Over lunch at last Wednesday’s Regional Energy Innovation Summit, attendees were treated to a presentation from Ted Zoller, Ph.D., executive director of University of North Carolina at Chapel Hill’s Center for Entrepreneurial Studies.
Zoller, who’s also an adjunct professor at UNC, has been an entrepreneur for most of his life. Now, it’s his mission to help entrepreneurs.
“It’s always bothered me that entrepreneurs that have such amazing vision have such a significant challenge in raising the money to realize their dreams,” Zoller said in a recent interview posted on UNC Kenan Institute’s YouTube channel.
So, I’ve contemplated this idea of identifying a different type of way to help entrepreneurs acquire the funding they need to realize their capabilities, and this concept is call the dealmaker’s algorithm.
Zoller identifies “dealmakers” as investors who have equity in three or more companies concurrently. For his dealmaker’s algorithm, he’s created a process that examines transaction data available through public and private data sets in order to infer the preferences of investors. He then utilizes that data to help entrepreneurs identify the investors who can fund their ventures.
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When applying the algorithm to his region, Research Triangle Park (left, image from rtp.org), he found seven individuals that fit his definition of dealmaker. “It turns out that the Rolodex I’ve developed over 15 years was perfectly correlated to the dealmakers that showed up in the secondary data,” Zoller told me an interview last Wednesday. “I’m very bullish about what this could do.”
A major component of Zoller’s research was to examine the activity within specific regions in the U.S. By doing so, he found that those with a very cohesive social capital network tend to give birth to new entrepreneurial enterprises. In short, serial entrepreneurs and serial investors who know one another build an economy that creates new firms.
[I]n Silicon Valley 98.6 percent of serial entrepreneurs and investors know one another. They’re within one degree of freedom. Where is in any other hotspot, including Research Triangle Park, the ratio is roughly 60 percent. That’s a big distinction. My hope is that by using this algorithm we may be able to create a more cohesive social capital network.
Looking to the future, however, he sees innovation distributed throughout the U.S. “Under the old model, venture capital was geographically concentrated,” said Zoller. “My hunch is that social networking will allow us to better correlate, or better associate, our capital sources and our innovation sources. We’ll start to see investment and innovation coming together, not in geographic pockets but where innovation occurs.”
In his presentation last Wednesday, he looked to a younger attendee in the crowd and asked him if he’d rely on his college alumi or Facebook network to make a connection. The attendee paused and replied, “It depends on the situation.” Not exactly the answer Zoller was looking for but it definitely wasn’t the old way of making a connection, which would be to rely solely on the alumni network.
Zoller’s presentation was one of the most fascinating I’ve seen on the topic of entrepreneurship. Although I don’t have video of the presentation, I caught up with him afterward for an interview. In it he talks more about his research as well as applying the concept to Omaha.
Here's Zoller's interview on UNC Kenan Institute's YouTube channel:
