2015 Tulsa State of Entrepreneurship
Presented by the Lobeck Taylor Family Foundation
Established in 1997, The Lobeck Taylor Family Foundation (LTFF) strives to spark innovation that ignites all types of entrepreneurs and fuels community development in Tulsa, unlocking the potential of our city’s future. LTFF supports entrepreneurship in Tulsa through programs like the Tulsa Startup Series (formerly Startup Cup), Cultivate918, The Mine, Kitchen 66 and 36°N. In 2014, LTFF produced a high-level assessment of entrepreneurial programs and resources, findings, and recommendations for strengthening the entrepreneurial community in Tulsa.
LTFF will continue to produce an annual State of Entrepreneurship Report in partnership with 36°N to be released during Global Entrepreneurship Week. The report will serve as an update to the prior year’s report and as a way to reflect on the progress and goals for our community.
In order to track progress from year to year, the report cites progress, opportunities, and successes that follow the eight themes initiated in the first report, including: Physical Infrastructure, Promoting Culture, Support Services, Human Capital, Finance, Access to Markets, Research and Development, and Policy. Within each theme, the report will look at the historical progress, current trends and recommendations for moving forward. The eight recommendations from the first report will also be revisited with 2015 success and future opportunities outlined. Where appropriate, LTFF will lay out 2016 organizational goals for itself and strategic planning goals to investigate and pursue by 2020. LTFF welcomes collaboration with other organizations interested in pursuing the same goals and feedback or ideas regarding new goals for the entrepreneurial community.
128 entrepreneurs and community supporters participated in the 2015 entrepreneurship survey.
In addition to the annual report, LTFF will continue its annual survey to gather input from the entrepreneurial community. In 2014, informal interviews were conducted with 73 community participants, while the 2015 survey had 128 respondents, 50% of whom identified themselves as entrepreneurs. The increase in individuals participating in the conversation about entrepreneurship in Tulsa bodes well for future community development of our entrepreneurial ecosystem. In 2016, we hope to increase participation in the survey by an additional 20% to capture even more voices and opinions.
While physical infrastructure in entrepreneurial ecosystems can refer to anything from internet connectivity to office space, for the purposes of this report, physical infrastructure means a physical place for entrepreneurs to work, access resources and connect with each other. The 2014 Entrepreneurial Landscape report cited two physical spaces in which entrepreneurs can work together in Tulsa. In 2015, both of those spaces, the Fab Lab and The Forge, have grown to capacity and are currently looking to expand their programs so they can increase outreach and membership.
At least three more physical spaces opened their doors in 2015. The Hive in Jenks, OK, is a 6,000 square foot facility and events space designed for creative entrepreneurs and features room for artists in residence, as well as event and gallery space. The Bridge is a co-working space that focuses on community building, education, networking and co-working in midtown Tulsa and The Workshop at Made is a Tulsa Coworking Space for artists, designers, freelancers, photographers and other creatives to create, work, learn, teach and play.
Three new entrepreneurship spaces opened in 2015.
A fifth space will exist when 36°N opens its doors in 2016 and a group of entrepreneurs made a presentation in 2015 to include funding for a mixed use Raw Space in Vision 2025 funding that would transform the Evans Fintube building north of downtown Tulsa into a one of a kind space where technology, industry and community collide.
In 2016, Lobeck Taylor Family Foundation will beta test Kitchen66, a kickstart kitchen with a sustainable business model that will train food entrepreneurs on business skills required to open a food business and also rent kitchen space to existing businesses in need of a licensed kitchen. Kitchen66 will also develop a distribution network to connect food entrepreneurs to markets locally and nationally.
The 2014 State of Entrepreneurship Report recommended that in 2015 Tulsa should “consolidate efforts to build a mixed use facility” for entrepreneurs with classroom, meeting and coworking space. 36°N, a joint project of the George Kaiser Family Foundation, Tulsa Regional Chamber and Lobeck Taylor Family Foundation, will open its doors in January 2016 to meet this identified need of the entrepreneurial community.
The 2014 Entrepreneurial Landscape report indicated that many resources exist in Tulsa but poor communication between them causes a lack of cohesive culture, inefficient use of resources and competition for entrepreneurs’ limited time and attention. The report cited this lack of communication and cooperation among resources as the fundamental element holding back the community and offered seven recommendations to facilitate collaboration between programming partners.
