States, This Is a Startup Ecosystem Model That Works

June 20, 2026

I’m writing today, thinking not only is a Saturday a terrible day to post, but ‘what am I thinking, tomorrow is Father’s Day, no one is online!?‘ But I’m fixated on getting this published because I’ve now scoped it with a half dozen states throughout the United States, and every conversation has ended with, “Why is no one suggesting this??” So, let me chalk this up as a bit of a Father’s Day gift, that as we get this right for founders, we’ll see a few more startups born.

Some context, after two decades of “innovation economy” investment, most states outside a handful of coastal markets still struggle to retain venture-scale companies, attract serious capital, or develop the mentor density that experienced founders need. So, what, exactly, has all that public money been doing?

Funding activity rather than outcomes, mostly. The gap between those two things is the entire game. Every state thinks it has a startup problem; most of them have a design problem, and there is a meaningful difference between those two diagnoses.

“We need more startups” is not a diagnosis. It’s a press release. It’s an easy consequence of growth. In the same breath that we can celebrate more venture capital, because there are more startups, when the reason is because we simply have more, we’re celebrating volume, not quality.

If you believe the challenge is a shortage of startups, your solution is more accelerators, more pitch competitions, more ribbon-cuttings in front of co-working spaces that will, within three years, quietly become real estate plays. If you understand the challenge is structural, that the scaffolding beneath the ecosystem is absent or incompatible with how startups actually work, you can start building something that addresses what’s actually broken.

So let’s be honest about what’s broken.

The silo problem is the one every ecosystem builder will acknowledge in private; too many confront it publicly, and they need to. Across city analyses from Baltimore to Iowa, too many organizations operate their own mentor pools, their own demo days, their own investor networks, their own CRMs, without sharing data or pipelines. The ecosystem, as such, is organized to benefit the organizations within it rather than the founders passing through it.

Not surprisingly, most civic funding actually like it that way, because celebration the local support of a local program makes headlines people can be proud of; nevermind if it actually works, that’s an afterthought.

The missing middle problem (evident in capital but actually not just about capital) is the gap that kills more scalable companies than any other single factor. In city after city, the pattern is consistent: reasonable support for very early-stage founders (grants, incubators, seed angels), some support for established operating businesses (chambers, SBDCs), and almost nothing in between for the company that has found product-market fit, is generating early revenue, and needs Series A capital plus operational expertise to scale.

It isn’t a coincidence; it’s a structural outcome of designing ecosystems around early-stage programming resulting in great ideas funded but lacking the understanding of scale to substantiate more investment. Without the underlying capital architecture to carry companies forward, few survive.

Again, cities get away with disregarding it because they can simply blame inexperienced founders or claim the failures are bad ideas. No, the reality is that we’re not enabling meaningful ideas and capable founders to compete and grow. The missing middle isn’t the lack of capital; it’s the lack of what’s required in the middle stages to justify the capital. The lack of the capital is the signal.

The university tech transfer problem is the most predictable challenge. In every city I’m engaged, I’ll ask about the University’s commercialization and entrepreneurship work; I’ll at least get a chuckle... easily half will tell me it isn’t working. And yet, this is the one most regions are least willing to confront. Most universities behave like medieval guilds guarding trade secrets behind toll booths.

Professors are inventors, not founders; that’s a functional reality the tech transfer world needs to stop pretending away with entrepreneurship centers. The IP sits on shelves. The commercialization paths are opaque. The incentives point toward licensing revenue and grant capture, not founder success. The OECD has been blunt about the fact that IP ownership is becoming less correlated with where value is ultimately created, and yet most regional universities still manage their innovation assets as if the year were 1985.

Why isn’t it being confronted? Because no local leader wants to criticize the local university; particularly when they don’t understand the work, what’s wrong, or how to fix it.

The corporate engagement problem is the one nobody names because corporate sponsors pay for the events (sometimes. Fine, okay... barely). What large employers actually provide, in most regional ecosystems, is a logo on a banner and a speaker at a demo day who spent thirty years in corporate finance and has never once made a payroll decision with three weeks of runway.

