and objects of strategic management in the context of local economic development. The features of the development of promising and successful Ukrainian startups in modern startup ecosystems are analyzed. The factors of initiation and development of startups are analyzed in accordance with the life trajectory of their founders. Proposals for improving the strategic management of a startup in the context of local economic development have been developed. Novelty. The proposed approach to the identification of a startup as an object and subject of strategic management in the context of the interests of its founder and the expectations of the local community regarding the impact of the startup on local economic development. The systematic approach to the strategic management of a startup in the context of local economic development on the basis of glocality, which involves the development of a startup project in a multi-ecosystem environment with the appropriate distribution of direct and indirect profits of the project among a wide range of stakeholders, has been further developed. Practical value. The results of the study will allow startup founders and entities responsible for local economic development planning to improve the effectiveness of strategic management of startup projects in accordance with interests and opportunities for influence.

411 The Hatchery, a Universal Approach for Incubator Space in Academia

OBJECTIVES/GOALS: The goal of the Hatchery is a new approach to de-risk innovative life science ideas within an entrepreneurial setting. The Hatchery creates value by vetting the initial potential through experimental testing. METHODS/STUDY POPULATION: In this study we took a functioning wet laboratory space that was vacant due to principle investigator movement, and created a pipeline for its use in life science startup formation. A functioning laboratory can remain unoccupied for a notable period with transitions of research leadership. At the same time, a life science startup company who is testing core principles of their technology need wet lab space at an affordable cost. Our solution called the Hatchery provides startup companies a state-of-the-art wet laboratory space, next to a research hospital, for a very short duration of time and minimal fee. This novel approach allows preliminary validation of a technology for initial NIH SBIRs and STTRs funding pathways. RESULTS/ANTICIPATED RESULTS: Initial findings demonstrated the effectiveness of the Hatchery method. Our pilot study included five different life science startups company tenants. Each company was enabled to de-risk technologies and secure a phase 1 SBIR/ STTR funding or resulted in an exit via acquisition. DISCUSSION/SIGNIFICANCE: Entrepreneurship is a growing approach for testing and expanding new research areas. The Hatchery model makes use of existing space and infrastructure, can scale with an entrepreneurial community, and can serve as critical pilot data for a more permanent space commitment.

Reprint of “The Startup Cartography Project: Measuring and mapping entrepreneurial ecosystems”

This paper presents the Startup Cartography Project (SCP), which offers a new set of entrepreneurial ecosystem statistics for the United States from 1988 to 2016. The SCP combines state-level business registration records with a predictive analytics approach to estimate the probability of “extreme” growth (IPO or high-value acquisition) at or near the time of founding for the population of newly-registered firms. The results highlight the ability of predictive analytics to identify high-potential start-ups at founding (using a variety of different approaches and measures). The SCP then leverages estimates of entrepreneurial quality to develop four entrepreneurial ecosystem statistics, including the rate of start-up formation, average entrepreneurial quality, the quality-adjusted quantity of entrepreneurship, and the entrepreneurial ecosystem performance associated with a given start-up “cohort.” These statistics offer sharp insight into patterns of regional entrepreneurship, the correlation of quality (but not quantity) with subsequent regional economic growth and the evolution of entrepreneurial ecosystems over time. The SCP includes both a public-access dataset at the state, MSA, county, and zip code level, as well as an interactive map, the U.S. Startup Map, that allows academic and policy users to assess entrepreneurial ecosystems at an arbitrary level of granularity (from the level of states down to individual street addresses). The SCP and accompanying datasets may be found at: https://www.startupcartography.com/ .

The rise of fintech: A cross-country perspective

We investigated the country determinants that encourage the establishment and activity of financial technology (fintech) companies. We found that countries witnessed more fintech start-up formation when access to bank loans was limited, indicating that fintech companies help underserved markets. In this paper, we show that countries’ technological adoption is important, as technological advancements, the quality of research, and the level of university-industry collaboration are positively related to fintech development. Additionally, we confirm that fintech companies may find the quality and stringency of regulations obstacles to their development. Finally, we show that some determinants of fintech development differ between developed and developing countries.

