A new report released Tuesday (Oct. 26) by Bentonville think tank Heartland Forward analyzes the entrepreneurial ecosystems of each state.
It is not surprising that the coastal states win while the heartland lags.
According to the research, only three heartland states are in the top 25 of a new state entrepreneurial index. California and New York take the top spots on the list, but what is clear is that there are opportunities for growth and investment among heartland states.
Researchers combined several metrics to create the index, including the percent of the private sector employed and the percent of workers with a bachelor’s degree or more in companies five years old or younger in each state.
Several recommendations are outlined in the report to encourage entrepreneurial growth, including investing in high-speed internet access, funding entrepreneurial support organizations and teaching entrepreneurial thinking in K-12 schools.
“Our country was built on entrepreneurship, and it’s absolutely essential we support our local and small business owners as we aim toward economic recovery from the COVID-19 pandemic. However, currently many of our heartland states lag behind the coasts in creating environments that are conducive to entrepreneurship,” Ross DeVol, president and CEO of Heartland Forward, said in a statement. “That’s why Heartland Forward prepared this report with recommendations of policy initiatives states can enact to spur entrepreneurship and position their local economies for diverse, equitable growth.
“With the right investment and approach, the heartland can be home to future generations of entrepreneurs as they fulfill their American dreams.”
The top states in the heartland are Texas at No. 14, Illinois at No. 20 and Minnesota at No. 25.
Arkansas ranks No. 46, and heartland states occupy 16 of the bottom 20 positions, indicating the need to change policies at the state level to create a conducive environment for entrepreneurship.
“Lawmakers are typically focused on large corporations or small mom and pops, but high growth companies — young firms, are technically neither one nor the other. Rather, they are hopefully on their way to becoming the next Fortune 500,” Bobby Franklin, president and CEO of the National Venture Capital Association and heartland native, said in a statement. “Our job at the National Venture Capital Association is to help policymakers understand the entrepreneurial ecosystem. As shared in Heartland Forward’s report, this pipeline of companies is very important to our economy as they drive innovation that brings services and technology to market, and undoubtedly, the heartland needs more support in making this happen for entrepreneurs and the region they call home.”
A Heartland Forward spokeswoman said the report would be biennial, and in the late winter/early spring, a version that focuses on metros will be released.
In addition to the report, Heartland Forward economists designed an interactive calculator, found here, allowing users to see the expected shift in ranking based on changes to risk capital, internet access and educational attainment.
Launched in 2019, Heartland Forward is the first U.S. think tank focused exclusively on the economic situation of the country’s heartland region. It is spearheaded by members of the Walton family and led by DeVol, a former Walton Fellow and Milken Institute chief research officer.