A recent Kauffman Foundation study found that year-over-year startup activity in the U.S. increased in 2015 for the first time in five years and showed the largest increase in more than 20 years. This is particularly good news from an employment perspective because new firms create the vast majority of net new jobs. And, fortunately for the Greater Baltimore market, Maryland is recognized as a leader in innovation. When compared to other Northeast Corridor metros, Greater Baltimore has historically had a greater startup rate than Boston and Philadelphia.
Greater Baltimore is a world-class market thanks to its talent base, quality of life, educational and health institutions, large federal and military presence, and companies of all sizes from start-up firms to global brands such as McCormick, T Rowe Price and Under Armour. Ensuring that residents of Greater Baltimore have the opportunity to launch businesses, and the support to be successful once they do, has helped to increase entrepreneurial activity.
The Kauffman Foundation measured start-up activity in 40 metropolitan areas across the country. Their research found that the Baltimore MSA was the 17th most active on the basis of start-up density, opportunity share of new entrepreneurs and the rate at which new businesses are formed. The opportunity share of new entrepreneurs, defined as the number of people that were not unemployed when launching their new business, is an important aspect to consider.
Nearly 90 percent of new entrepreneurs in Greater Baltimore were employed when they launched their start-up, according to the study, indicating that many of Baltimore's entrepreneurs both identified a market need and felt confident and stable enough to leave an existing job. Greater Baltimore is second only to San Jose for the percentage of new entrepreneurs who, but for their eye for opportunity, would have otherwise been employed. Nationally, 79 percent of new entrepreneurs left jobs to start businesses.
Why is Maryland considered an innovation hub? Maryland Gov. Larry Hogan is committed to developing a greater entrepreneurial ecosystem and improving the state's reputation with businesses. And the state, particularly Greater Baltimore and the Maryland suburbs of Washington, D.C., is dotted with incubator facilities for young firms, like FastForwardEast, a Johns Hopkins University commercial incubator that opened earlier this year. Many start-ups elect to join incubators because it gives them access to important business services and shared overhead costs, as well as a vibrant community of like-minded people and companies.
A density of entrepreneurs in a region is important for innovation and the flow of ideas. Similarly, giving ambitious and creative new business owners space to interact, share ideas and collaborate improves the quality of the products being created by each company and contributes to the birth of new ideas and new businesses.
The Economic Alliance of Greater Baltimore — a partnership of regional business executives, elected government officials and leaders from higher education focused on fostering business retention and development, job creation, workforce development and new investment throughout the Greater Baltimore region — has partnered with several organizations to develop two programs to support the region's entrepreneurs.
Advance Maryland, a program founded by the Economic Alliance and the Maryland Department of Business and Economic Development, is designed to help second-stage companies address their unique challenges and identify new opportunities at no cost to the company. The program employs a "grow from within" strategy that targets the state's existing growth companies and offers them critical strategic information customized to their needs. Since 2013, Advance Maryland has assisted 15 companies from throughout the state. The companies served by Advance Maryland are from a number of different industries, including manufacturing, website hosting services, software and food service.
DreamIt Health, an accelerator program, was launched in partnership with BioHealth Innovation, DreamIt Ventures, Johns Hopkins University, the Abell Foundation and the University of Maryland, Baltimore. The intense four-month accelerator program provides top-shelf resources, including downtown office space and $50,000 of seed capital to young health tech companies. The DreamIt Health Accelerator has attracted companies from around the world, many of which have set up permanent residence in Greater Baltimore after building a strong network through the DreamIt Health program.
Entrepreneurship is a critical component of a growing regional economy and should be supported at every turn. Generally, young firms are the fastest growing companies, and continued support for entrepreneurship helps to create lasting jobs and improve productivity. Encouraging risk-taking and business formation is key to sustainable economic growth in Greater Baltimore.
Tom Sadowski is CEO of the Economic Alliance of Greater Baltimore. His email is email@example.com.