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Week of May 8 - 14, 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.

Angel Investing Getting Attention from Congress

While twenty states now offer tax credits or other support to qualified angel investors, several members of Congress are examining ways that Washington can help create incentives for angel investing. Congressmen Don Manzullo (R-IL) and Earl Pomeroy (D-ND) have recently introduced H.R. 5198, the Access to Capital for Entrepreneurs (ACE) Act of 2006. This legislation would create a 25% tax credit for individual angel investors or partnerships that invest in qualified small businesses. The credit would be available for investments up to $250,000. Another take on the angel investing issue comes from Congresswoman Nydia Velazquez (D-NY). Along with numerous colleagues, the minority leader of the House Small Business Committee has introduced H.R. 4565, the Angels Nurture Growing Entrepreneurs into Long-Term Success (ANGELS) Act of 2006. H.R. 4565 would create a new Office of Angel Investment at the Small Business Administration. In addition to promoting angel investing as an innovative practice, the Office would make investments (of up to $2 million) to qualified angel groups. Both bills have a long path toward final passage, but they serve as an indication of Congress’ growing interest in supporting entrepreneurship.

To view the text of both bills, visit the Library of Congress’ THOMAS website at http://thomas.loc.gov.

The Power of Star Scientists

A new National Bureau of Economic Research (NBER) paper examines the role of star scientists and engineers as instigators of high technology entrepreneurship and company formation. UCLA researchers Lynn G. Zucker and Michael R. Darby followed the careers of more than 1,800 “star” (determined by publications and patent activity) scientists and engineers between 1981 and 2004. They found a very close connection between the movement of these individuals and rates of new technology company formation. In other words, it’s the person who builds the business, not the technology or the patent. Their other finding is that “stars” tend to cluster over time. They concentrate in a few communities where they have regular access to peers with skills in the same technologies or disciplines.

To view a summary of the April 2006 National Bureau of Economic Research paper, “Movement of Star Scientists and Engineers and High-Tech Firm Entry,” (No. 12172) by Lynn G. Zucker and Michael R. Darby, visit http://papers.nber.org/papers/w12172. The full paper is available for purchase from NBER.

Web Portal Consolidates Entrepreneurship Research

The Ewing Marion Kauffman Foundation, a major sponsor of research on entrepreneurship, has announced a new release of its Entrepreneurship Research Portal – a clearinghouse for understanding entrepreneurship across disciplines. The portal provides research, as well as listings of events and data sets targeted to the entrepreneurship research and policy community. With more than 2,000 existing records, and hundreds of new records added each month by its content partners at the University of Illinois, Urbana-Champaign and the Social Science Research Network (SSRN), the Entrepreneurship Research Portal is quickly becoming the most complete online resource for cross-disciplinary research on entrepreneurship. The new release offers many enhancements including: email and RSS options for notification of new research and events; more information on data sets used for the study of entrepreneurship; an expanded Research Database that includes research submitted through the Entrepreneurship Research and Policy Network (ERPN), a new scholarly network that is part of SSRN; and, the capability to browse research by author, institution, or subject.

The portal also allows users to submit research, events or calls for papers to be included on the site. Start using the Entrepreneurship Research Portal by visiting -- www.kauffman.org/research.

Inc.’s Hot Spots for Entrepreneurs

The May 2006 issue of Inc. Magazine contains its annual list of hot spots for new and growing businesses. This year’s ranking methodology is a little different from that used in previous lists. However, the bottom line is that the list focuses exclusively on job growth by combining measures of short-term (1 year), medium-term (five year), and long-term (ten-year) employment growth. This methodology tends to skew the results in favor of smaller cities and newer locations. Larger, more mature metro areas often find it harder to generate the rapid growth rates found in new and smaller locations. With the exception of Las Vegas (with non-farm employment of 879,000) and Cape Coral-Ft. Myers, Florida (non-farm employment of 209,000), the top ten performers all have employment bases that are below 125,000 non-farm employees. The top three performers are (in order): Yuma, AZ, St. George, UT, and Cape Coral-Ft. Myers, FL. The best performing large metros are Las Vegas (#9 in the overall list), Ft. Lauderdale (#24) and Orlando (#28). Nevada tops the list as the fastest growing state. Between 2001 and 2005, jobs in Nevada grew at a sizzling 19.3%.

“The Best Cities for Business,” Inc. Magazine’s listing of good locations for entrepreneurs, can be found in the May 2006 issue of Inc. or on-line at http://www.inc.com/bestcities. 

A Canadian View of Technology Commercialization

As in the US, Canadian business and government leaders are searching for ways to improve their country’s technology research and commercialization processes. In an effort to assess where Canada stands and where it should be going, Industry Canada chartered an expert panel on commercialization, headed by Joseph Rotman. Their report was recently released and it contains lots of useful ideas and information. It contains eleven recommendations for improving Canada’s research commercialization performance. These include establishment of a business-led Commercialization Partnership Board with a mission to advise government leaders on commercialization policies and to design new programs in this field. The panel also recommended creation of a Canada Commercialization Fellowships program, designed to attract talent to the technology commercialization field. Other recommendations focus on increasing research spending and making it easier for Canadian entrepreneur to access needed financing.

To view the April 2006 report of the Canadian Expert Panel on Commercialization, People and Excellence: The Heart of Successful Commercialization, visit
http://strategis.ic.gc.ca/epic/internet/inepc-gdc.nsf/en/tq00016e.html.

Early Education and Economic Growth

While we are big believers in innovation and entrepreneurship as drivers of economic growth, we don’t believe that they are the only drivers. Education, especially early childhood education, plays a critical role in generating a base for future prosperity. A new Brookings Institution policy brief seeks to quantify these effects. The report notes that researchers now estimate that education accounts for anywhere between 13 and 30 percent of the total increase in productivity (averaging 2.4% per year) over the past forty years. Much of this past research has examined the effects of primary and secondary level education; few studies have examined the role of pre-school education. The authors review this literature and find that effective pre-school education can have profound effects on economic growth rates. In fact, they suggest that a major federal investment in universal pre-school education (costing approximately $59 billion over 60 years) could increase the GDP in 2080 up to $2 trillion. What does this mean in plain English? The authors suggest that universal pre-school education would increase GDP by an additional 3.5 percent.

To access the April 2006 Brookings Institution Policy Brief (#153), The Effects of Investing in Early Childhood Education on Economic Growth, by William T. Dickens, Isabell Sawhill, and Jeffrey Tebbs, visit http://www.brookings.edu/comm/policybriefs/pb153.pdf.

Kauffman Foundation    The Public Forum Institute

National Dialogue on Entrepreneurship
2300 M Street, NW; Suite 900
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Mark Marich, Editor

All stories © 2006 The Public Forum Institute
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