A SMALL TEAM OF STUDENTS and faculty advisors from the University of California, Berkeley recently accomplished what no one had ever thought to do before — quantify the local economic benefits of the university’s entrepreneurial “ecosystem.”
Turns out, it’s nothing to shake a stick at.
“So we know that Berkeley produces a lot of startups. We know that it sends entrepreneurs all over the world but we hadn’t really thought about or quantified how many of those startups actually stayed in the city of Berkeley,” said Ben Bradbury, an executive coach and lecturer at the Haas School of Business.
Bradbury worked as a project manager, mentor and guide for a group of six students from various disciplines who produced the study “Economic Impacts of UC Berkeley’s Innovation & Entrepreneurship Ecosystem on the City of Berkeley and Alameda County.”
The study, based on surveys and interviews with 22 local startups, was published in February and prepared for the UC Berkeley Innovation & Entrepreneurship Office, the city of Berkeley and the Berkeley Startup Cluster.
It found that no one had yet calculated university-affiliated startups’ impacts on the local economy despite its worldwide reputation as a hotbed of such activity, with Pitchbook saying no other school produced more alumni who raised venture capital over the past decade, including arch-rival Stanford and MIT.
“We also didn’t know how many of these startups that are in the city of Berkeley are affiliated with UC Berkeley in some way, whether their founders came to Berkeley, whether they had a patent or technology that they licensed with Berkeley,” Bradbury said.
An economic engine
Of the 400 startups in the city, the study’s authors identified 182 affiliated with the campus in some way.
Extrapolating from survey results, the authors found those 182 companies support more than 500 jobs that have an average salary of $216,000 and each job supports an additional 1.05 jobs locally, resulting in a total “employment multiplier” of 2.05.
The study also found that UC Berkeley startups generated between $172 million to $212 million in payroll in Alameda County and between $112 million and $138 million in the city of Berkeley.
More broadly, the research was scoped to address four main questions: how are UC Berkeley affiliated startups interacting with the city and regional economy; what factors influence their decision to stay in Berkeley or relocate; how can the city better support university innovation while encouraging long term retention, and what is the overall impact of the university’s innovation and entrepreneurship ecosystem on the city, said Asha Roshini Gupta, one of the authors and an undergraduate studying economics and media law and policy.
“Berkeley’s innovation and entrepreneurship … does more than generate startups. It actually amplifies local economic activity through employment payroll services and spillover effects that actually extend beyond direct startup jobs.”
Asha Roshini Gupta, study co-author
“We found that the majority of (companies) were in software or biotech, with about 30% in each, and then the next most popular industry was clean tech, with about 20% of startups being within that category,” Gupta said, adding that healthcare and hardware startups are also well-represented.
The study also found that about 40% of local startups were in the “ideation stage,” about 27% were in early formation, 12% were in the acceleration stage and about 20% were scaling, she said.
All of them were hiring people and spending money on local goods and services, boosting the economic health of the city and the region.
“Berkeley’s innovation and entrepreneurship, or IE, ecosystem does more than generate startups,” Gupta said. “It actually amplifies local economic activity through employment payroll services and spillover effects that actually extend beyond direct startup jobs.”
The IE ecosystem
In addition to the startups, the university’s “IE ecosystem” includes dozens of programs designed to support the formation and growth of fledgling businesses.
The study cites a handful of examples of such programs, including the Sutardja Center for Entrepreneurship & Technology, which prepares students to take business ideas into the real-world, and the Berkeley Haas Entrepreneurship Program, which supports venture development through academic coursework and experiential learning, among other things.
Several startup founders said in interviews that partly because of programs like these, as well as ready access to the well-educated workforce and the intellectual capital associated with the university, their goal was always to find office or lab space within the city after launch.
That certainly was the case for Dana Charron, co-founder and managing director of Berkeley Air Monitoring Group, which was spun out of the Center for Entrepreneurship in International Health and Development at Berkeley’s School of Public Health.
Charron’s company provides air monitoring and evaluation services to organizations working on household energy and air pollution projects that seek to develop and promote cleaner and more efficient energy solutions.
Berkeley Air Monitoring offers “high-impact field studies to measure impacts on climate, health, livelihoods, and gender dynamics,” according to its website.
Having grown into a well-respected company with clients all over the world, Berkeley Air still operates out of a coworking space on Addison Street between Milvia Street and Martin Luther King Jr. Way.
“I don’t even think that we considered going anywhere else originally,” Charron said. “It felt like a big enough step just to figure out how to move our funding and our people, you know, out of the university and down the street, basically.”
Rooted in Berkeley
Also, Charron and her team wanted to stay local so they could continue working with colleagues who were still at the university and with whom they had joint projects, a factor she said that is probably pretty common for companies coming out of the UC Berkeley environment.
As the company evolved, it moved some technical functions to Fort Collins, Co. where “the economics are more favorable,” Charron said, but decided to keep a significant footprint in Berkeley, as well, partly because it’s where a lot of her talent resides.
“I think for us, being a pretty small organization, it does come down, not insignificantly, to the actual people and where they want to live,” she said.
Other factors that keep Berkeley Air local are the high-quality pool of interns constantly percolating out of the university’s programs and California’s continued funding for science-based solutions to environmental health problems, an area the federal government has largely abandoned.
“We always have interns, and we see that as an important part of both our business model and our mission to provide that kind of hands-on opportunity for students who are interested in environmental health especially,” Charron said. “So that’s another component of the ecosystem that has been important to our success and I think it’s contributed overall to several successful careers.”
The study also identifies concerns and challenges associated with maintaining a healthy startup trajectory while remaining in town, including perceptions about crime, navigating governmental bureaucracy and the cost and availability of appropriate office and lab space, co-author Gupta said.