2015 saw great progress towards these organizations working together and breaking down the silos to better serve and refer entrepreneurs. The collaborative nature and broad involvement of partner organizations in both Global Entrepreneurship Week and Startup Weekend indicate positive steps towards a more vibrant community. In the 2015 survey, the most-cited strengths of Tulsa were community support and resources. Fifty-nine percent of respondents said they used a community resource in the past year but most resource organizations were utilized by less than 20% of respondents, indicating either a lack of awareness or lack of need for these resources. 1 Million Cups was the most-used resource (53%) followed by The Forge (26%). OSU, the Tulsa Regional Chamber and i2E rounded out the top 5 most-cited organizations. Several respondents mentioned trouble navigating and finding resources within the community and only 16% of entrepreneurs found a resource from referral of another resource provider.
Startup Weekend Energy Edition attracted international attention and brought together entrepreneurs, energy companies and investors.
The 2014 State of Entrepreneurship Report had several recommendations for Tulsa in 2015 in regards to building and promoting a cohesive culture. The number one recommendation was for Tulsa to “grow the coalition of entrepreneurs and supporters to lead the community.” New spaces like The Bridge, 36°N and Kitchen66 as well as organizations like Cultivate918 are bringing entrepreneurs together where they may have never connected before. By bringing people together and creating that sense of community and belonging, great growth in the community can occur. While great strides in growing this community were made in 2015, there will always be room for more to join the conversation and add value. Additionally the report challenged the Tulsa entrepreneurial community to “develop a shared vision for the community.” Global Entrepreneurship Week, Startup Weekend and 36°N are all great examples of what the community in Tulsa can accomplish when entrepreneurs and partner organizations share a vision and pursue it together.
Entrepreneurs must constantly evaluate their time to balance when to conduct the never ending work required to launch or grow their company against attendance at entrepreneurial events. Many partner resource organizations see lower than anticipated attendance rates due to this fact. In order for a startup to take time away from their business, a clear value proposition must be conveyed which is often lacking. Even for events that adequately convey value, the struggle for attendance still exists due to lack of awareness caused by communication silos.
As a result of the 2014 Entrepreneurial Landscape report, Cultivate918 convened for the first time with the goal of mitigating the underlying communication barriers discouraging Tulsa’s entrepreneurial community. The mission of the organization is simply to connect entrepreneurs to one another and to the programming opportunities available to them. Monthly meetups create opportunities for meaningful collisions with other entrepreneurs and supporters of the community, connect attendees with upcoming events that benefit their personal development or grow their network and provide an opportunity to learn what others are doing to impact their city. In April 2015, Cultivate918 hosted a resource partner retreat with more than twenty organizations. Many resource partners found value in simply gaining insight regarding other resources available to entrepreneurs. As a result, many partners who had never worked together previously are now actively coordinating programing.
32% of survey respondents said they had attended an entrepreneurship event in the past month.
In the 2015 survey, 32% of survey respondents said they had attended an event in the past month, but attendance at many events, meetups and workshops has remained static or even declined over the past few years according to interviews with event organizers. At 1 Million Cups, the highest-ranked resource in the survey, entrepreneurs often make up less than half of the attendees. Taking a step back, most of these workshops, networking opportunities and various other events are created by the community at large and not necessarily entrepreneurs themselves. While there is no doubt that the community continues to provide exceptional content and opportunity through their events, perhaps the missing piece to solving this attendance puzzle is as simple as the entrepreneur him or herself. Recognizing this, in 2016 Cultivate918 will be become an entirely entrepreneur-led organization. The steering committee of entrepreneurs will evaluate their needs as well as those of their peers and accordingly address these identified gaps through programming they curate. In turn the value proposition for the monthly meetings should resonate with the entrepreneurial community as a whole.
Tulsa community resource providers need to evaluate and establish clear value propositions for entrepreneurial events by assessing attendance at events, conducting surveys with attendees after events and developing a process for entrepreneurs to suggest what additional programming would add value to the community that is currently unavailable. In 2016, 36°N will launch a centralized calendar to compile events happening at 36°N and around the community. The 36°N calendar will offer crowd-sourced event suggestions as well as staff curation to help keep the calendar as fresh as possible.
Ultimately, Tulsa should work to curate an online resource portal that not only acts as a centralized calendar, but utilizes industry experts nationwide to answer specific questions related to the subject matter of an event. Providing the technology to stream events if an entrepreneur cannot attend in person, with the information on how to view provided on the calendar, would also be a valued addition.
