Innovation Index reveals record high startup creation

SSTI Note: Benchmarking innovation-driven entrepreneurship and the impacts of other science, technology and venture development activity in your state or region is more important than ever in the post-pandemic economy. Understanding the gains made prior to the onset of the coronavirus – and the inevitable setbacks resulting from its economic shocks – will be important for helping to build support and momentum for your initiatives going forward. The Illinois Innovation Index provides one useful model to approaching university entrepreneurship activity across institutions and geography.

For more than a decade, the Illinois Science & Technology Coalition has published the annual Illinois Innovation Index, tracking entrepreneurship and commercialization flowing from ten of the state’s public and private universities. This latest Index, released May 18, reported the largest volume yet of startup creation – 1,064 from 2014-2019, creating approximately 3,300 jobs. This marked the first time a five-year period has surpassed 1,000 startups for the Index.

As well as growing in sheer number, the startups created over the past five years raised the highest amount of funding recorded through the Index: $1.42 billion. Direct university funding to help startups seed ideas or bridge gaps in funding generated an investment ratio of 14:1 in private and other funds for each university dollar contributed to the startup’s success.

Of the 1,064 new startups, 164 arose out of technology transferred from university R&D activity, with biotech leading startup accounting for half of the new tech-related companies.  University entrepreneurship initiatives across the 10 institutions, particularly those initiatives targeting student entrepreneurs, are credited with a 97 percent growth in the number of non-tech transfer startups over the five years. The Index highlights examples of these initiatives throughout the document.

ISTC also uses the Index to identify areas of potential improvement or change in public policy; benchmarking for instance, Illinois’s collective university tech transfer metrics against other states’ performance. Additionally it found, while two-thirds of the startups that raised funding remain in Illinois, the majority of those that raised more than $5 million moved out of state.

Relocation out of state certainly weakens the local economic development outcomes of university entrepreneurship, but in some cases – anywhere in the country – it is necessary for the business’s long-term survival. Matthew Bragg, director of the Illinois Science & Technology Coalition addressed the issue saying it is a chance to understand the dynamics leading to the decision to move, and then build initiatives that improve the ecosystem.

Each year, Illinois universities produce nearly 25,000 new STEM graduates and conduct $2.5 billion in research activity, adding high-skilled talent into the workforce and creating innovations, according to the Index.

“Illinois’ university entrepreneurship centers have built a strong pipeline to the state’s larger ecosystem of entrepreneurship resources, including industry-specific accelerators and incubators,” Bragg said. “Facilitating these seamless handoffs between on-campus and off-campus resources has been critical for our state.”

Bragg maintains that it is vital to build support systems and resources that promote new venture creation, and also commented that in the current economy, “…we need our entrepreneurs more than ever.”

“[W]e’re already seeing many of our startups pivot to create new solutions to challenges brought on by the pandemic. These startups are undoubtedly a key component of our nation's response,” he said. “However, startups advancing non-Covid related technologies will also play a vital part in our nation's recovery. As such, these startups must be supported through new state and federal initiatives that recognize the important role of startups in our economy.”