Innovate Mississippi

Pointe Innovation Magazine Fall 2014 Issue

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Creating a Domino Effect Mahew McLaughlin I think we have become too enchanted with headline-catching stories about the pre-revenue startup that is acquired for some obscene amount of money in what is clearly a human capital acquisition. ese tales are defined by being in the right place at the right time and are statistical anomalies. ey are the remotest of the remote. I am a firm believer in the domino effect – not to be confused with the United States foreign policy from the 1950s to the 1980s concerning the spread of communism – but that cascading, chain reaction and propagating consequence of cause and effect that occurs when a domino knocks down another domino that is one-and-a-half times its size. e domino effect, as advanced by University of Toronto professor Stephen Morris, demonstrates that starting with a domino that is merely 5mm in height and increasing the size by one-and-a-half times, a chain reaction can be created that knocks over a domino the size of the Empire State Building by the time it reaches the 29th domino. e metaphoric possibilities of the domino effect are limitless and arguably relevant in Malcolm Gladwell's book, "Tipping Point." Gladwell believes that certain events or occurrences contain three characteristics: contagiousness, lile causes can have big effects (the domino effect) and that change happens not gradually, but at one dramatic moment. "Tipping Point" has limitless application, but I want to position two theories in the context of startup needs in Mississippi. In my opinion, there are two significant gaps in Mississippi's entrepreneurial ecosystem. First, we continue to struggle with the lack of at-risk capital. Second, we need a beer organized and more engaged network of mentors, both within the state and outside, with close ties to Mississippi and who are otherwise invested here. What some states have done to address these issues is to create, incentivize or assist in the formation of accelerator programs. ese programs offer a group of companies an initial investment of $10,000 to $20,000 that are then put through a rigorous 90-day mentorship program that, in theory, increases the likelihood that a company will gain traction and get revenue. At the end of the 90-day program, the companies are given an opportunity to present to investors for the next phase of transition, point A to point B capital. Y Combinator in Silicon Valley is one of the oldest and most renowned accelerator programs. Formed in 2005, it has since funded more than 700 startups that have a combined value of nearly $20 billion. The Y Combinator model has been tweaked, modified and implemented all over the country in order to fit specific geographic- and demographic based needs. Some of these accelerator programs will receive more than 10,000 applications for 10 spots. e net effect is that, if a founder does not get accepted into an accelerator program in Austin, Texas, he or she might apply and get accepted into one in Nashville, Tennessee. In this regard, these accelerator programs can be used by states and cities as talent acquisition tools. An accelerator program in Mississippi could potentially address our lack of at-risk capital and institutionally cause us to beer organize our mentor network. Fundamentally, our startups need greater access to at-risk early-stage capital and subject matter

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