The 2014 State of Entrepreneurship Report recommended that in 2015 Tulsa “hold more informal events to connect members of the community that increase the collisions among entrepreneurs.” Cultivate918 structured their organizational meetings with this concept in mind as more than half of the allotted meeting time is reserved for networking and collisions. With The Hive and The Bridge opening in 2015 and 36°N in 2016, there is increased opportunity for entrepreneurs to organically make connections not only at their events but also during their work day. Organizations should continue to strive in 2016 to create these informal opportunities for entrepreneurs to connect with one another and the community.
Tulsa has a history rich in entrepreneurial success. From the prospectors settling in Tulsa to drill for oil to the business giants today like Consumer Affairs, Helmerich & Payne, Oneok, Nordam, Quiktrip and Bama Companies, Tulsa has several high profile businesses, both large and small that can inspire and inform aspiring entrepreneurs. According to the Tulsa’s Future III report, Tulsa outranks regional metro areas including Dallas and Kansas City for percentage of the population who are self-employed. The University of Tulsa was listed as one of 2015’s top 50 most entrepreneurial universities by Forbes magazine. Furthermore, Tulsa’s location in the center of the United States in a state with a strong manufacturing presence makes Tulsa uniquely situated as a production and distribution hub for companies with physical products. Unfortunately, the mainstreaming of startup culture has occurred more slowly in Tulsa than other cities. The 2009 Scruggs Report commissioned by the Oklahoma Innovation Institute cited “no shared marketing message that highlights the environment that makes the region attractive to startups” as a major weakness. This, along with the disintegration of public policies supporting entrepreneurship in local government, prohibits Tulsa from gaining a reputation both regionally and nationally as a city with a thriving entrepreneurial community.
2015 Accomplishment: Tulsa was named by Forbes magazine as the #1 place for young entrepreneurs.
In 2015, Tulsa made some great steps toward national recognition. First, Startup Weekend Energy Edition was recognized and promoted by the global Startup Weekend organization as a leading industry-specific event. In the past few months, Tulsa as a whole has garnered more attention including articles from local news outlets as well as national outlets. In July, Nerdwallet shared their observations on how “a diverse entrepreneurial ecosystem is taking hold” that makes Tulsa a great place to start a small business. Highlighted, among other things, were a low cost of living, access to talent and other resources, major industries in growth mode and moves underway to aid entrepreneurs. Though not yet open, 36°N has already been recognized by the White House as part of a “a growing community of organizations answering the call to action on inclusive entrepreneurship” for their efforts to support mom-preneurs.
Tulsa should continue to seek out opportunities to promote the community’s work to support and grow entrepreneurs nationally. In order to accomplish this goal, Tulsa based startups and resource partners should strive to connect with other leaders nationally on entrepreneurial programming and resources. Local Foundations working in the entrepreneurship space like Lobeck Taylor Family Foundation and George Kaiser Family Foundation should forge relationships with Kauffman Foundation, Coleman Foundation and other private foundations focusing on strengthening and developing the entrepreneurial ecosystem.
Additionally Tulsa should aim to capitalize on relationships with other entrepreneurship programs and entrepreneurially focused foundations to create an Entrepreneurial Exchange program through which Tulsa entrepreneurs can take advantage of the resources of other communities’ ecosystems and entrepreneurs from out of state can visit Tulsa to learn from our resources.
The Entrepreneurial Landscape report presented the robust network of support services available to the Tulsa entrepreneurial community. These resources included accelerators and incubators, boot camps, conferences, contests, e-centers, mentors/advisors and professional services. Although the availability of resources was noted as a strength of the community, the report cited poor communication as a hindrance to these resources being maximized.
In response to this challenge, in 2016, Tulsa will launch a central information hub called the Help Desk, powered by 36°N, that can provide entrepreneurs and resource providers with an overview of the resources available. Additionally, the Help Desk will offer an option for submitting questions to be answered by 36°N staff and community resources. Not only will entrepreneurs be able to use the Help Desk to learn about available resources, resource partners will be able to refer clients and provide individualized help.
Also looking forward to 2016, LTFF in partnership with Tulsa Community College will present a re-imagined version of its startup competition. The StartUp Series will feature six opportunities for entry, five from pitch competitions held bimonthly from January through September, and a sixth through applying directly for the November Global Entrepreneurship Week (GEW) Demo Day competition. Each of the five pitch competitions will run approximately 6 weeks with each of the competition cycles geared toward one area of development or type of entrepreneur: tech applications, K-12 entrepreneurs, physical products, food & retail and a wild card round. For each of the five rounds, sixty second pitch videos will be submitted and judges will narrow down the field to up to five finalists who will then present a two minute pitch live to the judges. The five pitch competition winners, along with up to fifteen others who qualify for Demo Day through an application process, will pitch live at the Demo Day Practice Round. At the Practice Round, the judges will narrow the field of up to twenty down to five finalists who will compete at Demo Day. The StartUp Series winner will receive $15,000 to advance their business, a one year membership and work space at 36°N and a dedicated mentor for twelve months.