So, add to our list that Universities produce research without commercialization pathways, governments offer incentives without deal flow, and investors wait until traction exists, long after the region has lost half its would-be founders, that companies say they’re innovative and supportive, but come on...

The experienced mentor scarcity problem is the one that compounds all the others. Regions point to their business advisor networks, their university entrepreneurship centers, their corporate mentorship programs, and claim they have this covered. They don’t. A mentor who has only worked in operating companies defaults to corporate-scale advice that startups cannot implement and should not try. The relevant experience is experience working inside startups, making decisions under resource constraints, navigating the specific psychological and operational challenges that distinguish an early-stage venture from every other kind of organization.

And look, let’s be honest about this one instead of my deliberate criticism; yes, most cities have some great mentors. What you don’t have, what you can’t have, are enough specialists experienced with everything being done. This isn’t a city criticism, this is an observation of the reality that you can’t accomplish this locally.

None of these are solved by another accelerator cohort, another pitch competition, or another delegation trip to Austin. That last one deserves some direct commentary so let’s go there next...

The most damaging idea in modern innovation policy is not that Silicon Valley succeeded; it clearly did, spectacularly, for reasons worth understanding carefully. The damaging idea is that its success can be reproduced through imitation rather than through the conditions that made it inevitable.

That belief persists across decades of visible failure in cities, states, and countries worldwide, not because the evidence supports it, but because it offers a convenient explanation for why outcomes haven’t materialized. In the book, Startup Ecosystems, I’ve detailed this as the intellectual equivalent of cargo cult thinking; you’ve observed the visible artifacts of a successful ecosystem, reproduced them in your market, and are now baffled that the cargo planes aren’t landing.

What cannot be manufactured or imported:

The accelerator that works in Palo Alto frequently doesn’t work in Peoria, not because Peoria lacks talented founders, but because the conditions that make the accelerator model effective are absent. What a region needs to study about successful ecosystems is the underlying conditions, not the surface-level programming. Borrow principles; never copy implementations.

But the answer to “don’t replicate Silicon Valley” is not “do what we’ve always been doing,” because what’s being done isn’t working either; the silos haven’t closed, the missing middle hasn’t been bridged, the university tech transfer offices haven’t opened up, and the mentor networks haven’t deepened. The capital hasn’t shown up in meaningful density. More of the same with slightly different branding is not a solution.

If you can’t win the game by copying the rules from somewhere else, and you can’t win by playing by the rules you’ve always used, you change the rules.

Step back from the goals and ask the honest first-principles question: how do you force everything to work together when it demonstrably doesn’t?

The answer isn’t another program. It’s architecture; specifically, the overarching institutional architecture that every functional ecosystem has sitting above the individual organizations and below the specific programming.

We know from trade associations and economic development zones that policy, funding, and resources allocated broadly throughout a state produce results. We also know, painfully, that those same mechanisms fail startups consistently. The reason isn’t that the model is wrong; it’s that the model gets captured by corporate technology company goals, workforce development priorities designed for operating businesses, and policy objectives shaped by the needs of companies that already exist.

The problem in most states is not a lack of innovation assets but a lack of structure, connection, and communication. “Tech” is not startup. “Business” is not startup. The existing associations, built to serve operating technology businesses, cannot effectively serve founders trying to discern and develop new business models because those two activities require entirely different things from policy, capital, infrastructure, and support.

They do work; just not for this. Which hopefully raises in you the question, “Can’t we design one that does?”

Right now, some of you are thinking, “we have something like that.”

You’re thinking of the Governor’s Innovation Advisory Council, or the State Technology Office, or maybe the thing the biggest local accelerator runs when it wants to feel official. That is not what this is.

What’s needed is a statewide, bipartisan, formal nonprofit association that:

The WTIA in Washington state is one of very few that I’ve found that is a close analog. Former WTIA CEO Michael Schutzler, speaking to GeekWire on WTIA’s 40th anniversary, explained the critical pivot that made the difference:

In 2024, WTIA provided resources for startups in 19 counties, far beyond any single metro, and assisted over 250 startups with coaching, connections, and member resources. That geographic breadth is the point; most state startup programs orbit one or two major metros and pretend the rest of the state doesn’t exist.

