New State Models Emerging for Fostering Entrepreneurship

Almost all net job growth is generated by businesses started less than five years ago, according to the National Bureau of Economic Research. Governors recognize the importance of new businesses to generating economic growth, and they are leading a variety of efforts to foster entrepreneurship in their states.

Since the release of NGA’s 2019 report Entrepreneurship in States: Fostering a Startup-Friendly Economy, momentum has continued to grow around policies to make it easier to start and grow new businesses. Under Nevada Governor Joe Lombardo’s leadership, Nevada made history by becoming the first state to pass a “Right to Start” law in 2023. In Pennsylvania, Governor Josh Shapiro issued an executive order to transform economic development and establish the Pennsylvania Office of Transformation & Opportunity.

The NGA Center for Best Practices hosted a webinar, New State Models Emerging for Fostering Entrepreneurship, bringing together Governors’ economic development advisors from across the nation to hear updates about these two state approaches and to learn about a nationwide grassroots campaign to advocate entrepreneur-friendly policy.

Speakers included:

  • Victor Hwang, Founder, Right to Start 
  • Jason Grill, Chief Government Affairs Officer, Right to Start 
  • Steve D’Ettorre, Executive Deputy Secretary of Policy & Planning, Office of Governor Josh Shapiro
  • Karsten Heise, Director of Strategic Programs, Nevada Governor’s Office of Economic Development (GOED) 
  • Kyeema Peart, Director, Office of Entrepreneurship, Nevada GOED

“Right to Start” Champions Entrepreneur-Friendly Policies

Right to Start is a nonprofit, nonpartisan organization that works to expand entrepreneurial opportunity through grassroots mobilization and advocacy. Launched in 2020, Right to Start is now active in 28 states and Washington, D.C.

Its founder, Victor Hwang, shared statistics highlighting the economic benefits of entrepreneurship, as well as the barriers to getting a new business off the ground:

  • New businesses create virtually all job growth in an economy.
  • New businesses are leading indicators of GDP growth.
  • Every 1% increase in entrepreneurial activity in a state correlates with a 2% decline in poverty.
  • The rate of new business formation in America has fallen by nearly half over 40+ years.
  • 81% of entrepreneurs say that government favors big businesses over them. 69% say government doesn’t care about them.
  • It’s far more expensive to start a business in the U.S. than the U.K., China, Australia, Brazil, Canada, Sweden, India, South Korea, and France.
  • 62% of Americans have a dream business in mind. 41% would start it in 6 months if they could. But less than 2% actually do.

“The voices of everyday entrepreneurs are left out of America’s policymaking,” Hwang explained. “The people who are hustling the hardest have the least time and energy and money to be involved in the system, and to have their voices heard. So we have to do something to lift their voices up and make sure that everyday entrepreneurs actually get heard in American policymaking… Everyone has a right to have a level playing field when it comes to being able to be an entrepreneur to start and build an enterprise.”

Jason Grill, Right to Start’s chief government affairs officer, shared survey data demonstrating wide bipartisan support among voters for policies that make it easier to start and grow new businesses. “These are issues that unite politicians, and they unite citizens,” Grill stated. Grill outlined policy priorities Right to Start advocates in state legislatures across the nation as a package of reforms under a typical Right to Start Act. Establishing an Office of Entrepreneurship is one of the first steps Right to Start recommends. These bodies serve as a dedicated liaison for entrepreneurs, and coordinate policies to cut red tape, streamline government processes, expand access to government contracts and track data on entrepreneurship.

“They eat, sleep, and breathe entrepreneurship issues, and new and young company issues, in states,” Grill said of these offices. Grill highlighted several states that have approved aspects of Right to Start legislation on a bipartisan basis, noting that over 40 pieces of legislation have been introduced in 15 states, with more anticipated.

Grill summarized Right to Start policy recommendations, including:

  • 5% to Start: Dedicate a small percentage of current funding (5% of government contracts, workforce development funds and economic development funds) to new entrepreneurs and young businesses.
  • Zero barriers: Reduce or eliminate registration costs and fees for new businesses.
  • Reduce or eliminate occupational licensing burdens and permits for businesses.
  • Provide tax relief for young businesses in their crucial first five years.