StartUp Series will feature five pitch competitions held bimonthly from January through September, and a Demo Day competition during GEW.
While Tulsa has done a great job in making resources available for the entrepreneurial community, one resource still missing from the 2014 Entrepreneurial Landscape report is a nationally-recognized accelerator program. An accelerator would help infuse the entrepreneurial ecosystem with new business and provide an environment in which they can test their ideas within the structure of programming and advising. This will increase innovation in our community and act as an incentive to bring out of state entrepreneurs to Tulsa. If other program expansions in Tulsa provide any anecdotal indication, bringing non-Tulsans to town to work makes them more likely to decide to make Tulsa their permanent home. For example, sixty-nine percent of the latest Teach for America corps decided to stay in Tulsa for a third year after they completed their service. Partnering with an existing, nationally recognized accelerator like BetaBlox in Kansas City, Venture Hive in Miami or the global accelerator Techstars to expand their operation to the Tulsa market will connect Tulsans to the larger entrepreneurial ecosystem and potentially act as a pipeline for funding and talent.
The 2014 State of Entrepreneurship Report concluded that the Tulsa entrepreneurial community could benefit from “building an online resource center with an actively managed calendar of entrepreneurship events” The Help Desk, powered by 36°N, launching in 2016 will be the online resource center that the community has been lacking. While many organizations and spaces maintain calendars, in 2016 the community should work to incorporate them all into one master calendar integrated into the Help Desk. The report additionally spotlighted the need to “build good communication habits within the community” in order to break down silos as well as promote available resources. In 2015 the community emphasized working on this goal and the successes of Startup Weekend, Global Entrepreneurship Week and Cultivate918 can be directly attributed to the communication and collaboration by the members of the entrepreneurial community.
Mentorship historically receives less attention in the analysis of the Tulsa entrepreneurial community but is perhaps one of Tulsa’s greatest strengths. The Entrepreneurial Landscape report from 2014 cited mentorship as a needed element for the community but had limited suggestions for how to leverage existing programs. Additionally, due to the personal nature of mentorship, it can be difficult to set appropriate expectations for the mentor and the mentee, leading to missed opportunities for growth.
The challenge facing Tulsa’s entrepreneurial ecosystem is not necessarily a lack of available mentors but rather how to efficiently connect them with those entrepreneurs desiring that relationship. The BullPen, The Forge’s mentorship program, provides the opportunity for mentoring in over fifteen different categories. Fifty people across the community have offered their time to share their expertise on topics ranging from raising capital to strategic planning, logistics/distribution, and valuation. The Tulsa chapter of SCORE has a network of thirty members with varying backgrounds available for guidance for entrepreneurs at all stages of business ownership. The i2E Venture Assessment Program is an additional formalized mentoring opportunity as participants not only attend weekly workshops, but also have dedicated one-on-one meetings with i2E around strategic framework.
The BullPen, The Forge’s mentorship program, provides the opportunity for mentoring in over fifteen different categories.
While only 36% of entrepreneurs in the 2015 survey had a mentor in the past year, almost all indicated the relationship was extremely valuable. The most commonly cited benefit (even more valuable than the $30,000 prize money) of the TCC Startup Cup business model competition was the coaching and mentoring that the participants received. The majority of the teams involved expressed that the access to quality mentors that the competition has been able to provide over the last seven years has been immensely beneficial. Moreover, although mentoring sessions were only scheduled over two hours during the coaching portion of the competition, many of these coaching sessions blossomed into mentorship and advisor relationships and on at least two occasions resulted in new customers or a product’s acquisition by another company.
