Thursday, June 2, 2016

When it comes to start-ups, we still suck, and are still bad

You may remember that Wisconsin’s low amount of new business start-ups has been an ongoing problem, and has gotten worse in the Age of Fitzwalkerstan. This culminated in a top state business development official saying “We suck, we’re bad” in 2013 and the state ending up dead last in the nation in the Kaufmann Foundation's index for new startups in 2015.

Well, the Kaufmann Foundation is back with another report on how states are doing in cultivating new businesses and… Wisconsin’s theme is still “We suck, we’re bad.”
It would seem that young businesses aren't doing so well in Wisconsin, at least in relative terms. Of the 25 states with the largest populations in the U.S., the report ranks Wisconsin 23rd in terms of its entrepreneurial growth. Only Florida and Michigan fared worse. Virginia, Maryland and Arizona top the list….

The report based its scoring for each state on three different metrics: the rate at which startups grow in terms of number of employees, the percentage of startups that successfully "scale up" — in other words, that hire a significant number of workers over its initial 10-year lifespan — and the proportion of companies that achieve "high growth" in terms of revenue.

Based on the analysis of the Kauffman Foundation, Wisconsin's performance in terms of scaleups and the overall startup growth was just slightly lower than average compared to the other 24 "large states." But it was in the "high-growth company density" category where the state truly suffered — the report found that Wisconsin for every 100,000 businesses, Wisconsin has about 37.9 that attain high growth. That put it dead last among its similarly sized peers.

High growth was defined as companies that record revenue growth of 20 percent for three years, while making at least $2 million annually.
That “high growth density” stat is a good proxy for entrepreneurship that is succeeding , and Minnesota, Illinois and Ohio all have start-ups that are over twice as likely to have strong growth as Wisconsin does.

And a key to doing well in that stat seems to be related to how well the largest metropolitan areas in those states fare in the Kaufamnn high-growth index. Wisconsin’s bad statewide ranking is underscored with the Milwaukee area being 3rd-from-the-bottom for high-growth density out of the top 40 U.S. markets. Compare that with how things look in Minnesota’s, Illinois’, and Ohio’s biggest markets.

High-growth density, Kaufmann index 2016 (out of 40)
Columbus, Ohio 7th
Twin Cities, MN 14th
Cincinnati, OH 15th
Chicago, IL 20th
Cleveland, OH 23rd
Milwaukee, WI 38th

In addition, Milwaukee rates 31st out of 40 in the country in the growth of businesses that do start up, and the Kaufmann Foundation says the Milwaukee area dropped 10 spots from 21st to 31st out of the top 40 U.S. markets for growth, the second-largest drop of any large market in America.

These disappointing stats point directly at Wisconsin GOP policies and the corporate oligarchs that direct it. Governor Walker and WisGOP have gone out of their way to favor established, older industries through tax cuts and worker suppression laws, indirectly discouraging competition by giving advantages to the established firms, which makes it tougher for new firms to enter and contribute to the state’s economy. In particular, the Milwaukee corporate community continually proves to be among the worst of any in the country, with the Metropolitan Milwaukee Association of Commerce and other rich, connected types being more concerned with holding onto market share and using their outsized influence to direct policy, instead of encouraging an environment of openness to new ideas and excellence through competition.

At the same time, the Wisconsin business community (and especially Milwaukee-area corporates) have not done nearly enough to discourage and/or block the damage Walker and WisGOP has done to the state’s once-great K-12 and higher education system, and have seemed to have no problem with WisGOPs micromanaging and disinvesting in the state’s largest city (well, unless it’s a new basketball arena, then they’re all about investment in Milwaukee). This has in turn discouraged talented individuals from deciding to set up in Milwaukee and Wisconsin, and instead they head to other communities where they feel their new ideas will be welcomed and given a better chance to succeed.

This state needs some new blood to get things moving again. Not just in the form of innovative new business start-ups, but also in the Capitol and in the boardrooms of the state’s corporations, because the WisGOPs and their corporate buddies are failing miserably in Wisconsin, and the state keeps falling further behind the longer these mediocre men (pronoun used intentionally) are kept in charge.

PS- Look at what just went public. The WisGOP slush fund better known as the Wisconsin Economic Development Corporation (WEDC) is now asking to take $8 million away from the Early Stage Business Investments credit, and move it to a tax credit for “companies seeking to expand or locate their business in Wisconsin.” Yes folks, this would add money to the same types of WEDC tax credits where we found out last week that millions of dollars may already have been improperly handed out.

Any wonder why this state continues to suck for job and new business growth?

1 comment:

  1. Quick update- I have word that Dems on the Joint Finance Committee have already objected to this request to move $8 mil out of start-ups and into these "jobs credit" giveaways. So this will come up at the next JFC meeting.