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Week of April 10 - 16, 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.

Small Business Week 2006

Today marks the official start of Small Business Week, the US Small Business Administration’s celebration of “all things small business.” The week offers an opportunity to recognize the important role of small businesses in driving the American economy, and it is celebrated with award ceremonies, conferences, and other events. The biggest of all celebrations occurs on April 12-13th in Washington DC where SBA Administrator Hector Barreto and other luminaries – including Kauffman Foundation president Carl Schramm – will honor SBA’s National Small Business Person of the Year, and a host of other award winners.

Small Business Week 2006 is being sponsored in part by the Kauffman Foundation. To learn more, visit http://www.sba.gov/sbw

Angel Investors: Holding Steady in 2005

Angel investing enjoyed a slight upturn in 2005, but the basic message is that the angel market is holding steady. New data from Jeffrey Sohl at the University of New Hampshire finds that the angel investor market enjoyed modest growth of 2.7% in 2005, for an investment total of $23.1 billion. (As a point of comparison, institutional venture capital investing in 2005 totaled $21.7 billion.) The average number of active investors is approximately 227,000 with most investments involving an average of 4-5 individual investors. Sohl credits these angel investments for the creation of roughly 198,000 new jobs. Angels continue to focus on seed and start-up stage investments; these deals account for 55% of last year’s total deal flow. This year’s data also includes some interesting numbers on women and minority angels. Women represent 8.7% of all angels, and 8.7% of all entrepreneurs seeking angel capital. Of this latter group, one third (33%) received angel capital—a much higher figure than the overall average yield rate of 23%. Minority angels account for 3.2% of the total angel market, and minority entrepreneurs were 14.2% of the total entrepreneurs who presented their business concepts to angels. Unfortunately, their yield rate of 7.6% was significantly lower than the national averages.

To access The Angel Investor Market in 2005: The Angel Market Exhibits Modest Growth, by Jeffrey Sohl of the University of New Hampshire’s Center for Venture Research, visit http://www.unh.edu/news/docs/CVR_2005.pdf

Attracting Foreign Talent: Time for Some Good News

While the headlines are full of studies bemoaning America’s ability to attract the world’s best and brightest to our businesses and educational institutions, not all the news is bad. The latest surveys from the Council of Graduate Schools contain some glimmerings of optimism. The surveys find that international applications to US graduate schools were up in 2005---by a healthy 11%. This is especially good news given the 32% cumulative decline in applications during 2003 and 2004. The largest gains come from India (up 23%) and China (up 21%). Applications are up in all disciplines, with engineering and life sciences seeing the biggest jump. While this is good news, everything is somewhat relative as applications are still down 23% since 2003. It will take several more years of improvement to return to pre-9/11 levels of foreign applications and attendance at US graduate schools.

To view the March 2006 Council of Graduate Schools report, Findings from the 2006 CGS International Graduate Admissions Survey, Phase I: Applications, visit
http://cgsnet.org/portals/0/pdf/R_intlapps06_1.pdf.

SBA Seeks Disaster Relief Ideas

Since Hurricane Katrina struck about six months ago, the US Small Business Administration has been under the gun for its initial response in providing loans and other support to disaster-affected residents and businesses. Through several programs to address the issue, it has approved $7.39 billion in loans for more than 100,000 victims, including more than 17,000 disaster loans to businesses (totaling $1.6 billion). Now, the SBA is seeking new ideas for improving its performance in the event of future disasters. Specifically, it is accepting suggestions for how the agency can best “complement existing resources” with support from the private sector and elsewhere. Formal comments can be submitted until the deadline of May 2, 2006.

If you are interested in responding to the Small Business Administration’s Request for Information on “How the Private Sector Can Best Support the Delivery of SBA’s Disaster Assistance within its Current Operational Framework,” visit the Fed BizOpps website at: http://www.fbo.gov/spg/SBA/OOA/OPGM/SBAHQ%2D06%2DI%2D0001/SynopsisR.html.

Whatever Happened to IPOs?

The initial public offering (IPO), that staple of the dot-com era, has become an increasingly rare thing nowadays. Experts in the venture capital industry are starting to get concerned. A new study from Thomson Venture Economics and the National Venture Capital Association warns that the lackluster IPO market may hurt America’s economy. IPOs matter because they, along with mergers and acquisitions (M&As), are a primary exit strategy for venture capital investors. Without an exit strategy, venture investors can’t recoup any return on investment. As a result, money that could be invested elsewhere cannot be used to create new companies, new jobs, and new innovations. In 2005, the market saw only 56 IPOs, a large drop from 2004’s total of 93. Performance in 2006 remains poor as only ten IPOs occurred in the first quarter of 2006. Fortunately, mergers and acquisitions are picking up some of the slack. Q1 2006 saw 95 M&As, the largest quarterly total in five years.

To view the latest 2006 Q1 Exit Poll report from Thomson Venture Economics and the National Venture Capital Association, visit http://www.nvca.org/pdf/2006Q1exitpollreleasefinal.pdf

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