“Small frictions create large economic leakage so things like regulatory complexity, space limitations and perceptions of public safety disproportionately affect early stage and scaling startups, which accelerates relocation during key growth phases,” Gupta said.
While Berkeley Air hasn’t been impacted much by concerns over public safety, the cost of office space “has definitely been a topic we’ve dealt with a couple of times,” Charron said.
She also said it can be hard to find city officials who can help with various services.
“Once you do find the right person for whatever your issue is and you do connect with them, they’re really helpful,” Charron said. “It’s just that it’s really difficult.”
A cluster of innovation
That’s the kind of feedback that can be helpful to officials like Liz Redman Cleveland, chief strategist of sustainable growth for the city’s Office of Economic Development.
Redman Cleveland, who was instrumental in getting the study launched, also leads the Berkeley Startup Cluster, which the city runs in partnership with the university, the Lawrence Berkeley National Lab, the Berkeley Chamber of Commerce and the Downtown Berkeley Association.
The cluster was formed to help make Berkeley more attractive to startups, “especially those spinning out of UC Berkeley and the Berkeley Lab,” according to its website.
Redman Cleveland said the city and university have been working to deepen their relationship over the past year or so and the idea for the study emerged out of a meeting between herself, Mayor Adena Ishii, Chancellor Rich Lyons and other UC and city officials.
While she didn’t seem surprised by the findings, Redman Cleveland said it’s the first time she’s seen the average salary figure of roughly $216,000 quantified.
“That’s important to just show the community that these are high paying jobs,” she said. “I don’t know that our community will love that or likes it or doesn’t but the point is that these are good jobs and from an economic development perspective.”
She also noted that the employment multiplier of 2.05 is “not huge,” partly because a lot of the startups in Berkeley are still relatively small.
“I’d love to see more of the UC Berkeley startups staying in Berkeley and then turning into larger employers with those higher salaries rather than, once they get bigger and they employ a lot of people, going elsewhere,” she said.
She also hopes the data in the study can be updated regularly in order to track trends that can help policymakers better manage economic development decisions in the future.
“From one snapshot based on one data set I think it gives some points for consideration and, you know, future investment,” she said. “I think to really make good decisions, you’d want to track these metrics and think about what investments or policies you put in place and how those impact the numbers over time.”
The study’s authors make several recommendations for city and university officials, including improving perceptions about public safety, streamlining some regulatory processes, increasing short-term lease office and lab space and investing in research and development.
Berkeley Accelerator helps Young entrepreneurs turn ideas into startups
Behind an unremarkable entry to a downtown Berkeley office building, down a narrow hall and up on the second floor is a newly minted, 30,000-square-foot hotbed of entrepreneurial hustle called the Berkeley Gateway Accelerator.
Backed by Future Frontier Capital and “soft launched” in February by managing partners Matt Rappaport and Nirav Bisarya, BGA was founded, in tech parlance, as a “pre-seed for early-stage deep tech startups.”
In civilian terms, its mission is to help new companies that are developing products and services based on emerging scientific technologies bridge the gap between the lab environment and the marketplace.
Also, while not formally affiliated with the University of California, Berkeley, it aims to leverage and support the school’s “innovation and entrepreneurial ecosystem” to benefit startup activity in the region.
Perhaps more importantly, however, it’s also a classroom and a summer camp for students looking to get a leg up on everything from leadership skills to product development to networking.
“So, we work with a lot of founders from all sorts of lengths and breadths of sciences, but there was a moment where we wanted to really create a space for young, budding entrepreneurs,” said BGA program manager Kavisha Shroff.
Building deep-tech skills
To that end, the inaugural three-week BGA Academy for high school and college students kicked off this summer with its first cohort of about a dozen youngsters.
“This really exposed them to think of how do you collaborate in a multidisciplinary team and come up with an idea that could be a profitable business,” said Shroff, who leads the academy.
Participants included local high schoolers and community college students, as well as UC Berkeley and international students.
The curriculum focused on leadership, entrepreneurship and vocational skills within a “deep tech innovation” and startup-development context.
Over the course of three weeks, student teams worked together to come up with an idea for a company, develop a business model and present their completed project at the end of the academy.
“It’s a very diverse, inclusive environment and the goal of this program is to kind of focus on that — how can we build an inclusive environment where people are free to think and be creative and enable them to build something that they want to do and support them with the ecosystem,” Shroff said. “And that kind of goes back to the larger mandate of our accelerator.”
Professional connections
For 20-year-old Cal student B.J. Fisher, being a BGA Academy participant was rewarding, especially due to the daily schedule of expert lectures and presenters.
“I would just say the coolest thing has been seeing how much exposure BGA has like given us,” Fisher said. “We’ve met probably like three people a day and all of them have been kind of like experts in their field.”
His team’s project involved developing a business model for a digital lock product for commercial storage facilities.
He said, for him, the customer discovery and research phase was interesting because it involved developing a potential solution to a problem his team wasn’t sure would pan out in the real world.
“We assumed that a bunch of people had the same problem that we had, but we didn’t really know until we went out there and asked people about it,” Fisher said.
“So until then, we didn’t really know if our product would work, and then once we figured it out, we knew we had a decent idea,” he said.
It’s experiences like Fisher’s that BGP hopes to replicate in the months and years ahead.
“This is our first summer academy, but we’ve seen such good response that my goal is to build maybe something during the school year as an evening program,” Shroff said. “I’m looking for collaborations and people and organizations within the East Bay, being in community colleges or high schools, where we could put together an innovation model like this.”
— Kiley Russell
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