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Week of April 28 - May 4, 2008

Entrepreneurial Activity Remained Strong in 2007

According to the latest Kauffman Index of Entrepreneurial Activity, 495,000 new businesses per month were started in 2007 with 0.30 percent of the adult population (or 300 out of 100,000 adults) involved in the startup process. This entrepreneurial activity rate is a slight increase over the 2006 rate of 0.29 percent.

Other trends from the Kauffman Index include:

  • The rates for immigrants (0.37 percent to 0.46 percent) and men (0.35 percent to 0.41 percent) rose significantly

  • The rate for women dropped (from 0.23 percent to 0.20 percent).

  • The rate among Latinos increased (0.33 percent to 0.40 percent) more than any other major ethnic or racial group

The rate among youth—ages 20-34—increased, but still lag behind older age groups
The study also examines entrepreneurial activity by city, state and region. Startup activity increased in the Midwest and the West, but decreased in the Northeast. The entrepreneurial activity rate increased slightly in the South.

For a list of the most (and least) entrepreneurial cities and states, download the the Kauffman Index of Entrepreneurial Activity at www.kauffman.org.

New National Innovation Foundation Proposed

A new report from the Information Technology and Innovation Foundation and the Brookings Institution suggests that a new National Innovation Foundation could do a better job of structuring key Federal agencies to support innovation. The study recommends that a newly created National Innovation Foundation serve as the Federal government’s primary support mechanism and point of contact for issues related to innovation. The report proposes three possible structures for a new NIF: housed within the Commerce Department; a publicly-sponsored corporation similar to the Corporation for Public Broadcasting; and, as an independent federal agency like the National Science Foundation. Regardless of the final structure, the NIF would seek to:

  • Catalyze industry-university research partnerships through national sector research grants.

  • Expand regional innovation-promotion through state-level grants to fund activities like technology commercialization and entrepreneurial support.

  • Encourage technology adoption by assisting small and mid-sized firms in implementing best-practice processes and organizational forms that they do not currently use.

  • Support regional industry clusters with grants for cluster development.

  • Emphasize performance and accountability by measuring and researching innovation, productivity, and the value-added to firms from NIF assistance.

Champion innovation by promoting innovation policy within the federal government and serving as an expert resource on innovation to other agencies.

It is anticipated that legislation will soon be introduced in the Senate. This promises to kick-off a new round of discussion about how big a role the Federal government could or should play in unleashing America’s innovation capacity.

Download the April 2008 report from the Information Technology and Innovation Foundation and the Brookings Institution’s Metropolitan Policy Program, Boosting Productivity, Innovation and Growth through a National Innovation Foundation, by Robert Atkinson and Howard Wial.

Nurturing Business Clusters

A new Brookings Institution study contends that current Federal policies do too little to promote cluster creation, i.e. agglomerations of businesses, service providers, and other partners who operate in a particular field or sector. As part of a wider set of programs to spur innovation, the report recommends that policymakers initiate a new set of programs to catalyze cluster activity across the US. This effort would contain two components. First, a Cluster Information Center would help map cluster initiatives across the US and provide research and evaluation about these programs. This effort is modeled on a successful European effort, the European Cluster Observatory (www.clusterobservatory.eu). Second, a new Federal grant program (of about $360 million) to help fund state and regional cluster initiatives. This effort would help seed state and local innovations and also build closer connections between Federal, state and local partners.

Download the April 2008 report from the Brookings Institution’s Metropolitan Policy Program, Clusters and Competitiveness: A New Federal Role for Stimulating Regional Economies, by Karen G. Mills, Elisabeth B. Reynolds, and Andrew Reamer.

SBA Small Business Person of the Year

The US Small Business Administration (SBA) spent much of last week recognizing National Small Business Week, co-sponsored by the Kauffman Foundation. As part of these events, SBA also announced its 2008 National Small Business Person of the Year winner: Shawn Boyer of Richmond’s SnagAJob.com. SnagAJob.com is one of the nation’s leading on-line job posting sites for temporary and hourly positions. Runners-up for this year’s awards were: Angela R. Timm, CEO of Cottage Garden, Inc. (Bainbridge, IN); Deborah Moore, CEO of AccuStat EMR (Myrtle Beach, SC); and, George Burciaga, CEO of smarTECHS.net (Chicago, IL)

Learn more about the 2008 US Small Business Administration’s National Small Business Person of the Year awards.

Entrepreneur Hot 100

Entrepreneur magazine recently published its 14th annual list of the Hot 100 listing of the nation’s fastest growing firms. This year’s list is topped by Orlando’s Simple Self Storage, which was founded in 2003 yet already has 500 employees, $150 million in annual revenue, and 225 facilities. Entrepreneur also includes some interesting aggregate figures about the Hot 100 companies. At start-up, these 100 companies boasted total employment of 517 people. By 2009, these entrepreneurs project that they will collectively employ more than 15,000. When asked where they obtained their start-up funds, 79 of Hot 100 owners noted that they used personal savings and credit cards. Other popular funding sources were friends and family (19) and lines of credit (23). Only three firms used venture capital sources.

“Shining Stars: The 2008 Hot 100,” appears in the May 2008 issue of Entrepreneur.

Business Week’s Most Innovative Companies

The latest issue of Business Week contains its rankings of the world’s 25 most innovative companies. The list, developed in cooperation with the Boston Consulting Group, is based on surveys of more than 2500 leading corporate executives. Not surprisingly, Apple tops the list for the third straight year. Most respondents lauded Apple for its introduction of the iPhone which has, in only ten months, pushed Apple to #3 in the global smartphone market. Other innovative firms include (in rank order): Google, Toyota, General Electric, and Microsoft.

“The 25 Most Innovative Companies: Smart Ideas for Tough Times,” appears in the April 28, 2008 issue of Business Week.

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.

Kauffman Foundation The Public Forum Institute

National Dialogue on Entrepreneurship

Mark Marich, Editor

All stories © 2008 The Public Forum Institute
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