Right up front, I just want to point out:  I would LOVE to see a comment thread form on this post.  I don’t think anyone person can create this report card, so I would love to see your thoughts.

Yesterday I spoke about the debate around the NYC Startup Scene (Link to the Post).  I noted that there are a lot of great things that can be learned from that debate.  First, there is Chris Dixon’s point about what a startup community outside Silicon Valley should be trying to create.  Chris points out that communities outside the Valley should be attempting to create something LIKE Silicon Valley, not something to compete with it.  The second thing we learned in yesterdays post was a list of characteristics that make NYC, Silicon Valley or (by extension), anywhere a good startup ecosystem.

Today I want to extend both of those to create a “report card” for a startup ecosystem.  The first part of building a report card is to determining what to grade.  This, I believe, is based on the list of things identified in yesterday’s post (the bolded items).   As I was copying over the bolded items, I realized that we had a major problem for building a report card, importance.  For example, I had “Local and Locally Cooperative VC Firms” and “Locations Where People Can Congregate”.  Clearly, theses two items are not equally important to a startup ecosystem.

The way I’d like to solve this problem is by dividing the characteristics in to categories and then weighting the category’s importance.  As I looked through the characteristics, I divided them in to 5 categories; funding, talent, direct needs (infrastructure), environmental essentials, environmental factors.  For weighting, I started with the two biggies; funding and talent.  Those two together have looked at as 70% of the total grade.  It is either to hire talent and tell them to move (or work remotely) then it is to tell your VC that you’d prefer to stay put in a far away city, so I’m going to weight these 45% for funding and 25% for talent.  The remaining 30%, I propose we split up 15% environmental essentials, 10% direct needs and 5% environmental factors.

Funding – 45%

• Quality Angel Investors
• Quantity of Angel Investors
• Local and Locally Cooperative VC Firms

Talent – 25%

• Strategic Leaders with advice and connections
• Skill/Expertise of Talent
• Recruitability of Talent
• Quantity of Talent

Environmental Essentials – 15%

• Relationship Based Economy
• Community of Startups
• Outside Organization Focused on Startups
• Strong, Diverse University Environment
• An Environment that Inspires Individual Thought (avoiding a regional or national groupthink)

Direct Needs (Infrastructure) – 10%

• Startup Oriented Advertisers and Marketers
• Startup Oriented Legal Entities

Environmental Factors – 5%

• New Innovators
• Experienced Disruptors
• Great Place to Live
• Locations Where People can Congregate

So, in order to grade a city’s Startup Ecosystem we would start by evaluating each characteristic.  Each category would then get a “roll-up” grade for the category.  Each category’s grade would be multiplied by its weight and then summed with the other categories.  This would give you an overall score.

The only question remaining is, how are each of the categories scored?  For simplicity, I recommend a 4.0 scale for simplicity.  With the following rubric:

• A  (4 out of a possible 4) would be defined as something that is so good that there would be no reason to look in to another ecosystem for it.  For example if your “startup oriented legal entities” were an A, the startups in your ecosystem would be almost exclusively leveraging the services of lawyers in your area (obvious exceptions like family connections, etc..).  By definition if something is not a reason to leave your ecosystem, then it must be as good as anywhere else in the world (including the Valley).  This meets the original goal, building something LIKE the Valley.
• B (3 out of a possible 4) would be defined as something that is good enough that it is a reason for a startup to choose your ecosystem.  For example, if your “startup oriented legal entities” were a B, looking through the yellow pages and calling a couple attorneys would make a startup more likely to start in your ecosystem.
• C (2 out of a possible 4) would be defined as something that is an acceptable characteristic of your ecosystem.  For example, if your “startup oriented legal entities” were a C, a company that wants to start in your ecosystem would not feel pressure to leave because it couldn’t find an acceptable lawyer.
• D (1 out of a possible 4) would be defined as something that is possible to find in your ecosystem, but a company could clearly benefit from finding another ecosystem.  For example, if your “startup oriented legal entities” were a D, a startup that works with a lawyer in your ecosystem would be at a disadvantage because they are not as qualified as lawyers in other areas.
• F (0 out of a possible 4) would be defined as something that is completely nonexistent in your ecosystem.  For example, if your “startup oriented legal entities” were an F then almost every startup in your ecosystem would be seeking legal advice from outside the ecosystem.

So there you have it, a report card for a startup environment.  Over the next few weeks, I’m going to do a little research and will occasionally be offering an actual grade for Pittsburgh on some of these areas.  I didn’t include anything Pittsburgh in this post because I want the input not just of Burghers, but of anyone who has through through what makes a startup ecosystem what it is.  I would love to see a comment thread form on this post.  I don’t think anyone person can create this report card, so I would love to see your thoughts.