Tuesday, September 21, 2010

High Growth, Stage II Companies, Part II

In the previous blog, we looked at the importance of high growth, Stage II companies as the engines of job creation.

Stage II companies are among the most important in the economy. They are also among the most ignored. They are critical because they are powerhouses when it comes to job creation. Second stage companies are privately held enterprises that have 10 to 99 employees, annual revenues ranging from $1 million to $50 million, and the intent and capacity for further growth.

According to research by youreconomy.org, in 1993-2007, second stage companies represented only 11.8 percent of all resident companies in the United States, but generated 34 percent of positive job growth. Second stagers also attract money. Venture funds and angel investors follow success. The more successful high growth companies in any given region, the more attractive the region will be to investors at all levels. They also make the region far more attractive to other companies, adding to a regional business attraction strategy by building up the region's existing business base.

Owensboro has built up an infrastructure to provide support for business startups through the eMerging Ventures program and provides services for existing businesses, so support for Stage II companies is a natural outgrowth of the two.

According to data on youreconomy.org, the jobs in the Owensboro region created by Stage II companies has lagged behind the national pace since 2005 (0% of jobs in Daviess County compared to 24% nationally). This is a critical reason why the EDC is putting so much emphasis on support for Stage II companies through a program called "economic gardening."

NEXT: What does a Stage II Company program look like? We will review the successful "economic gardening" programs.

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