Компанії-єдинороги як продукт успішних екосистем стартапів

The article studied the essence and history of the term "unicorn startups", identified features of the formation and development of unicorn companies, outlined the main differences between unicorn startups and traditional innovative companies. The author analyzed the geographical and sectoral features of unicorn startups, identified economic activities, and locations of the most active occurrence of unicorn digs on a global scale. The article analyzed the main factors of successful formation and development of unicorn startups, among them, identified a very important factor – the state and quality of national ecosystems of startups, that create favorable economic conditions and investment climate for the emergence and rapid development of such companies. The presence of a developed and competitive national ecosystem for the development of unicorn startups implies the availability of first-class investment venture funds with international professionals who can select potential unicorns in the early stages of the startup life cycle, provide competent management and intelligence services, also provide sufficient and necessary amounts of venture capital investment. Rapid scaling of startups is not possible without sufficient demand. Developing countries with low demand for technology and local market capacity, limited resources to build venture capital funds need to create the right legal framework to improve the investment climate, attract global venture funds and establish effective cooperation between government, business, and science within the startup ecosystem. Thus, it can be concluded that unicorn companies are the product of successful national startup ecosystems, and the factor of support, initiation, and development of national startup ecosystems is critical both for the emergence of such companies and for the successful development of the national ecosystem. Unicorns are a very important criterion for improving its position in the global ranking of ecosystems. Improving the position of national ecosystems in global rankings will contribute to the inflow of foreign venture capital, attract investors and influencers with an international name, will determine the future development of the domestic ecosystem of startups, and increase the number of unicorn startups in our country.

Catch me if you can? Staggered inevitable disclosure doctrine (IDD) rejection and entrepreneurial activity in the US

AbstractResearch SummaryInevitable disclosure doctrine (IDD) refers to a legal doctrine where an employer can claim, without the need for proof or evidence, misappropriation of trade secrets to seek an injunction against an employee. Based on entrepreneurial spawning literature, for employees seeking to start their ventures, IDD rejection by state courts could therefore be a potential catalyst to entrepreneurial activity. In a sample of neighbor‐counties across state borders with and without IDD rejection, the two‐way fixed‐effects difference‐in‐differences estimates show positive effects for county‐level entrepreneurial outcomes. However, when applying more recently developed methods for testing staggered implementation, we find no support for county‐level entrepreneurial outcomes across multiple specifications and heterogeneities. The findings have implications for the limited efficacy of IDD rejection on regional entrepreneurial activity.Managerial SummaryThe value of protecting trade secrets is important for employers, and the role of laws in preventing employees from potentially disclosing their trade secrets is widely studied. One such legal doctrine is the inevitable disclosure doctrine (IDD) where an employer can claim, without the need for proof or evidence, misappropriation of trade secrets to seek an injunction against an employee. We find that IDD rejections by courts have a limited effect on the formation of startups in a county. The findings imply that investors are less encumbered by IDD rejections by courts and that policymakers may not find IDD rejections as a useful mechanism to prime local entrepreneurship.

Family support, psychological capital, and start-up formation

The influence of family support and psychological capital (PsyCap) is a topical discourse in entrepreneurship studies due to the unsupportive and turbulent environments most entrepreneurs operate in. However, studies concluding on the nature and direction of family support and PsyCap effects on start-up formation appear scant. This study aims to empirically examine family support effects on start-up formation with psychological capital (PsyCap) as a mediation factor. Specific emphasis was given to extended family support. The study utilized the partial least square (PLS) method for hypotheses testing with cross-sectional data collected from 261 randomly sampled trainees in an entrepreneurship training program organized by the Delta State Ministry of Youth Development. The PLS analysis showed that family support (β = 0.317, p = 0.000) and PsyCap (β = 0.202, p = 0.000) have a significant positive effect on start-up formation. The results proved that family support and PsyCap are valuable antecedent factors for positioning entrepreneurs to engage and thrive productively in the start-up formation process. Furthermore, PsyCap did not mediate the significant positive effect of family support on start-up formation (β = 0.235, p = 0.000; β = 0.103, p = 0.052). This result demonstrates that family support may not be enough for PsyCap to transmit its significant positive effect on start-up formation. Hence, there is a need to procure other alternate support from formal or informal settings.