The difference between what most states have and what’s being proposed here is specificity of charter. A generic technology or business association serves operating companies and calls it innovation. A startup innovation association is designed, from its founding documents forward, to serve the specific needs of the temporary ventures trying to discern and develop new business models; the Steve Blank definition of a startup, not the popular conflation of startup with any new small business.

A food truck is not a startup. A new law firm is not a startup. The semiconductor company in town isn’t applicable here because “tech” has nothing to do with this.

A Series A SaaS company changing banking and navigating its first enterprise sales cycles absolutely is, and that distinction determines every policy, program, and resource decision that follows.

The governance design is where most attempts at this fail, because they get captured by whoever shows up first with money or a title.

Dual entity structure. The association should be formed as two complementary organizations: a 501(c)(6) trade association for advocacy and industry representation, and a 501(c)(3) educational foundation to manage grants, research, and workforce development partnerships.

This dual structure is the mechanism by which the association can both lobby effectively for startup-friendly policy and receive philanthropic and public grant funding, which carry separate legal requirements. This foundation must provide both operational sustainability and policy credibility.

Board qualification. Every Board seat must be occupied by someone who has actually worked inside a startup or venture capital firm, not just “advised” businesses. This is the line that gets negotiated away in most states because large companies, government offices, and university administrators all want Board representation. Their participation is not unwelcome; except on a startup-focused Board, they need to bring startup-fluent representatives.

A VP of Innovation at a Fortune 500 who has never pushed to release despite known bugs and the lack of Q&A, is not equipped to govern a startup-focused institution. That’s not an insult; it’s a qualification.

Sector-specific Advisory Board. An innovation association cannot meaningfully serve “all technology,” because there isn’t a place in the world that does that effectively. The association must identify the sectors of genuine strength in the state and orient its advisory structure toward those sectors specifically.

For example, a region is strong in energy technology, aerospace and defense, agriculture, or data infrastructure. A state trying to build an advisory board for “tech broadly” ends up with a room full of people who are experts in nothing relevant to the actual founders in the ecosystem.

Paid professional staff. The consistent failure mode of these efforts is over-reliance on volunteers who burn out when the association extracts their expertise without sustaining it. The ecosystem builder burnout problem is well documented; the writer, event host, and connector who holds the informal network together is already doing this work unpaid in most cities. That has to change at the institutional level.

A minimum effective staff:

These aren’t part-time committee chairs; these are paid positions, because the work of connecting a state’s innovation economy requires the same professional commitment as any other serious institutional function.

The funding model is where the design either becomes a genuine ecosystem solution or collapses into another organization serving whoever pays the most.

Founders and advisors: free members. If the association charges founders to access what should be a foundational resource of their state’s innovation infrastructure, it has already failed. Founders are who the association exists to serve; charging them to be served is the equivalent of a city charging residents to call the fire department.

Investors: paid members. Angel investors and venture capitalists derive direct economic value from higher-quality deal flow, better-prepared founders, and more transparent information about what’s happening in the market. They should fund it. The association should also provide investor education, because angel and venture capital investing is not the same as business investing, and treating it as if it were produces the kind of risk-averse, debt-mentality angel groups that proliferate in most non-coastal markets. The Kauffman Foundation has documented this gap extensively; their research on access to capital consistently identifies the need to build critical market infrastructure well beyond simply moving dollars around.

Service providers: paid members. Law firms, accounting firms, recruiting firms, marketing agencies, and technology vendors all derive client revenue from the startup community. If they want to be promoted by, featured within, or referred through the association’s network, a civically supported organization, then participation and financial contribution are the price of entry.

Universities: mandatory affiliates. All publicly funded universities running commercialization or entrepreneurship programs must affiliate with the association through a capital allocation and provide full transparency to all IP available within their programs. This is the university tech transfer fix that everyone says they want and nobody has been willing to mandate. Professors are inventors, not founders, and the gap between research production and commercial development requires active bridging; not hoping it emerges organically from relationship-building between organizations with no structural incentive to share.

