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Week of February 6 - February 12, 2006

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.

State of the Union: What’s in it for Entrepreneurs?

Last Tuesday, President Bush presented his annual State of Union address. The speech was full of new program ideas and initiatives, including some that might be of interest to entrepreneurs. The President’s American Competitiveness Initiative (ACI) probably tops this list. ACI commits $7.9 billion (in FY2007) and $136 billion (over ten years) to a series of efforts designed to support new R&D investments, and promote innovation and entrepreneurship. The heart of the plan calls for a doubling of federal investments in programs, such as the National Science Foundation and the National Institutes of Standards and Technology, that support the physical sciences and engineering. It also commits $380 million to improve the quality of math, science and technology education at the K-12 level. Finally, ACI includes a new program called Career Advancement Accounts. These self-managed accounts will allow workers to use up to $3,000 to obtain training or other workforce development services. As in the past, the State of the Union proposals kick off debate and deliberation. As President Bush found out last year with his plans to reform social security, there are no promises that such proposals will become reality. Expect a long debate ahead on these ideas and more.

To learn more about the White House American Competitiveness Initiative, visit http://www.whitehouse.gov/news/releases/2006/01/20060131-5.html

The Protecting America’s Competitive Edge (PACE) Acts

Not to be outdone by the President, several Senators have introduced their own plans to enhance American competitiveness. Three bills have been introduced—by Senators Domenici (R-NM), Bingaman (D-NM), Mikulksi (D-MD), and Alexander (R-TN)—using the primary name of “The Protecting America’s Competitive Edge (PACE) Act:” the PACE-Finance Act (S. 2196) , the PACE-Energy Act (S. 2197), and the PACE-Education Act (S. 2198). The bill seeks to implement twenty recommendations from the National Academy of Science’s report: Rising Above the Gathering Storm. The bills contain numerous provisions that seek to increase federal support for R&D, enhance research opportunities for scientists and technologists, and to improve training in math and science at all levels of the American educational system.

To learn more about this legislation, visit the Library of Congress’ THOMAS website at http://thomas.loc.gov.

To access the 2005 National Academy of Sciences report, Rising Above the Gathering Storm: Energizing and Employing America for a Brighter Future, visit http://darwin.nap.edu/books/0309100399/html

VC Investing in 2005: The Last Word

The final numbers on venture capital (VC) investing in 2005 were released last week, and the news remains pretty good. Overall, VC firms invested $21.7 billion in 2005, a slight increase over 2004’s total of $21.6 billion. Within these numbers, there’s some bad news for new start-ups. Funding for later stage firms has grown rapidly—up 22% to an annual total of $9.7 billion. Later stage investments accounted for 45% of all VC dollars invested in 2005. Meanwhile, early stage investment numbers continue to face a slow but steady decline—dropping from $4.4 billion 2004 to $4.1 billion in 2005. Previous “hot” sectors, like life sciences and software, remained hot. But, some new contenders are also emerging. Wireless-related companies enjoyed a big investment spike (up 24%). Other emerging sectors include information technology services, energy/industrial, and financial services.

To view the latest statistics from PriceWaterhouse Coopers, Thomson Venture Economics, and the National Venture Capital Association, visit www.nvca.org.

What’s on the Minds of North Carolina’s Entrepreneurs?

The Council for Entrepreneurial Development (CED), located in Research Triangle Park, NC, is one of the US’ largest private entrepreneur support networks. CED regularly surveys its members to learn of their leading concerns and issues. The latest version of this survey has just been released. CED’s 2006 Entrepreneurial Satisfaction Survey finds that the number one concern for the region’s entrepreneurs is the availability and retention of top-quality technical and non-technical management talent. This echoes findings from previous iterations of the survey. Other key themes include the following:

  • Research Triangle’s proximity to world-class universities is the region’s greatest asset.

  • Quality of life is considered to be a major local factor in attracting and retaining talent.

  • Access to capital remains a primary issue for the region. In previous surveys in 2001 and 2004, concerns about access to capital had declined. In 2006, concerns have grown, with nearly 34% of respondents identifying limited access to capital as the region’s number one problem area.

To access the Council for Entrepreneurial Development’s 2006 Entrepreneurial Satisfaction Survey, visit www.cednc.org

2006 Development Report Card Released

The Corporation for Enterprise Development has just released its widely-anticipated Development Report Card for the States (19th edition). This index differs from other “places rated” listings in that it does not simply measure a state’s business climate or performance. It also assesses the state’s development capacity (the quality of schools and local infrastructure) and performance in terms of equity and justice (e.g. high school graduation rates, poverty rates, etc.). Only two states—Massachusetts and Minnesota---received A grades this year. Other “honor roll” states include Colorado, Connecticut, New Jersey, Virginia and Wisconsin. High scorers on CFED’s measures of business vitality and entrepreneurial energy include (in rank order): Colorado, California, Massachusetts, and (tied for 4th place) are Pennsylvania and Minnesota. Poor “students” (i.e. those who received a D or an F grade in all categories) include: Alaska, Arizona, Mississippi, New Mexico, and West Virginia.

To access the Corporation for Enterprise Development’s 2006 Development Report for the States, visit http://www.cfed.org/focus.m?parentid=34&siteid=1581&id=1581.

A link between PCs and entrepreneurs?

Are personal computers invaluable tools to the burgeoning entrepreneur – making it easier to create experimental business plans, research the competition and control costs – that impact an individual’s decision to become an entrepreneur? Or do the skills acquired in using them actually work against the creation of new businesses, by increasing earnings in the wage and salary sector and improving the job search process? In a paper funded by the SBA, Robert Fairlie of UC Santa Cruz finds some evidence of a positive relationship. He finds male computer users are 0.6 percentage points more likely to become entrepreneurs than non-users, and an increase of 0.7 percentage points for female computer users.

‘The Personal Computer and Entrepreneurship’ will be published in an upcoming issue of Management Science. For an advance look, visit http://www.publicforuminstitute.org/nde/sources/reports/techent11.pdf.

Kauffman Foundation    The Public Forum Institute

National Dialogue on Entrepreneurship
2300 M Street, NW; Suite 900
Washington, DC 20037

Mark Marich, Editor

All stories © 2006 The Public Forum Institute
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