Week of January 31 - February 4, 2005

Welcome to the National Dialogue on Entrepreneurship, an initiative of the Public Forum Institute made possible by a grant from the Kauffman Foundation of Kansas City. Through NDE-news, we bring you short summaries and analyses of various trends driving the innovation economy. Subscribe now to receive your weekly copy. Archived issues are available online. Links to the day's entrepreneurship stories from across the nation and around the world are posted each weekday on the NDE main page - bookmark it and stay informed about the latest entrepreneurship news. 

NDE Briefings Continue, February To Examine UK’s Enterprise Insight

Earlier this week, more than seventy congressional staffers and others interested in entrepreneurship as an economic growth strategy participated in the NDE Briefing, Innovation and Regional Economies. In a few weeks, Martin Wyn Griffith, chief executive of the UK’s Small Business Service of the Department for Trade and Industry – the British equivalent of the SBA – will headline the next NDE Briefing, Enterprising Efforts in the UK. One such effort, coordinated by Enterprise Insight (Ei), a campaign funded by SBS, was Enterprise Week. Occurring in November 2004 throughout the UK, Enterprise Week was a high-profile collection of more than 1,000 events – ranging from large national conferences to small local discussion sessions – run by more than 400 organizations. 

The next NDE Briefing is scheduled for Monday, February 14, from 10:30 am to 12:00 pm in the Rayburn House Office Building, Room 2360. To register online, please visit www.publicforuminstitute.org/nde/2005/february

The Latest VC Data

The latest figures on venture capital (VC) investment have been released and the news continues to be good. According to the National Venture Capital Association (NVCA), overall VC investments in 2004 reached $20.9 billion. This total is an increase from last year’s total of $18.9 billion, and it represents the first increase in three years. Overall, 2,876 deals were completed in 2004. Key trends include an increase in later stage investing; key sectors include the life sciences and software. Other good news is that first time financings also grew in 2004, as 796 companies received venture capital for the first time. 

Performance is also improving; venture capital investments in the 3rd quarter of 2004 continued to perform quite well. The VC industry has come through a run of several bad years, and is now showing consistent yet gradual improvement in its returns. According to the latest figures, the current average five-year return for VC investments is 10.5%, far outpacing the returns provided by the S&P 500 or NASDAQ. Industry experts expect this trend to continue thanks to improvements in the exit market. As the pace of initial public offerings (IPOs) and mergers and acquisitions speeds up, VC investors should continue to reap the dividends. 

To access the latest VC data from PricewaterhouseCoopers, Thomson Venture Economics and NVCA, visit www.nvca.org

Von Bargen To Head Center for Venture Education and Kauffman Fellows Program

Patrick Von Bargen, managing executive for policy and staff at the U.S. Securities & Exchange Commission (SEC), has been named CEO of the Center for Venture Education. The Center is best known for its prestigious Kauffman Fellows Program, which educates and prepares emerging leaders in venture capital globally. Von Bargen has more than 30 years of business, public policy and non-profit experience. He will be replacing Trish Costello, the Program’s co-founder and leader for the past ten years – during which time Kauffman Fellows Alumni have led investments of over $3.6 billion in 417 companies, resulting in $10.8 billion in annual revenues and over 42,700 new jobs. Costello will remain an active advisor to the Center. 

For more information on the Program, visit www.kauffmanfellows.org. 

Global Entrepreneurship Trends

The latest version of the Global Entrepreneurship Monitor (GEM) is out, and, as usual, it contains some data about the state of entrepreneurship worldwide. The sixth GEM report examines levels of entrepreneurship activity in 34 countries, and finds that, worldwide, more than 73 million people are somehow involved in entrepreneurial activity. One overall theme of this year’s report is that entrepreneurial activity tends to decline as national incomes rise. So, the highest levels of entrepreneurial activity among participating countries can be found in Uganda, Peru, and Ecuador. Meanwhile, the worst performing countries—Japan, Belgium, Italy, Sweden, and Finland---all tend to enjoy relative prosperity. Iceland and the United States are rare exceptions of nations that combine high entrepreneurship and high relative wealth. A couple of highlights include:

• Most entrepreneurs are already employed, working on their new venture in free time or while working. 

• Most new start-ups don’t expect to be major job creators. Two-thirds expect to create no jobs or no more than two jobs within five years.

• Men continue to dominate the entrepreneurial landscape; men are 75 percent more likely to start a new venture than women. 

An accompanying report examines trends in entrepreneurial finance, and it highlights other key trends. Informal investment continues to be the lifeblood of the entrepreneurial economy. Self-funding, and support from family and friends continues to be the dominant means to financing a business. Entrepreneurs themselves provide nearly 66% of the funding for their own companies. Venture capital (VC) investments continue to be rare, even in the US. For example, in the US, less than one in 10,000 businesses receive their first investment from a venture capitalist. While venture capitalists back few companies, they still play a key role in the technology economy. Ninety-one percent of all VC invested in the US backs technology companies. Meanwhile, only 29% of VC money invested in the remaining G7 countries goes to technology businesses. 

The GEM project is sponsored by Babson College and the London Business School. To access the Global Entrepreneurship Monitor 2004 Executive Report, the Global Entrepreneurship Monitor 2004 Financing Report, and related reports of various national studies, visit www.gemconsortium.org

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