Pennsylvania’s Office of Transformation and Opportunity Takes Off

Steve D’Ettorre, Executive Deputy Secretary of Policy & Planning in the Office of Pennsylvania Governor Josh Shapiro, briefed participants on his state’s progress in advancing entrepreneurship.

Upon taking office in 2023, Governor Shapiro issued an Executive Order creating the Office of Transformation and Opportunity. This office is designed as a “one-stop-shop” to “make government move at the speed of business.” The office is tasked with facilitating a number of goals and implementing economic development projects and programs, including:

  • Eliminate red tape.
  • Encourage out-of-state businesses to expand in the Commonwealth.
  • Expedite permit reviews and approval of key incentive programs, instead of forcing business to go to multiple agencies for permits, approvals, and funding.
  • Launch a PA SITES program to help more sites become “shovel ready” to attract and retain more businesses.
  • Fund the Main Street Matters program that will support entrepreneurs, small businesses, and commercial corridors.
  • Create and launch the Pennsylvania regional economic competitiveness challenge.

“The Shapiro Administration’s new economic development strategy in the lens of startups and entrepreneurs aims to increase the total number of startups in high growth industries by 1,100 over the next 10 years, which will bring our share of startups from 6.6% to 10% in these industries,” D’Ettorre explained. “This strategy will lead to more competitive and prosperous Pennsylvania, where innovators become entrepreneurs, and new discoveries enable our people and companies to succeed.”

Nevada’s Office of Entrepreneurship Identifies Opportunities

With bipartisan support, Nevada adopted a Right to Start law in July 2023, advancing one of Governor Lombardo’s top priorities. As Karsten Heise, Director of Strategic Programs in the Nevada Governor’s Office of Economic Development (GOED), stated, “Governor Lombardo was very clear in the State of the State address in January 2023, putting forward that Nevada should be the most entrepreneur-friendly state in the nation. So, passing this bill really fit the priorities of his incoming administration.”

Nevada’s Right to Start legislation, considered the first of its kind in the nation, established a dedicated Office of Entrepreneurship within GOED, led by Director Kyeema Peart. The purpose of the new office aligns with GOED’s goals under Governor Lombardo’s 3-year plan to diversify the state’s economy, positioning the Silver State “as electric, innovative and connected.”

Peart described how the Office of Entrepreneurship (OE) interacts with a variety of other programs and agencies, all designed to support economic growth. As in Pennsylvania, a primary focus is cutting red tape. Provisions of Governor Lombardo’s Executive Order, Peart said, “created the chance to dig a little deeper into those business licensing, occupational licensing, and other regulatory frameworks that stand in the way of business formation and growth.” Peart’s department is also focused on data collection to ensure the state is accurately capturing small business activity.

Statewide community engagement is integral to the OE’s 3-phase approach, which includes: community consultation, data assessment and a community deep dive. The approach is designed to ensure opportunities reach historically underserved communities, including African Americans, Hispanic Americans, veterans, women, tribal members, immigrants and senior citizens. “It was the desire of the legislature that we should ensure that all of these operators can take effect in communities that have been historically underserved,” Peart explained. “So we’re highlighting a review of some of those minority groups … and also expanding to those who might be able to take advantage of the resources and assets available, but may not know how to access them.”

OE’s efforts are designed to ensure that all specified stakeholder groups — entrepreneurs, investors, established businesses, government agencies, the university system – are “active and contributing players to a healthy Nevada entrepreneurial ecosystem,” Peart summarized.

Through the consultation process, rural and urban participants identified common issues to address at the community level for growing and sustaining new businesses:

  • More support from elected officials, senior champions and communities.
  • Less onerous government portals, licensing and fees.
  • More trackable information, education and resource sharing.
  • More infrastructure and community supports such as housing and child care.
  • More accessible small business grants and financing.

NGA is pleased to feature efforts from Governors Shapiro and Lombardo as models for supporting entrepreneurs. Please be in touch if your state or territory has best practices to share or interest in follow-on events and projects about entrepreneurship as an economic development strategy. Meanwhile, Right to Start reiterates that it looks forward to continuing to support state efforts in this area.

NGA contacts: Sally Rood, Jack Porter

Right to Start: Jason Grill, Victor Hwang