The enforcement mechanism. Any entity serving startups or founders within the state is obligated to participate if it wants to qualify for support from the state or cities. No accelerator, no startup law firm, no innovation hub, no specific startup seeking public or state support can be featured, promoted, or directly supported by the association without participation. Organizations that benefit from public ecosystem investment should contribute to the shared infrastructure that makes their success possible.

This is the piece that separates the model from every other association proposal you’ve encountered, because what makes an association for startups genuinely different isn’t only the governance and membership structure. It’s what the association provides beneath the programming level.

Programs sit between the association and the founders: accelerators, pitch training, mentorship sessions, cohort experiences. Those need to be developed locally to be meaningful. A program that works in Oklahoma City for energy technology startups is not the same program that works in Tulsa for aerospace companies or in Arkansas for AgTech founders. What works in Silicon Valley or Austin isn’t replicable there.

Beneath the programs, there is infrastructure that every founder and every investor in every region of the state needs regardless of sector, stage, or city.

In the 21st-century sense that economic development professionals have been slowly accepting, infrastructure is not only roads and bridges; it is the foundational capacity that makes economic activity possible. In a startup ecosystem, three forms of it are currently absent or badly inadequate in virtually every state.

One of the most destructive patterns in regional ecosystems is the for-profit accelerator or innovation hub that positions itself as the center of everything, requires payment to access its network, and excludes organizations it considers competitive. The result:

The fix is a genuine CRM, not a startup directory website that pretends to list everyone and provides janky promotional data, but a real platform properly developed on Salesforce or HubSpot, maintained by the association, and available to all members. It should document the angels, the VCs, the advisors, the mentors, the relevant service providers, and the startups. Everyone working on innovation in the state knows who matters because it’s organized and maintained by an entity with no financial interest in keeping certain people off the list.

The Agile Strategy Lab at the University of North Alabama put together some research on entrepreneurial ecosystem building which has identified cross-ecosystem fragmentation as the central barrier to spread:

A shared CRM maintained by an unbiased association breaks that pattern structurally and breaks the for-profit silo model at the same time.

An AI system built out for use by association members, trained on the full suite of economic development, policy, regulatory, service provider, investor, and startup-oriented information relevant to that state, provides founders with on-demand access to the kind of guidance that currently requires knowing the right person, paying for a consultation, or being lucky enough to be in the right accelerator cohort.

Yes, there are SaaS products and apps providing some version of this for well-funded companies. But if the association’s mission is to serve founders specifically, this is infrastructure that should be available as a member service rather than a subscription. The state provides roads regardless of ability to pay for private transport; AI-powered ecosystem intelligence should work the same way for the founders supposedly driving economic growth.

Here’s where diplomacy runs out; after doing this analysis across enough cities, the pattern is unmistakable: most regional ecosystems are genuinely bad at community building, newsletters, social media, and earned media. Not somewhat lacking; genuinely bad.

A handful of individuals in any given ecosystem are very good at this, and they’re doing it unpaid, without institutional support, and heading toward burnout because the ecosystem extracts their social capital without funding it. As detailed in analyses of what ecosystem building actually requires, the event host, social group admin, and connector doing the work without support is the ecosystem builder.

That has to change.

A state innovation association with a paid, experienced Marketing lead and Communications director can build the social infrastructure such as the groups, the newsletters, the event community, and the earned media relationships, that requires experience to understand how to do proprly. This matters not just for founders talking to each other, but because compelling social and media infrastructure is how a region reaches the investors, advisors, and talent outside its borders who need to know what’s happening there.

You cannot be nationally relevant as an innovation economy with a newsletter that reaches 400 people and a social account updated twice a month by a volunteer.