A lasting solution for the mentorship gap will require grassroots involvement and cannot be solved with pure programming. Many of the programs mentioned previously have already created the framework to match entrepreneurs with mentors. In 2016, 36°N will provide more opportunities for serendipitous interactions between entrepreneurs and potential mentors. Additionally, programming partners should keep an eye out for potential mentor relationships and work to connect their clients with one another. REI, for example, in collaboration with OSU, OU and The Forge and several female entrepreneurs recently launched a monthly breakfast designed to support and encourage female entrepreneurs. This monthly gathering will allow women in all stages of business to meet one another and conduct informal, round table discussions around pain points and struggles they face on their entrepreneurial journey. Sharing advice and ways others have overcome these struggles could be an opportunity to plant the seeds for a future, successful mentor relationship. Alternatively, an advisor network in which companies exchange a small amount of equity for the advice and expertise of a seasoned entrepreneur or expert in the field can provide accountability to both parties by creating an incentive to set aside time for mentoring and collaboration.
The entrepreneurial community in Tulsa should work to create additional industry focused, informal meetups to provide novice entrepreneurs an opportunity to meet with seasoned entrepreneurs in order to develop an organic relationship. The Cultivate918 steering committee in particular has a unique opportunity to spearhead this effort as their organizational reach is wide across industries and their attendees represent all stages of the entrepreneurial process.
The 2014 State of Entrepreneurship Report recommended that in 2015 Tulsa should work to “understand the mentorship landscape and use existing resources” to establish a pool of mentors that multiple organizations and resources could leverage as needed. This year the community made strides in understanding its mentorship landscape and continues to work together to create opportunities for entrepreneurs to connect with mentors. The opportunity to create a network of mentors still exists and should be pursued in 2016.
The second-most cited obstacle for Tulsa in the 2015 survey was the lack of software developer talent. In many ways, the disconnect that exists between investors and entrepreneurs is similar to the disconnect between developers and entrepreneurs. Due to the lack of communication and cohesion within the community, it’s often difficult for entrepreneurs and developers to find each other, much less find the right match. Generally, Tulsa does not lack for developer talent. Each year at Tulsa Tech Fest, more than 500 developers gather to share and learn, and Tulsa was also ranked by Business Insider as the “Top city for freelance software or web developers.” However, a majority of those developers focus on enterprise programs used by large organizations and have a hard time leaving the security of their employment to work on a high risk startup. Tulsa lacks an adequate pool of a specific set of developers: those who work with modern, web frameworks. According to the Tulsa’s Future III report, Tulsa loses a large number of these upper-level developers to other cities such as Kansas City where information technology workers earn on average $22,000 more per year.
A recent study by the company Payable awarded Tulsa the top spot “to be a freelance software or web developer.”
The 2015 survey indicates that entrepreneurs feel conflicted about whether adequate supply exists to satisfy the demand for developer talent. While 56% of respondents plan to hire technical talent in the next year, 42% of respondents said that there is a gap in developer talent and 34% of respondents said there is no gap. Clearly, a disconnect exists. Tulsa made significant strides in 2015 to address the talent gap. Tulsa Web Devs continues to provide a vibrant community for developers at all skill levels and often acts as the “front door” to the developer community, both at their monthly meetings and through their Facebook group. Educational initiatives such as OKCoders, Girls Who Code and the increasing focus on STEM education in K-12 classrooms set the foundation for creating a new generation of software developers.
In 2016, Tulsa should recruit or create a more intensive program to follow up on the success of OKCoders that makes software developers ready for immediate employment as a junior-level developer at any startup or established company. As of November, OKCoders has completed two classes with a total of twenty-seven participants. As a direct result of their new skillsets, several of the students have received new job opportunities. Tech Talent South, who operates intensive coding education programs in Dallas, Atlanta, Raleigh and several other cities across the south, announced in early November that it was bringing its Pop Up Code Program to Tulsa in February 2016. The two week course, held after work and on Saturday, teaches the web application framework Ruby on Rails, HTML/CSS and Twitter Bootstrap. Additional new programs should also include options like an online learning cohort or apprenticeship program.
Cyber Corps received a $4.98 million grant from the National Science Foundation in October 2015.
Pipelines should be established from the entrepreneurial community to the educational institutions in the Tulsa Metropolitan Area as well as across the state that engage students capable of this technical talent. For example, Cyber Corps, an acclaimed organization at the University of Tulsa that received a $4.98 million grant from the National Science Foundation in October 2015, has a mission to train students in the art and science of cyber warfare. More than 350 students with an interest in computer science and computer engineering have gone through the program since 2001 with most securing positions post-graduation with the NSA, CIA, FBI, NASA or the Department of Defense. Students with the aptitude to fill the technical talent gap that some entrepreneurs feel exists are available in this very city, but project partnerships, internships, and collaborations must be established with these students to attract and retain them in Tulsa.
