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Week of July 30 - August 5, 2007 |
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Census Bureau, Economic Data Under Fire Action last week on Capitol Hill surrounding the FY2008 Commerce-Justice-Science Appropriations bill has put some widely-used economic data from the Census Bureau in jeopardy. Following a $30 million cut by the House Appropriations Committee, an amendment to shift an additional $10 million away from Census to bolster border security in the southwest US narrowly passed along with the bill on the House floor. The Bureau's leaders have indicated that these cuts will come from its Economic Statistics Group, which produces the Survey of Business Owners and other important data reports. According to a statement from Bob Litan of the Kauffman Foundation outlining the importance of the survey, the SBO provides important insights into the world of entrepreneurship with a wealth of information about business age, industry, employment, owner demographics and firm financing –and most importantly, that unlike other surveys, its sample size of 2.3 million businesses includes small and new firms. Recently, the National Academies argued that the biggest failing of the SBO was that it was conducted too infrequently, missing those businesses that emerge then fail quickly. It followed with a recommendation for the SBO to be carried out annually instead of every five years and for a public-use or restricted-access version of the data file. What lies ahead? Once the Senate passes its version of the bill, S.1745, which does not include the cuts, debate will continue in conference committee. In addition, the Census Bureau is expected to issue a 30-day call within the next several weeks for comments on the SBO. Stay tuned for updates. View additional information on H.R.3093, the Commerce, Justice, Science, and Related Agencies Appropriations Act, 2008. View "The Importance of the Survey of Business Owners", a statement by Bob Litan of the Kauffman Foundation. |
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Innovate America and a Sneak Peak at Clean Energy Last week, the National Governors Association finished up its annual Summer meeting in Traverse City, Michigan. As part of this event, the NGA released a series of reports tied to Governor Janet Napolitano’s (D-AZ) 2007 special initiative called Innovation America. Three reports were released:
All of these reports are excellent guides for how policymakers can help their economies prosper in today’s globalized economy. The NGA meeting also provided a sneak peak at incoming NGA Chair Tim Pawlenty’s (R-MN) new special initiative around clean energy. |
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Just as the “American Idol”
television series is stirring up the music business, a group of
entrepreneurs is quietly adopting a similar format to change the face of
the venture capital and angel investing industry, according to an
analysis on venture financing by the Ewing Marion Kauffman Foundation.
According to the paper, while “American Idol” has proved to be a major
success in identifying and establishing entertainment stars, the reality
show also has tapped industry experts to groom and coach the top talent
in the competition, who have gone on to sell tens of millions of albums.
A similar formula is emerging among a new wave of entrepreneurs and
venture capital funders -- from identifying new entrepreneurs to
providing the expert advice and support in launching and accelerating
new business operations. The new “Idol-based” models vary in their
details, but their contest-based method of selection and subsequent
grooming are a common feature. This new approach to finding and
nurturing innovative entrepreneurial enterprises seems to be catching on
like wildfire, not only in the United States but in Europe and other
parts of the world. In a report titled “Finding Business Idols: A New
Model to Accelerate Start-Ups,” the Kauffman researchers outline several
variations of this new form of early stage acceleration and venture
investing. This so-called new “accelerator” model differs from previous
early stage investors, such as incubators, which are oftentimes limited
to real estate deals, with start-ups as tenants who pay for shared
overhead. In contrast, the accelerator typically helps form companies as
legal entities, interviews and hires the appropriate initial management
team, and lends its own management expertise. In short, the accelerator
becomes the “new company” throughout seed-stage development. And though
venture capitalists and even some angel investor groups have backed away
from seed-stage financing, others are now showing interest in the
accelerator model of picking and grooming the next wave of potentially
high-growth start-ups. |
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The World’s Most Innovative Companies
Business Week is out with
its annual listing of the world’s most innovative companies. Given the
buzz surrounding the iPhone, it’s no surprise that Apple maintains its
number 1 ranking on this year’s list. Others in the top five include (in
rank order): Google, Toyota, General Electric and Microsoft. The list
seems to stay fairly stable over time, but this year’s rankings include
four newcomers to the top 25: Disney, Boeing, Genentech, and Cisco
Systems. The list is accompanied by a series of interesting articles
including survey data from interviews with top corporate executives.
Somewhat surprisingly, only 23% of surveyed executives (down from 32% in
2006) identified innovation as their firm’s top priority. Most
executives felt their firms were fairly strong in terms of product and
service innovation, but only 50% felt their firms could innovate
effectively in terms of adopting new business models. When managers were
asked to identify major obstacles to innovation, their top worries were
their firm’s risk-averse culture, long development times for new
products and services, and poor coordination within the company. |
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Wealth, Race and Entrepreneurship
A new research report
sponsored by the US Small Business Administration’s Office of Advocacy
examines the links between wealth, race, and entrepreneurial activity.
The research finds that individuals in the top twenty-five percent of
the wealth distribution are more likely to start a business than others
with less personal wealth. The study also finds that African-American
and Hispanic entrepreneurs face more obstacles in starting a new
company. The chances of a minority individual starting a new business
are 55% lower than for non-minority individuals. Firms that seek outside
financial assistance were found to have better prospects for success
than firms who did not seek such help. Finally, contrary to previous
research, the study finds that having a parent who was an entrepreneur
has no sizable effect on whether one starts a business. |
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A new study of
broadband use in California offers some useful insights for other
regions around the country and overseas. The study, Broadband for All?,
examines patterns of broadband adoption and availability across the
state. It notes the presence of three broadband “digital divides” in the
state. First, broadband availability varies widely. Not surprisingly,
broadband is more readily available in wealthier and denser parts of the
state. In terms of adoption, 47% of California households have broadband
(compared to 39% nationwide). Finally, the study finds large racial and
income disparities in terms of use – wealthier families are much more
likely to adopt broadband. Hispanic and African-American families have
much lower broadband adoption rates when compared to other Californians
– even though the availability of such services does not differ by race.
The report concludes by recommending that policymakers focus on two key
goals: boosting broadband availability in rural areas, and boosting
broadband adoption and use by Hispanic and African-American families.
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America’s Only Exclusively Student-Run Venture Fund An interesting
effort is underway in North Dakota, where the University of North Dakota
(UND) is sponsoring the only student-led and managed venture capital
fund in the US. The Dakota Venture Group got started with a donation
from a local entrepreneur, and is now managed by five students enrolled
in UND’s business programs. Other universities operate student venture
funds, but UND officials consider Dakota Venture Group to be unique
because it is 100% managed by students. Students handle all aspects of
the investing process, from screening deals to due diligence to actual
investing. The fund looks for high-growth opportunities in North Dakota
and Minnesota and is especially interested in firms started by UND
students and alumni. The fund is viewed as a great opportunity to learn
the ins and outs of equity investing, and also to make a difference in
the economy of the Great Plains region. |
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The National Dialogue on Entrepreneurship is 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 entrepreneurship around the world. Subscribe now to receive your weekly copy. Archived issues are available online. |
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National Dialogue on Entrepreneurship
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All
stories © 2007 The Public Forum Institute
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