These three forms of infrastructure, CRM, AI, and social-and-communication, are interdependent. The association doesn’t work without the infrastructure, and the infrastructure doesn’t become compelling without the association’s governance making participation a condition of ecosystem support. They are available freely only to the organizations that contribute as they should: paid membership for service providers, companies, and investors; participation for founders and advisors; data transparency for and from everyone. Organizations that refuse to contribute don’t get listed, don’t get promoted, and don’t qualify for state support.

Got it? Now give it to your City and State Representatives

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Every ecosystem organization currently counts; they count events attended, mentors connected, founders served, workshops delivered. They do not, as if a rule, report on:

The design of accountability within the ecosystem makes learning optional and self-criticism costly. Activity provides institutional cover in ways that value creation does not, and organizations optimize accordingly.

The state innovation association should publish a quarterly or biannual report on the performance of startup development organizations and investors, based on outcomes rather than volume or events. Transparency of performance data is a contingency of association membership, benefits, and any public funding from the state or cities.

We don’t fund roads based on how many planning meetings the transportation department held; we fund them based on miles built and traffic moved. The startup ecosystem deserves at least the same rigor.

Pull back to the problems from the beginning and check each one against this model.

Silos are addressed through mandatory participation. When being listed in the shared CRM, receiving association promotion, and qualifying for state support all require contributing data and cooperation to the shared infrastructure, the incentive to silo your mentor pool or hide your investor relationships disappears. You can still run your accelerator with your own programming and culture; you just can’t keep the rest of the ecosystem in the dark about what you’re doing.

The missing middle is addressed because of mentor access and social/communication infrastructure as well as the investor education and the VC Liaison function. When the association is specifically charged with training angel investors in how startup investing actually differs from business investing, and maintaining a transparent CRM that shows where every company in the state sits relative to its funding stage, the information asymmetry that produces the missing middle begins to close. When you fix the fact that founders aren’t learning how to scale and can’t find channels in which to do so with support, you close the growth gap. Access to capital research identifies building critical market infrastructure as essential to expanding capital access; the association is that infrastructure.

University tech transfer is addressed through the affiliation requirement. When publicly funded universities must affiliate with the association and provide IP transparency as a condition of that affiliation, the incentive structure for commercialization changes. Founders can see what’s available. Advisors can match research to market opportunities. The association’s AI infrastructure can surface relevant IP when founders ask for it. This doesn’t solve the cultural resistance inside universities overnight, but it creates the institutional conditions for the connection to happen; which is where every serious university-startup engagement effort must begin.

Corporate engagement is addressed through the Board qualification requirement and the membership model. Large employers participate through Board seats occupied by people with actual startup experience; their financial contribution funds infrastructure that attracts better founders, which gives those employers better talent pipelines, acquisition targets, and innovation partners. The value exchange is explicit rather than assumed.

Mentor scarcity is addressed through the CRM, the AI, and the VC and SDO Liaison functions, which together create systematic connection between experienced operators and founders that currently depends entirely on who happens to know whom. When every advisor is documented in a shared CRM with their sector experience and stage expertise, and founders can query an AI system to surface the right match for their specific challenge, the brilliant mentor who would have been invisible because they weren’t part of any particular accelerator’s informal network becomes findable.

The result, fully implemented, is an ecosystem operating as a coherent system rather than competing nodes, with legitimate policy influence, measurable outcomes, and the kind of national profile that attracts external capital and talent. The gap between what states have and what they need is not more organizations; it’s connective infrastructure between the organizations that already exist.

There isn’t a state in the country that couldn’t benefit from this model. The problems it addresses aren’t regional quirks; they’re structural patterns that appear in Baltimore and Iowa and Las Vegas and Oklahoma and everywhere else that has invested in startup programming without investing in startup infrastructure.

The hidden architecture of startup cities is not accidental in the places that work; it was designed, funded, and maintained. What this model requires is experience operating across all of it simultaneously: economic development policy, startup ecosystem dynamics, nonprofit governance, venture capital, and the specific political navigation required to build something bipartisan and durable in a state capital environment. Those things rarely exist inside the organizations trying to build ecosystems, which is precisely why this has remained unbuilt for so long.

This isn’t a framework you hand to a committee and check back on in six months. Building this requires someone who has already done it.