Previous reports, including the LTFF Report, OII Scruggs Report and Tulsa’s Future III Report cite early-stage capital as one of the primary hurdles facing Tulsa startups. This hurdle is common in many cities, but Tulsa currently falls behind its peers. According to the Tulsa’s Future III report, in 2014 only 13% of Oklahoma’s total $2.3 million venture capital investments in the state went to a Tulsa startup. Tulsa is receiving less than its share of venture capital funds in the state, and the state of Oklahoma has fewer venture capital dollars than Missouri, Kansas, Kentucky, and Indiana by approximately $14 million dollars. Texas, our neighbor to the south, dedicated $350 million to venture capital.
Tulsa’s early-stage capital market saw little improvement in 2015. In this year’s survey, early stage investment was cited as the foremost obstacle preventing Tulsa from advancing as an entrepreneurial community. Twenty-five percent of the entrepreneurs surveyed this year attempted to raise outside capital, but less than half of those were successful. Not one of the successful respondents raised money from Tulsa-area venture capital firms. According to the survey, most startup financing occurs through friends and family rounds with less than $50,000 raised or large, growth rounds of $1,000,000 or more raised through private equity.
Not one of the successful respondents raised money from Tulsa-area venture capital firms.
Tulsa should create a dedicated investor education series and a separate entrepreneur education series about early-stage investing. Much of the disconnect is due to unrealistic expectations for both the investor and the entrepreneur. For investors, the education should cover the similarities and differences between oil & gas investing and early-stage technology investing as well as current trends in early-stage financing structures. For entrepreneurs, education should cover when entrepreneurs should begin looking for venture capital funds, what investors look for and how to pitch them appropriately. This educational series will also increase the connections between investors and entrepreneurs, leading to more deal potential.
Both individual and institutional investors as well as entrepreneurs in Tulsa should engage the broader investment market through platforms like AngelList, an online portal for raising early-stage capital. Additionally, the recent SEC passing of the Jobs Act allows startups to raise equity investment from non-accredited investors, those earning less than $200,000 per year. Though it will take some time for these changes to take effect, they have the potential to greatly increase the access to capital for startups.
Tulsa should work to have establish programs whose mission is to partner entrepreneurs with the appropriate funding be it from venture capital, angel investors or equity crowdfunding. VentureWell recently received a grant from Kansas City based Kauffman Foundation for their Accelerating Startup Partnership and Investment Readiness (ASPIRE) program which “supports the development of hardware innovations and the ventures that bring those products to market.” Programs like this that focus not only on the development of the product, but also the funding of the development, would fill an important gap that exists in our entrepreneurial ecosystem today.
The 2014 State of Entrepreneurship Report recommended that in 2015 Tulsa should “train entrepreneurs and investors to reduce the misalignment in the financing.” Unfortunately this year not much if any progress was made towards achieving this goal as we still see a large disconnect between entrepreneur and investor. Educating both parties about start-up investment will remain a goal for 2016.
Access to Markets
As noted earlier in the report, our state and city are situated geographically in such a way that makes them ideal hubs for the movement of goods. Despite this logistical benefit, very few resources or services exist to help local entrepreneurs leverage this position in accessing markets. Many organizations may hypothetically share what one should do in order to most effectively or efficiently access the market, but in short supply are those that help put that into action. Beyond the Global Business Services team maintained by the Oklahoma Department of Commerce that connects Oklahoma entrepreneurs to the international markets, no other organization exists with the mission of assisting entrepreneurs in accessing their customer base. These facts are consistent with the information reviewed in the 2014 Entrepreneurial Landscape report; consequently we conclude that no progress has been made in the last year.
Tulsa has the opportunity to address this gap. Existing Tulsa businesses should look to the newer, up and coming companies to see if their products and services can meet the needs of what the existing businesses are currently outsourcing to other cities and states. Increasing these local business to business transactions will keep money in Tulsa which in turn strengthens and diversifies our economy. Awareness and education for the existing businesses is the first step to achieving this goal. Organizations actively supporting entrepreneurs need to work together to identify appropriate partnerships, promote the opportunity and facilitate next steps.
Research and Development
Research and development spurs innovation, and if the products and technology invented can be commercialized, research and development translates into high quality jobs in Oklahoma. There are several organizations committed to research and development. Oklahoma Innovation Institute cornerstone program, Tulsa Research Partners, aims to catalyze multidisciplinary collaborations in strategic areas of research for the region focusing upon information security, advanced materials, aerospace, telecommunications, bio-life, information technology and alternative energy sciences. Tulsa Research Partners identifies opportunities for collaborative research and development, funding, grant writing and the transition of scientific research and technologies into commercially viable products and solutions. Tulsa Research Partners also hosts an annual Tulsa Citywide Research Day open to students and faculty from around the Tulsa area and includes a poster contest open to K-12 students and speakers who have information to contribute to the year’s topic.
