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Week of September 24 - 30, 2007

Angel Predictions ‘On the Money’

In its Confidence Report earlier this year, angel groups belonging to the Angel Capital Association predicted that the quantity and quality of entrepreneurial investment proposals in the coming year would surpass 2006 levels. A mid-year check by the ACA shows that those predictions were not just idle boasts. Fifty percent of survey respondents expressed that their group’s deal flow had continued to increase in quality and quantity during the first six months of 2007, and most of the remaining respondents said that deal flow was similar to 2006. Angel groups also expressed optimism regarding relationships with venture capitalists. A majority of angel group leaders (73.7) thought that the relationships between VCs and angel groups had improved in the last three years. Reasons given for the improved relationship with VCs included: market segmentation, increased understanding about their respective roles in early and later-stage financing, better deal structuring, and good company referrals, among other things. Forty-four percent of the angel groups in the survey had established partnerships with VC firms to expedite co-investments or follow-on investments.

For more information on the Angel Capital Association, visit www.angelcapitalassociation.org.

Gender Similarities and Differences in Entrepreneurs

While a popular book once proclaimed that “Men are from Mars, Women are from Venus,” that’s not really true when we’re talking about entrepreneurs. A new Small Business Administration Office of Advocacy-sponsored report finds that men and women entrepreneurs share more similarities than differences. The study’s main conclusion is that, when other factors are controlled, gender does not affect a new venture’s performance. Women and men often decide to become entrepreneurs for different reasons, but these differences don’t appear to have a huge effect on the bottom line. What are some key differences? Men are more likely to start a technology business and to start a business with a primary objective of making money. Women, in turn, are more likely to operate in low risk/return business sectors. Women were more likely to operate a business with positive revenue, while men are more likely to own a firm with employees. In the past, these many interesting trends led some researchers to suspect major differences in male and female entrepreneurs. This new research contends that most of the differences in firm performance are due to past industry or start-up experience as opposed to gender differences.

Download the September 2007 Small Business Administration Office of Advocacy-sponsored report, “Are Male and Female Entrepreneurs Really That Different?” by Erin Kepler and Scott Shane.  

Innovation in China

A new Organization for Economic Cooperation and Development (OECD) study assesses China’s current innovation policy framework. The report recognizes China’s impressive achievements, and especially highlights the Chinese government’s capacity to mobilize investment resources for science and technology. China ranks No. 2 in the world (behind the US) in the number of employed researchers, and has sustained a 19% annual R&D spending increase for more than ten years. While the input side is impressive, the output performance has lagged. China’s performance still lags in many critical areas, such as patent applications, funding for basic research, and the quality and productivity of research personnel and scientists. The report concludes with suggestions for how China can improve its support for innovation. These recommendations include strengthening of China’s weak intellectual property regime, improving corporate governance practices, using state procurement to help stimulate innovation, and shifting investment away from its current emphasis on building research infrastructure to providing more support to nurture human capital.

Download the 2007 Organization for Economic Cooperation and Development Review of Innovation Policy, “China: Synthesis Report.”  

The Power of Global Collaborations

A new research paper from a group of Harvard Business School professors takes a look at effective approaches for international collaboration around innovation. The paper’s basic finding is that firms should not just build international alliances that are based on costs. This, of course, is the traditional model found in the offshoring of manufacturing to lower cost economies. When seeking to promote innovation, effective alliances are built on deep webs of collaboration. Overseas collaborators should not be treated as suppliers, but as real partners. Effective firms also reorganize and restructure their operations to help support international R&D alliances. If firms hope to build new innovations via global partnerships, they will need to move away from a traditional “outsourcing” mindset to a new approach that fosters real collaboration across borders.

Access the August 2007 working paper, “Innovation through Global Collaboration: A New Source of Competitive Advantage,” by Alan MacCormack, Theodore Forbath, Peter Brooks, and Patrick Kalaher. 

University Merger Talks to Spark Innovation in NYC?

After a three-year hiatus, merger talks are back on between New York University and Polytechnic University, a private engineering college in Brooklyn. The move would eventually result in “Brooklyn Poly” being integrated into NYU as its engineering school. An August policy brief released by the Center for an Urban Future suggests that the merger could be just what the city needs to start competing as on a national level as a center for R&D and technological innovation. The authors of “Engineering a Tech Sector” point out that despite a number of well-regarded scientific research institutions and an enormous amount of federal R&D funding, New York City gets very little return in business development. The brief notes that only three NY universities pass the $1 million mark for engineering research – Polytechnic being one of those with $9.8 million (the entire city combines for $48.5 million). Even if the merger goes through, there will be considerable ground to gain on national leaders like Georgia Tech ($286 million), MIT ($207 million), Stanford ($156 million) and Michigan ($154 million).

Download “Engineering a Tech Sector,” written by David Hochman. Or read the memos concerning the merger talks from NYU and Polytechnic. 

Research & Policy Network Grows

In a little more than a year, the Entrepreneurship Research & Policy Network has grown to more than 3300 papers that have been downloaded approximately 413,000 times. Sponsored by the Ewing Marion Kauffman Foundation, the site is a part of the larger Social Science Research Network which is devoted to the rapid worldwide dissemination of research on twelve topics, including economics and entrepreneurship. ERPN provides licenses to nearly 750 schools, university departments, firms and other organizations.

Learn more about Entrepreneurship Research and Policy Network.   

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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All stories © 2007 The Public Forum Institute
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