Start-up as an Environment to Promote Innovation Activities

The article summarizes the relevance and importance of activities in the field of start-ups as a source of modern innovative ideas. It is determined that a successful start-up requires a favourable environment both at the level of the start-up organization and at the level of its implementation. It is substantiated that in the conditions of low innovation activity start-ups can serve as a tool for intensification of innovation activity. Based on the results of the study, the directions of a favourable environment formation for the development of start-ups are proposed. At the macro level, the necessary changes are related to the formation of appropriate culture and regulatory activities, technical development, dissemination of experience and international practice, needs, desires and requirements of consumers, at the micro level — management technologies that create a favourable environment for the formation and implementation of start-ups. Modern organizational forms for attracting the investment resources into the innovative development of organizations and society as a whole on the basis of the allocation of start-ups, project activities and pilot projects are considered. The results of the introduction of start-ups in domestic practice are analysed and their characteristics are presented. Attention is drawn to the importance of considering of potential stakeholders who are interested in creating an innovative product within a start-up or other forms of investment, and create conditions that directly or indirectly affect the implementation of innovative ideas. The differences between start-ups, project management and pilot project are summarized and highlighted. It is substantiated that the implementation of pilot projects is appropriate in the conditions of approbation of the initiative, new concept or process or test for the organization. It is determined that the basis for both pilot projects and start-ups is the project management methodology. Examples of pilot projects for domestic oil and gas companies are considered. The key provisions for the implementation of a new concept of development or innovation in domestic enterprises through various forms of project activities are highlighted.

Высокотехнологичные американские стартапы: роль университетов

The article is devoted to development of startups in American Universities, attracting potential investors, direct assistance to startup founders from specialized centers and research departments. Innovations are spread across the world and startups are the largest contributors to job creators. Startups are gradually becoming indicators of the effectiveness of Universities and an important part of the innovativeness. Universities are trying to achieve excellence in research by facilitating the translation and commercialization of scientific discoveries into accessible technologies, products and services for the benefit of contemporary society. It is generally accepted that technology commercialization specialists develop and disseminating the best practices for spinning out new companies based on university research and development. It is also important to protect new technologies with patent, trademark and copyright filings. The article deals with the main problems of protecting of patenting scientific developments. The American intellectual property protection government laws and regulations allow companies to commercialize the products they invent, encouraging innovations and researches in Universities, attracting students to establish new startups. University startups can help students improve their knowledge by teaching an entrepreneurial mindset and have new career opportunities. The article considers different innovative American startups, the new technologies and the impact they will have in economy. The article analyzes the cooperation of non-profit national organizations, foundations and business incubators with University startups and their financing. As a rule technology commercialization often requires support from multiply financial sources. A comprehensive analysis of the stages of formation and development of high tech startups, state support for innovative potential and the creation of venture companies are shown.

РОЗВИТОК СТАРТАПІВ В УКРАЇНІ: ТЕОРЕТИЧНІ АСПЕКТИ, ТЕНДЕНЦІЇ, МОЖЛИВОСТІ

The article examines the theoretical aspects of the functioning of startups: the essence, content, and differences of startups from traditional entrepreneurship. A startup is a modern form of starting an innovative business that has a high potential for development and is designed for rapid growth and scalability. The main criteria that determine the credibility of startups and form their rating are identified: efficiency; financing; market size; talent; experience; knowledge; connectivity. Ukraine's international ranking for the development of startups, as well as trends in the country's leading cities are analyzed. According to the international rating StartupBlink, Ukraine in 2021 ranked 34th among 100 countries. Over the past 20 years, the development of startups in the IT industry has gained momentum. However, there are many promising areas in the country, in addition to IT, which may develop in the future and help bring Ukraine to high ratings. An assessment of investment attraction and cost formation of startups in Ukraine was conducted. The risks and problems faced by Ukrainian startups have been identified. The tendencies and strategic prospects of further development of startups are outlined, among which: activity in the field of information technologies; the growing number of startups with mobile applications, computer programs, and games; stimulating innovation and development of startups in the processing industry, financial and insurance activities, telecommunications. Ukraine has great potential and opportunities for the development of startups in the future, but their further implementation is possible only with effective state intervention. The problem for Ukraine is the insufficient level of support for startups from the state, the low investment climate in the country, as well as the ambiguous regulatory framework. The directions of state support for the development of startups and venture investment in Ukraine are substantiated: orientation on the development of entrepreneurial culture; enabling startups to participate in international programs; guarantee of protection of the rights of startups, intellectual property; increase in investments by the state for further development of startups in the country.

