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Week of May 1 - 7, 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.

Ten Cool New Technologies

Few people really understand what epigenetics is, but we are likely to learn more in the years ahead. Epigenetics—which studies chemical interactions inside genes---is one of ten emerging new technologies identified by Technology Review as likely to have big and positive societal effects. Scientists are using epigenetics to identify how changes in DNA can signal the onset of certain cancers. Others on the top ten list include cognitive radio (radios that can pick out unused portions of radio spectrum) and stretchable silicon (a technique that will make it easier to embed silicon chips in various products like clothing). If there’s a theme to this year’s list, it has to be nanotechnology. Several of the top ten technologies—including nanomedicine and nanobiomechanics—exploit recent advances in the nanotech field. While it might still be too early to invest, all of these technologies are generating lots of buzz among scientists and technologists alike.

“Ten Emerging Technologies,” appears in the March/April 2006 edition of Technology Review and is available on-line at: http://www.technologyreview.com/special/emerging/index.aspx. 

Sarbanes-Oxley and Smaller Firms

The Securities and Exchange Commission’s Advisory Committee on Smaller Public Companies has completed its work and sent its final report to SEC Chairman Christopher Cox. As expected, the Advisory Committee contends that regulations implementing the Sarbanes-Oxley Act of 2002 should be revised to reduce their financial and administrative burdens on smaller public companies. The Advisory Committee has defined smaller public companies as those firms that are publicly-held with a market capitalization exceeding $787 million. That’s a big group. It accounts for nearly 79% of all US publicly-held companies, but these firms account for only 6% of the total US equity market capitalization. The Advisory Committee’s detailed plans focus on Section 404 of the original Sarbanes-Oxley law. This provision regulates a firm’s internal controls; compliance with Section 404 is costly as it often requires new audit systems and staff as well as outside consulting support. The Advisory Committee recommends that smaller firms be provided a partial exemption from this provision. Very small micro-cap firms (market capitalization under $128 million) could receive a complete exemption. While the Advisory Committee’s recommendations are gaining attention, the final say will be determined by the SEC or by Congress.

To access the April 23, 2006 Final Report of the Advisory Committee on Smaller Public Companies to the Securities and Exchange Commission, visit http://www.sec.gov/info/smallbus/acspc/acspc-finalreport.pdf

Growing the pool of angel funds

Despite increased financial power and wealth, high net worth women represent a largely untapped source of capital for start-up entrepreneurs, according to a new report released by the Ewing Marion Kauffman Foundation. The report, Women and Angel Investing: An Untapped Pool of Equity for Entrepreneurs, provides insights and recommendations from leading women angels on how to grow the pool of early stage equity by encouraging more women to be angels. Of the estimated 225,000 active angels who invested $23.1 billion in nearly 50,000 entrepreneurial deals in 2005, no more than eight percent are female, as estimated by several reports. The report -- released last week at the Kauffman Foundation-sponsored North American Summit of the Angel Capital Education Foundation (ACEF) – suggests actions and initiatives to inform and attract more qualified women to join angel groups, including: building strong national and regional networks of women angels; increasing the visibility of women angel investors through well-known role models; and conducting research on women angels and entrepreneurs. Summit participants suggested using roundtables, judging business plan competitions, and speaking at community business functions as ways to publicize women angels and the personal and financial reward of investing in entrepreneurial companies.

Women and Angel Investing: An Untapped Pool of Equity for Entrepreneurs is available at www.kauffman.org (the direct link is http://www.kauffman.org/pdf/WomenAndAngelInvest0406.pdf). 

The Latest on Global Broadband Penetration

New data from the Organization for Economic Cooperation and Development (OECD) indicates that broadband use is growing rapidly across the globe. Between June 2005 and December 2005, the total number of worldwide broadband customers grew from 136 million to 158 million. The US has the largest total number of broadband subscribers (49 million), but the US rate of per capita broadband use (16.8 broadband subscribers per 100 inhabitants) falls behind eleven other countries. Iceland is the world’s most wired place--with 26.7 broadband subscribers per 100 inhabitants. Other strong performers include Korea, the Netherlands, Denmark, and Switzerland.

Countries with high broadband penetrations ought to be seeing some real bottom-line benefits to their economy. A new report sponsored by the US Economic Development Administration examines the economic impact of broadband access. The study, which examines US communities, finds that regions with mass-market broadband access performed better in terms of employment growth, business growth, and new business starts. The report concludes by noting that policy makers must begin to include broadband as an essential part of a region’s economic infrastructure.

To view the December 2005 OECD Broadband Statistics from the Organization for Economic Cooperation and Development, visit
http://www.oecd.org/document/39/0,2340,en_2649_201185_36459431_1_1_1_1,00.html

Read the February 2006 US Economic Development Administration-sponsored report, Measuring Broadband’s Economic Impact, by Sharon E. Gillett, William H. Lehr, Carlos A. Osorio, and Marvin A. Sirbu.

The World’s Most Innovative Companies

The April 24, 2006 edition of Business Week contains an interesting look at the world’s most innovative companies. Working with the Boston Consulting Group, the Business Week team surveyed more than 1,000 senior corporate managers to assess which companies do the best job in terms of fostering and supporting innovation. The survey assessed a wide range of innovation, from technology to business models to process innovations. Apple took the top spot, followed by (in order): Google, 3M, Toyota, and Microsoft. The survey also asked respondents to identify the primary barriers to innovation. Slow development times ranked as the top obstacle, as firms cannot innovate quickly enough to meet rapidly changing customer needs. A lack of coordination ranked as the No. 2 challenge. Firms want to enhance collaboration, but often find it difficult to work across different organizations and groups.

“The World’s Most Innovative Companies,” appears in the April 24, 2006 edition of Business Week. It is available on-line at:
http://www.businessweek.com/magazine/toc/06_17/B39810617innovation.htm

(Workplace) Safety in small numbers

Small workplaces that are a business’ only location are among the safest places to work, according to a new study carried out by the Kauffman-RAND Center for the Study of Small Business and Regulation. Researchers found that fatal accidents were most common at small worksites (with fewer than 20 workers) that were operated by middle-sized businesses – defined as those with 20 to 999 employees. Fatality rates at these worksites were 2 to 5 times higher than similar worksites operated by either small or large businesses. The report contends that small, single-site businesses may be safer because they could have an owner on the premises who watches over the safety of employees. Some policymakers have argued that the burden of health, safety and environmental regulations falls too heavily on small businesses, which have less ability to keep up with regulatory requirements and can’t take advantage of economies of scale to meet safety standards. This report suggests that the safety records of single establishment small firms may justify lighter regulatory intervention there. In addition, it might make sense for OSHA to focus more effort at middle-sized firms that have small establishments, because they present by far the highest fatality risks.

Read the abstract and excerpts from “Small Businesses and Workplace Fatality Risk: An Exploratory Analysis” on RAND's website at http://www.rand.org/pubs/research_briefs/RB9181/index1.html. Copies  can be ordered from RAND’s Distribution Services (order@rand.org or call toll-free in the United States 1-877-584-8642 [ISBN: 0-8330-3944-X]).

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All stories © 2006 The Public Forum Institute
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