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MassTech annual innovation report focused on special analysis of entrepreneurial ecosystems, 10 “Leading Technology States”

June 18, 2020
By: Colin Edwards

The Massachusetts Technology Collaborative (MassTech) — the state agency responsible for strengthening the commonwealth’s position as a leading hub for innovation and entrepreneurship — recently released the 2019 edition of its annual report, The Index of the Massachusetts Innovation Economy, which includes an updated list of the 10 leading technology states  and a detailed special analysis on entrepreneurial ecosystems. As a globally recognized center of science- and technology-based innovation, communities across the U.S. can learn from Massachusetts’ successes as well as from the challenges the state faces in further strengthening its entrepreneurship ecosystem.

MassTech’s innovation index is based on three primary pillars: (1) the strength of education systems, including K-12 and higher education; (2) the quality of regional research and development (R&D); and (3) the abundance of and access to capital. The report focuses on a detailed evaluation of Massachusetts’ performance in the elements that compose these three pillars of success as compared to the nine other leading states — California, Connecticut, Illinois, Minnesota, New York, North Carolina, Ohio, Pennsylvania, and Texas. While the report provides a thorough comparative economic analysis among the leading states — using metrics that will be familiar to economic developers and state innovation agencies — it also includes a unique, yet vital, element that is often overlooked: an analysis of the importance of supporting entrepreneurial ecosystems.

Entrepreneurs rely heavily on the resources in their environments such as mentor support, educational opportunities, flexible workspace, professional networking opportunities, and seed stage capital. The entrepreneurship ecosystem is then composed of entrepreneurs, mentors, pitch contests, angel and venture investors, collaborative workspaces (coworking, incubators, accelerators, etc.), college and university entrepreneurship programs, and federal, state, and local government small business development programs. While the following takeaways from the MassTech report are focused on Massachusetts’ performance, the lessons are widely applicable to any organization — from any state — that aims to nurture and grow its entrepreneurial ecosystems.


Perceptions matter. By building the perceptions of communities outside the traditionally accepted hubs of innovation as valuable locations that are equally supportive of entrepreneurs and innovation, these areas can attract unique and diverse companies that otherwise may simply remain ideas.

Regional organization is important. While regions may contain all the ingredients for supportive and successful entrepreneurship ecosystems, ensuring that all the pieces and players are properly interconnected is essential to developing a truly productive innovation economy. High regional organization also increases efficiency in providing entrepreneurial support services and streamlines the networking and resource utilization efforts of entrepreneurs.

Collaboration creates valuable outcomes, but needs to be incentivized. Although inter-organization collaboration is widely accepted as a highly desirable characteristic of an entrepreneurship ecosystem, there is stiff competition among entrepreneur support organizations (ESOs) — many of which are small nonprofits — for limited funding and resources. Providing specific funding for collaboration efforts among ESOs, venture capital, and government organizations is required to encourage this activity in the face of such resource scarcity.

Long term commitment is needed to sustain ecosystems in regions. While volatility and turbulence are inherent forces in the world of high-growth innovation entrepreneurship, the same degree of volatility in the availability and reliability of ecosystem support can drive innovators away regions. This sort of stability in entrepreneurial support services and programs are most commonly seen at foundations and universities, but should be matched by efforts from other sectors. Similarly, a broader definition of financial stability is needed. Simply put, funding ESOs strictly through user fees, allocations from strained state budgets, and a patchwork of national and local grant-makers is untenable. More research on the broad, intrinsic value of ESOs is needed while a broadly applicable model for sustainably funding these organizations is yet to emerge.

The report also touches on other lessons regarding the value of programming, the need for diverse options in physical work space, and the impact of entrepreneurial mentorship. The special analysis closes with the ever-important message that “As Entrepreneurs Go – So Goes the Local Economy.” This message rings true and loud as the world emerges from the “Great Lockdown.” The resilience of the innovation economy stands to serve as a beacon of hope and a guiding light for the post-COVID, post-recession recovery that lies ahead. Regions that nurture and grow their entrepreneurial ecosystems will not only quicken their emergence from this current economic downturn, but also fortify their communities against the uncertainties of the future.

innovation index, entrepreneurship