VOL. 131 | NO. 8 | Tuesday, January 12, 2016
Helping Memphis Make the Shift to Startups
By Andre Fowlkes
It’s been quite a year! We saw Memphis’ first joint Demo Day with Start Co. and Zeroto510, graduated 18 startups from accelerator programming and hosted several investors and startup enthusiasts from all over the country here for the Memphis in May World Championship Barbecue Cooking Contest. However, on a national scale, our startup community still has plenty of work to do.
While the Great Recession held much of the country back in terms of economic advancement, Memphis has been slower to catch up than other cities.
Five years ago, Memphis’ annual job births in information, communication and technology sectors, as well as high-tech, high-growth industries were 50 percent lower than they were 35 years ago, while the nation as a whole had more than tripled information, communication and technology jobs and grown high-tech, high-growth jobs by nearly 70 percent.
While startup accelerators have been ramping up the ecosystem for the last five years and have brought in and sustained more than 300 jobs, Memphis is still the most unemployed city in the nation.
Historically, Memphis has understood that existing businesses create the majority of our jobs. The flaw in this conventional wisdom today is that we’ve not yet acknowledged that existing businesses also eliminate as many jobs as they create. New startup business creation outpaces job elimination numbers at three to four times the pace of existing businesses.
Eric Mathews and I realized this and made the decision in 2011 to switch Start Co. from a volunteer organization to a business deliberate about changing the job and talent trajectory in Memphis. Solidus, a Nashville-based private equity firm, also believed in our vision and provided us with the necessary resources to run the first Seed Hatchery cohort, our region’s first startup business accelerator. We have since spent every day investing time, money and resources into the entrepreneurs themselves.
Fast-forward to today and there are several Start Co. graduate startups that are creating jobs in the information technology, women-led technology and social enterprise areas. What’s more, Memphis Bioworks also launched the Zeroto510 medical device accelerator program and EPIcenter Memphis launched the Logistics Innovation Accelerator sponsored by FedEx. Since 2011, these accelerator programs have produced over 41 startup companies that have created and sustained more than 300 knowledge and technology-based jobs. Close to $30 million has been raised in private equity dollars and reinvested back into the community, attracting talent from all over the world. National corporate partners are now materially investing in Memphis startups, including Amazon Web Services, PayPal, IBM, American Airlines and more.
However, we still have a lot of catching up to do. Those 300 jobs are built on a fragile ecosystem and that number could easily fall back down to zero unless Memphis begins materially investing in growing that job number to 1,000 or more. The success we’ve seen so far is a result of bootstrapped resources, but think of what that success could look like if our community began realizing what our national corporate partners have already started to see.
We need to start supporting what other cities have already come to know: It is absolutely necessary to diversify our economic growth efforts to be inclusive of the number one net job creator, startups.
Applications for Start Co. programming, including its Seed Hatchery, Upstart and Sky High accelerators, are currently open at neverstop.co, and accepted teams in the Seed Hatchery and Upstart accelerator programs will again receive $25,000 of investment capital. B2B technology startup founders with unique, high-growth potential business ideas should apply by March 1. Memphis Demo Day, another joint effort with the Zeroto510 accelerator program, will occur Aug. 11.
Andre Fowlkes is president of Start Co.