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Week of October 17 - 21, 2005Welcome 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. |
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Hot Shot Business Teaching Tomorrow’s Entrepreneurs While the enterprising youth of yesteryear were opening lemonade stands on a whim (and a pitcher of mom’s lemonade), today’s future entrepreneurs are learning the ropes while launching virtual skate shops, pet spas and candy factories. Hot Shot Business, an award-winning online entrepreneurship simulation, has been enhanced to give players an even more realistic and challenging taste of what it takes to start and run a business. Jointly developed by the entrepreneurship experts at the Kauffman Foundation and Disney Online’s creative team, the simulation blends fast-paced game play with real-world lessons to teach children ages 9 to 12, entrepreneurship concepts and skills. The simulation welcomes kids to “Opportunity City,” where animated teen characters Kate and Jack help players recognize and act on business opportunities to meet the citizens’ needs. Enhancements launched this month include a new type of business (the candy store) and a series of ethical dilemmas that kids must address as well as a formalized teacher curriculum to adopt Hot Shot Business into the classroom.
Hot Shot Business was launched in May 2003 following a Kauffman
Foundation study that found that 41 percent of kids ages 9 to 12 would
like to start their own business, but don’t know how. Since then, it has
been among the most popular content published on Disney Online, which
attracts more than 12 million unique visitors each month. |
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Angel Investors Remain Bullish
The angel investment field
has continued to cruise ahead in the first half of 2005, according to
new research from the University of New Hampshire’s Center for Venture
Research. The Center’s tally of angel investing numbers in the first two
quarters of 2005 finds that total investing levels reached $11 billion,
on track to match last year’s total of $22.5 billion. A total of 126,000
individuals made angel investments over this period; this figure is a
slight drop from last year. Angels continue to focus on early stage
investing, with 48% of investments occurring in the start-up or seed
stage. The research also identifies a large market of “latent angels” –
individuals who are members of angel groups but who are not making
investments. In fact, 66% of angel group members are latent angels. The
researchers suggest this growing number of latent angels is a symptom of
the large number of newly formed angel groups, and they recommend
additional investor education to help latent angels become active
investors. |
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Entrepreneurs and the Inner City
A new study sponsored by the
Small Business Administration’s Office of Advocacy provides an
interesting glimpse at how entrepreneurs are faring in America’s inner
cities. State of the Inner City Economies does not find a major
set of differences between small businesses based in the inner city and
those found elsewhere in large metropolitan areas. Both regions show
similar start-up and failure rates. The report also finds that the
cumulative economic impact of inner city small businesses is quite
large, employing nearly 9 million people and accounting for roughly 8%
of total US private employment. Most (78%) of these jobs are held by
commuters. Because inner city residents account for only 22% of this
employment base, the immediate local economic impact of these businesses
is less pronounced. Overall, employment at these firms grew one percent
between 1995 and 2002. This figure lags the1.9 % rate for job growth
found in broader metropolitan statistical areas. |
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More Health Care Woes for Small Firms
Rising health care costs hit
all Americans and all American companies in the pocketbook, but
microenterprises (with less than 10 workers) are among the most
hard-hit. A new survey from the National Association for the
Self-Employed (NASE) tells the depressing story. NASE surveyed more than
600 small business owners to assess how they deal with rising health
care costs. The survey found that a majority of surveyed firms (51.1%)
of firms do not now offer and do not plan to offer health care coverage
for themselves or their employees. Cost is the primary inhibiting
factor, and, not surprisingly, the smallest firms are most affected by
these costs. Firms with less than ten employees spend roughly 4% of
total gross revenue on health care. Sadly, the situation may be getting
worse. Eighty-five percent of respondents noted that their health care
premiums had jumped in the past year, with a median increase of a
whopping 17.3%. |
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Federal R&D Spending: A Status Report
The current fiscal year
started ten days ago, but Congress is still working on this year’s
budget and is unlikely to finish soon. Nonetheless, some preliminary
indications of spending priorities are starting to emerge. The latest
comes from regular tracking by the American Association for the
Advancement of Science’s (AAAS) federal R&D update project. News from
the Senate has been pretty good for R&D advocates. Overall,
Senate-backed appropriations bills would increase R&D spending by 2.3%
over last year’s levels, with most of that increase slated for weapons
development and National Institutes of Health (NIH) research. The House
has been less generous, holding the line on funding increases for most
federal R&D programs. Budget negotiations are continuing, and will be
further complicated by new spending required in the aftermath of
hurricanes Katrina and Rita. |
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The Power of Corporate Venture Capital
When we think about venture
capitalists, we tend to think of them as relatively small independent
partnerships. But, large corporations are also big players in the
venture capital field, and their investments play an important role in
fostering innovation. A recent series of research papers, profiled by
Wharton’s Knowledge at Wharton e-newsletter, examine the role of
corporate venture capital. Wharton professor Gary Dushnitsky argues that
corporate venture capital is part of a “three legged stool” of corporate
innovation. The other key legs are a strong internal R&D capability and
alliances with academic or government researchers. Dushnitsky and
co-author Michael Lenox have found that firms with strong internal R&D
capacity also tend to have strong venture capital programs. The two
strategies are complementary. Not surprisingly, the importance of
corporate venture investing varies by sector, with the best returns
generated in the medical device and information technology industries.
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