A reconsideration of university gap funds for promoting biomedical entrepreneurship

Abstract The last 50 years have seen an increasing dependence on academic institutions to develop and commercialize new biomedical innovations, a responsibility for which many universities are ill-equipped. To address this need, we created LEAP, an asset development and gap fund program at Washington University in St. Louis (WUSTL). Beyond awarding funds to promising projects, this program aimed to promote a culture of academic entrepreneurship, and thus improve WUSTL technology transfer, by providing university inventors with individualized consulting and industry expert feedback. The purpose of this work is to document the structure of the LEAP program and evaluate its impact on the WUSTL entrepreneurial ecosystem. Our analysis utilizes program data, participant surveys, and WUSTL technology transfer office records to demonstrate that LEAP consistently attracted new investigators and that the training provided by the program was both impactful and highly valued by participants. We also show that an increase in annual WUSTL start-up formation during the years after LEAP was established and implicate the program in this increase. Taken together, our results illustrate that programs like LEAP could serve as a model for other institutions that seek to support academic entrepreneurship initiatives.

Optimizing biomedical discoveries as an engine of culture change in an academic medical center.

Academic discovery in biomedicine is a growing enterprise with tens of billions of dollars in research funding available to universities and hospitals. Protecting and optimizing the resultant intellectual property is required in order for the discoveries to have an impact on society. To achieve that, institutions must create a multidisciplinary, collaborative system of review and support, and utilize connections to industry partners. In this study, we outline the efforts of Case Western Reserve University, coordinated through its Clinical and Translational Science Collaborative (CTSC), to promote entrepreneurial culture, and achieve goals of product development and startup formation for biomedical and population health discoveries arising from the academic ecosystem in Cleveland. The CTSC Office of Translation and Innovation, with the university's Technology Transfer Office (TTO), helps identify and derisk promising IP while building interdisciplinary project teams to optimize the assets through key preclinical derisking steps. The benefits of coordinating funding across multiple programs, assuring dedicated project management to oversee optimizing the IP, and ensuring training to help improve proposals and encourage an entrepreneurial culture, are discussed in the context of a case study of therapeutic assets, the Council to Advance Human Health. This case study highlights best practices in academic innovation.

The Five Biggest Factors Challenging Startups in Nepal

There are a variety of factors that pose challenges for start-ups globally. These challenges vary based on the country, region, or economy of operation. Research identified the challenges start-ups face depending on whether start-ups were established in developed or undeveloped countries. However, few research studies have been conducted in Nepal. Hence, the purpose of this study was to examine the top five factors that hindered start-up formation or posed difficulty for the growth of start-ups within Nepal between 2017 to 2020. The primary data was collected using a mixed method using purposive sampling consisting of an in-depth interview followed by a survey with entrepreneurs and experts of the entrepreneurial ecosystem of Nepal. The authors administered an in-depth interview with open-ended questions and then conducted key informant interviews. Throughout the interviews, the five major issues identified as hindering start-ups were human capital, finance, support system, policy, and marketing.

The Startup Cartography Project: Measuring and mapping entrepreneurial ecosystems

This paper presents the Startup Cartography Project (SCP), which offers a new set of entrepreneurial ecosystem statistics for the United States from 1988 to 2016. The SCP combines state-level business registration records with a predictive analytics approach to estimate the probability of “extreme” growth (IPO or high-value acquisition) at or near the time of founding for the population of newly-registered firms. The results highlight the ability of predictive analytics to identify high-potential start-ups at founding (using a variety of different approaches and measures). The SCP then leverages estimates of entrepreneurial quality to develop four entrepreneurial ecosystem statistics, including the rate of start-up formation, average entrepreneurial quality, the quality-adjusted quantity of entrepreneurship, and the entrepreneurial ecosystem performance associated with a given start-up “cohort.” These statistics offer sharp insight into patterns of regional entrepreneurship, the correlation of quality (but not quantity) with subsequent regional economic growth and the evolution of entrepreneurial ecosystems over time. The SCP includes both a public-access dataset at the state, MSA, county, and zip code level, as well as an interactive map, the U.S. Startup Map, that allows academic and policy users to assess entrepreneurial ecosystems at an arbitrary level of granularity (from the level of states down to individual street addresses). The SCP and accompanying datasets may be found at: https://www.startupcartography.com/.