Oklahoma State University is doing great work utilizing the strength of Oklahoma’s manufacturing industry to increase commercialization of viable technology. The Oklahoma State University New Product Development Center (NPDC) links innovative ideas and capabilities of Oklahoma’s small-and medium-sized manufacturers with the knowledge and technical expertise of the land grant university faculty, staff and students. This collaboration allows for the development and commercialization of economically competitive new products and improves manufacturing practices that strengthen economies, create new and enhanced jobs, improve capital investment and increase tax base. For Oklahoma-based Cookshack, the work of the NPDC resulted in the creation of three new positions and projected revenues of $500,000 in the company’s first year.
For Oklahoma-based Cookshack, the work of the NPDC resulted in the creation of three new positions and projected revenues of $500,000 in the company’s first year.
OSU’s Center for Health Systems Innovation (CHSI) utilizes the OSU Spears School of Business and the OSU Center for Health Sciences to focus on both business and clinical innovations to improve healthcare delivery and information systems, another industry of increasing importance in Oklahoma. By combining the assets of both the Spears School of Business and the Center for Health Sciences, the CHSI can bring a complete continuum of innovation to Oklahoma as well as the region, nation, and world markets by moving an idea from speculation through testing, implementation and adoption.
It is encouraging to see the amount of collaboration within a variety of industries, departments and educational institutions around research and development to encourage innovation in Oklahoma. Tulsa should harness the energy and collaboration present in research and development phase to standardize the commercialization process across higher education institutions in Oklahoma. We should be proud of the incredible talent and innovation that exists within the research departments at the University of Tulsa, the University of Oklahoma and Oklahoma State University, but we need to work harder to get the ideas into the market. In 2016, LTFF will research technology commercialization programs across the nation and attempt to work with higher education and support programs like OII, CCEW and i2e to standardize technology commercialization across the state.
The city of Tulsa website states: “Tulsa was built on entrepreneurs and small business owners. Tulsa continues the trend today with small businesses providing more than 55,000 primary jobs and an estimated payroll of $1.4 billion annually to the Tulsa MSA.”. Although the City of Tulsa clearly recognizes the importance of entrepreneurship in our city, they offer little assistance. Sadly, only three resources are listed on the City of Tulsa website for entrepreneurs, and all three links (Entrepreneur’s Guide, Sourcelink, and Small Business Center) are expired or invalid.
When Mayor Dewey Bartlett issued an executive order consolidating several economic development departments under the Mayor’s office in March 2014, he also removed funding from the Economic Development Commission (EDC). The EDC is an 11-member volunteer city board made up of mayoral appointees from Tulsa’s business community. According to the City of Tulsa website, EDC areas of focus include downtown and north Tulsa development, entrepreneurship and small business. The EDC receives 38.4% of the hotel/motel tax which it allocated toward the Economic Development Strategic Plan, Global Entrepreneurship Week and The Tulsey awards (which celebrated Tulsa entrepreneurs). Currently, all economic development activity is consolidated in the newly formed Mayor’s Office of Economic Development and the funding from the EDC has been reallocated. Although the EDC still exists, they have not met since 2013. The entrepreneurship committee within the EDC has not been reinitiated. An effective and low cost way to improve entrepreneurial engagement within the City of Tulsa would be to facilitate a link between government and corporations that introduces out of town visitors, speakers, dignitaries to local entrepreneurs.
Although the City of Tulsa is light on policies or programs supporting entrepreneurs, the State of Oklahoma offers incentives and programs to support entrepreneurs. Oklahoma offers two tax incentives that are specifically tailored to lowering taxes paid by innovation driven entrepreneurs. The first program exempts royalties on new products manufactured in Oklahoma from income tax and the second encourages the development of business incubator space by making the income earned from rent and other operations tax free for ten years.
