Week of May 9 - May 13, 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. 


New Venture Capital Numbers

The past year saw a bit of an upturn in the world of venture capital (VC), but the latest figures from the first quarter of 2005 indicate that it may be too soon to declare the next investment boom. According to the latest figures, total VC investments dropped slightly in the first quarter of 2005 to $4.6 billion. This drop remains relatively small when compared to figures for the third and fourth quarters of 2004 ($4.6 billion and $5.4 billion, respectively). Industry experts note that quarterly investments in the range of $4-6 billion are likely to remain the industry norm over the next several years. VC fundraising is also down, as VC firms raised $5.3 billion in the 2005’s first quarter, a 13.5% drop from the previous quarter. Most of this investment is supporting follow-on funds - additional funds for firms with existing VC backing - and will not be used for new investments.

To track the latest venture capital data and statistics from PriceWaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association, visit www.nvca.org.


The Power of Networking: New Evidence from Britain

It’s commonplace to claim that networking is essential to entrepreneurial success, but what specifically seems to matter when it comes to networking? A new study from a group of British researchers sheds some light on this question. The analysts carried out an extensive literature review with the goal of understanding how networking contributes to innovation. They find that networking supports innovation in all organizational forms — from small start-ups to large corporations. By networking, individuals help manage risk, obtain access to new markets, and gain knowledge about new technologies. How one networks also seems to matter. Firms with access to diverse networks tend to be more innovative than those with access to more limited networks (e.g. networking only with customers). The researchers conclude by noting that while it is clear that networking contributes to innovation, it is not yet clear where and how public activities can support such networking. More research is needed to better understand the linkages between public policies and effective networking organizations and activities. 

Networking and Innovation: A Systematic Review of the Evidence, Lancaster University Management School Working Paper 2004/016, by Luke Pittaway, Maxine Robertson, Kamal Munir, and David Denyer, is available at http://www.lums.lancs.ac.uk/publications/viewpdf/000261/


Competitive Strengths and Challenges in Rural America 

Last month, the Federal Home Loan Bank of Des Moines held a policy forum in Washington that brought together some heavy hitters: the Secretary of Agriculture, four Senators and five Members of Congress. Rural development was the day’s topic, and, as part of this program, the Bank released an interesting new snapshot of the competitive challenges facing rural communities. Crafting a Competitive Future maps the current situation facing rural America and presents some general strategies that could help jumpstart growth in these regions. In general, federal policy does not neglect rural America. In fact, the researchers identified 1,399 programs that assist rural regions, with 337 of these programs identified as “key” sources of support. Unfortunately, many of these programs are not targeted at the “right” issues or challenges. The report contends that as agriculture becomes a less dominant economic force, a broader focus on general economic development challenges is needed, including the development of local industry clusters and nurturing the growth of rural entrepreneurs. 

Crafting a Competitive Future was prepared by SRI International for the Federal Home Loan Bank of Des Moines. Copies are available at http://www.fhlbdm.com/Docs/About_Us/PF/SRIReport_FINAL.pdf


Patent System Reform Focus of Washington Conference

Following years of review and study of the U.S. Patent System, the National Academies Board on Science Technology and Economics (STEP) and the Federal Trade Commission (FTC) have issued reports with recommendations on modernizing U.S. Patent Law. The American Intellectual Property Law Association (AIPLA) thoroughly reviewed both reports and prepared detailed responses to each. The three groups recently teamed up for a series of regional meetings to discuss differences of detail in the largely consistent recommendations of the three organizations in anticipation of congressional hearings. A summary symposium – scheduled for June 9 in Washington, DC - will share the results of those meetings and focus on the case for addressing patent system reform from a diverse set of business, judicial, and academic perspectives. The one-day program will feature executives of large and small business and entrepreneurs in different industries, members of the federal trial and appellate benches, and scholars who have conducted empirical research on how the system is working.

To register for this free conference, send your name and affiliation to CSchultz@nas.edu


America’s Failing Infrastructure

While entrepreneurs bring many new ideas and approaches to the world of business, they don’t differ from traditional companies in their reliance on adequate infrastructure as a key foundation for business success. Unfortunately, most American communities are failing on this front. The latest report card from the American Society for Civil Engineers (ASCE) assesses the US’s physical plant and doesn’t find much worth bragging about. The report card assess a range of assets, including highways, schools, wastewater treatment, and energy. Every sector receives a poor grade, and the overall grade for the US is a D. The costs associated with this neglect are even scarier. The ASCE estimates that $1.6 trillion in new investment (over five years) would be required to remedy these problems. 

The 2005 Report Card for America’s Infrastructure, by the American Society for Civil Engineers is available at http://www.asce.org/reportcard/2005/index.cfm?pic=3


IN THE SPOTLIGHT

Wisconsin Entrepreneurs Network
Wisconsin Department of Commerce
201 West Washington Avenue
Madison, WI 53703
(608) 267-9384
http://commerce.wi.gov/Act255/BD-Act255-WEN.html

Wisconsin is in the midst of a major shift in its economic development activities. As part of Governor Jim Doyle’s “Grow Wisconsin” Initiative, the state Commerce Department has recently unveiled the Wisconsin Entrepreneurs Network. The program is quite new, and is backed by a $1 million investment from the Wisconsin Department of Commerce. It will create a host of regional support centers as well as four major regional technology transfer centers. The project has an ambitious goal of reaching out to 10,000 Wisconsin residents in its first year. While many of these programs are just getting underway, the Commerce website already includes a number of useful resources.


Correction: Last week’s issue of NDE-news misidentified Mosaica Education in the article on the Initiative for a Competitive Inner City and Inc. Magazine’s Inner City 100. The company is headquartered in New York City.

Kauffman Foundation    The Public Forum Institute

National Dialogue on Entrepreneurship
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Mark Marich, Editor

All stories © 2005 The Public Forum Institute
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