gazelles, gazelle companies

By Rieva Lesonsky

Do you think your business startup has the potential to be the next Facebook, Twitter or Instagram? It might stand a better chance if it’s located in one of the regions that the SBA’s Office of Advocacy has pinpointed as having strong support networks for high-growth companies, or “gazelles.”

The Geography of Employment Growth: The Support Networks for Gazelle IPOs examined the factors in a geographic region that help fast-growing companies, or gazelles, flourish. Remember the saying “It takes a village”? Well, according to the Small Business Administration, turns out it takes a village to create gazelles. Fast-growing business startups flourish in regions that have strong entrepreneurial support networks (ESNs), including skilled labor, access to capital, and plenty of customers and suppliers.

Where are these ESNs? According to the Small Business Administration, ESNs with the strength needed to build business startups into IPO-worthy businesses are predominantly found in California, Massachusetts, Florida, New York and Texas. Although California accounts for approximately 12 percent of the U.S. population, it produces nearly 32 percent of all of new IPOs; Massachusetts, with 2 percent of the population and 7 percent of the IPOs, has the greatest concentration of IPOs per capita.

One city stood out as an entrepreneurial hotspot despite the absence of an entrepreneurial support network for business startups: Minneapolis-St. Paul, which is a hotbed for medical instrument companies and home to 10 percent of the IPOs in that industry.

One reason ESNs matter for small businesses, the Small Business Administration notes, is that small business startups are more likely than big ones to rely on local service providers. How can your region encourage more gazelles? The Small Business Administration says partnerships between universities and high-growth companies, plus a focus on creating ESNs (rather than financial incentives such as tax breaks to attract business), will help encourage high-growth business startups and IPOs.