Oklahoma Center for the Advancement of Science and Technology (OCAST) is a state run agency that works with researchers, entrepreneurs and companies by helping fund their research, working through the proof-of-concept process and connecting them to investment capital and other researchers and resources to grow their ideas. When it was created in 1989, legislators believed OCAST might help ease future financial tough times via investments in research and technology. OCAST has been an overwhelming success: In its 27 years, the agency has helped to fund more than 2,500 science and research projects. Cumulative legislative allocations of $253 million have produced returns totaling $5.2 billion in private and federal investment, a ratio of 20-to-1. This history of success involves working with researchers, entrepreneurs and companies from job creation to improved quality of life to a more diversified economy, the impact of OCAST and the citizens and companies it serves are a testament to the strength of the state’s science and technology community. OCAST is only able to fund about half of the projects that it believes merit a kickstart. The agency’s budget for the current fiscal year is $16.8 million, which is down from a high of $24.5 million in 2008.
Cumulative legislative allocations of $253 million have produced returns totaling $5.2 billion in private and federal investment, a ratio of 20-to-1.
On the federal policy level, the Securities Exchange Commission (SEC) finally approved a long awaited change to the crowdfunding rules under Title III of the JOBS act this October. The change gives businesses seeking funding access to a much larger group of investors — but under certain conditions. Companies will be able to gather up to $1 million in crowdfunding cash per year without registering with the Securities and Exchange Commission.
Before the change, private companies could only seek money from “accredited investors,” defined as individuals who own more than $1 million in assets, excluding their primary residence, or have maintained an income of more than $200,000 for at least two years. Under the new rules, those with more modest wealth will be able to invest in startups, with limits. The SEC also specified that crowdfunding must go through an intermediary, either a broker-dealer or a registered funding portal.
Crowdfunding is an evolving method of raising capital that has been used to raise funds through the Internet for a variety of projects. The new crowdfunding rules will help startups, investments funds, and many more projects seeking financing for projects of less than $1 million dollars from a much larger segment of the population, including retirement accounts.
The changes in federal crowdfunding policy through the JOBS act combined with the decline in oil and gas prices make 2016 the perfect time to enact simple but effective changes to support entrepreneurs on a local and statewide level. Lobeck Taylor Family Foundation will develop a list of legislative priorities for 2016 and work with state and local government to make Tulsa and Oklahoma a more hospitable place for entrepreneurs. Cities like Buffalo, New York sense the opportunity for entrepreneurs and progressive governors like Governor Coumo have pledged 1 billion dollars in tax breaks, grants and other aid to help revitalize Buffalo’s struggling population trying to increase prosperity after losing many of the city’s industrial giants. Part of this 1 billion dollar commitment went to fund (along with private sector investment) 43North that promises businesses up to 1 million dollar investments for companies willing to stay in or relocate to Buffalo.
2015 was an exciting year for entrepreneurship in Tulsa. There is a palpable feeling in the community that something new and different is developing. We have seen great progress in the communication and collaboration on short term projects like Startup Weekend and longer term projects like Raw Space and 36°N. Additionally, startups and the startup community in Tulsa are seeing increased promotion of small business on a local and national level. Finally, we’re seeing some great, early steps towards educating and empowering a new generation of software developers.
But we still have work to do. The disconnect between investors and entrepreneurs will prevent true rapid growth. We need to eliminate the perception of an “in-crowd” and make everyone feel welcomed and have the opportunity to pursue authentic mentorship. Resource providers need to clearly demonstrate value to our entrepreneurs, collaborate to maximize the effectiveness of their programming and respond to feedback. If our programs duplicate value or fail to produce value, we need to evaluate and adapt, just as we would advise our entrepreneurs.
Achieving these goals will require collaboration, dedication and intentionality on our part. Additionally, no one organization can effectively undertake all of the goals set for 2016. We need the entire community to take ownership and get involved — both entrepreneurs and resource providers.
There are plenty of opportunities but no one person or group should do everything. Pick just one of the goals mentioned below and dedicate yourself in 2016 to making a tangible difference in that area. Many of these opportunities are waiting for your help: become a 1 Million Cups organizer, join the Cultivate918 steering committee, give a workshop in your area of expertise or sign up to mentor someone. None of these opportunities take much time but they make a big difference to you and to the community.
In 2014, the first State of Entrepreneurship report established clear goals to move the needle in Tulsa entrepreneurship and the community rallied behind those efforts. In 2015, entrepreneurs and community partners took measurable steps towards strengthening the entrepreneurial landscape. As we look to 2016, we hope to continue this momentum and make greater strides in making Tulsa and Oklahoma more hospitable for entrepreneurs by working with state and local governments, increasing local business to business transactions, educating investors and entrepreneurs on start up financing, launching a centralized calendar, creating a network of mentors and much more.