Ecosystem builders are choosing community over capital

Technical.ly

15-05-2025

For organizations looking to support entrepreneurs, leaders in the space say it's time to stop obsessing over scale and the venture capital financing route.
Instead, focus on deep impact through trusted referral networks, sharing leadership and being creative about getting capital to those who need it, panelists at the 39th International Conference on Business Incubation (InBIA) said last month in Philadelphia. Growth — sustainable and manageable — will follow.
'I don't know that what [entrepreneurs] need is a single place they can go to get all the help they need,' Heidi Knoblauch, a professor at the University at Albany, SUNY, said at the event hosted by the International Business Innovation Association. 'What they need is key people in their lives who will help propel them.'
As federal funding for innovation becomes increasingly uncertain and living costs steadily rise, economic developers and entrepreneur support programs represented on the panel say they are pushed to reconsider how they work with their respective communities.
Build referral networks, not (just) one-stop shops
Many ecosystems are designed to have a single point of entry or a hub that can support every founder at every step of the way.
But panelists, including Knoblauch, pushed back against this 'one-stop shop' model – and instead advocated for a distributed network of place-based support, where relationships matter more than standardized forms.
A well-tended and trusted referral network, she said, is foundational to long-term partnership with, and within, communities of entrepreneurs. She also shared that entrepreneurs are likely to stop asking for help, and even quit, if they are referred to the wrong resource three times.
Other ecosystem participants will be the connective tissue, bringing it all together, David Ponraj, CEO and founder of Economic Impact Catalyst (EIC) said.
'Once the entrepreneur raises their hand, it's the ecosystem's job to get them to the right place,' he said.
In practice, that looks like using tools like EIC's network navigator to more effectively and efficiently provide referrals for entrepreneurs, Naila Jackson, program director at Network Navigator, said. But referrals are often seen as encroaching on the role of ESOs, so unsurprisingly, many local organizations found this new tool to be threatening.
'We are starting to see the difference and changes in making good referrals,' she said, 'and in good referrals, you build trust, and you are able to actually realize… the gaps that we have.'
When funding tensions arise, share the leadership.
Those who work in economic development or entrepreneurship support are familiar with the presence of 'silos' in our ecosystems.
Baltimore readers will recognize the term 'Smalltimore' — the notion that any two strangers in the city are likely separated by a single degree of connection or two. And yet, for all its intimacy, Baltimore remains a city of siloes. Major breakthroughs, bold experiments and generational work unfold quietly in different corners and labs of the city, often unheard by those who might benefit the most from knowing.
The instinctual response to this fragmentation is to 'break down these siloes' — gathering builders, funders, creatives and caretakers across communities and sectors, and seek for consensus on strategy and direction, according to Tarsha Hearns, formerly the vice president of entrepreneurship at Small Business Majority.
This coalition-building is helpful and can bring about real change, but when one organization gets the funding to distribute to other organizations, tensions inevitably arise.
The increased funding and services are great for the community, but they bring a new power dynamic into the fold, which can undermine trust and the relational capital. Informal leaders may be excluded and grassroots relationships can become transactional, while ecosystem players may feel pressure to take sides and join funder-driven agendas rather than community-rooted priorities.
'The two currencies at the table are funding and egos,' Rhonda Ladig, formerly the vice president at Northeast Indiana Innovation Center, said. So how do we overcome this dynamic? Hearns recommends shared leadership.
'Even though one organization might be getting all the money and … recognition, if you find that there is distrust or hesitation, or that money and leadership are the big elephants in the room,' Ladig said, 'then be willing to step back a bit, elevate the other organizations and share that leadership.'
Help businesses get customers, not just raise VC
Instead of looking for the next big check, panelists encouraged the audience to think creatively, and, as the community-generated wealth increases, to consider locally managed capital pools that reflect the communities they serve.
Ladig and Knoblauch both pointed to the need for more creative innovation capital structures, rather than relying on the venture capital and investment firms, which are known to not always be accessible or inclusive.
'The system of capital is not built for the people who really need them,' Ladig said, highlighting how financial models too often exclude the very entrepreneurs that ecosystems claim to support.
Knoblauch emphasized that the most effective way for an entrepreneur to secure money for their business isn't through chasing funding—it's by gaining customers. She challenged ecosystem support organizations (ESOs) to rethink their role: instead of focusing solely on fundraising, how can they directly help entrepreneurs find and retain customers? In her view, that's where ESOs can have the greatest impact, functioning more like community organizers than gatekeepers of capital.
'It's not [about] how we get funders to fund one on one,' Knoblauch said. 'That thinking about this wrong. [The better question is] how do we not need the funders? If you get businesses to have customers, to create jobs, to create wealth in your community, to do things like creating capital structures…to further generate wealth for people by aggregating small amounts of capital.'
Knoblauch proposed smaller, community-driven funding mechanisms, not just dilutive investments that require giving up ownership of the company. This makes for friendlier deal terms that do not prey on first-time entrepreneurs or those who are unaware of financing options.
Knoblauch briefly mentioned loan-loss reserves and seller equity as other creative financing levers to reach audiences that otherwise might not receive funding.
If economic developers, ecosystem builders and civic leaders are serious about community transformation, they must consider how support is structured, shared and sustained, panelists said.
The future of entrepreneurship support and ESOs, they said, will be rooted in relational currency. And the emerging leaders will be those willing to redesign the system, one relationship at a time.