How to “Startup America”
– Daniel Isenberg is Professor of Management Practice at Babson Global and founding executive director of the Babson Entrepreneurship Ecosystem Project. Dr. Isenberg has been an entrepreneur, venture capitalist, consultant, and educator, having taught at Harvard, Columbia, Technion, INSEAD, and Reykjavik. –
The White House recently convened an unprecedented consortium of public and private entities to announce the launch of Startup America. The purpose was to galvanize a coordinated effort to define and implement President Obama’s vision and strategy to foster entrepreneurship and provide more push to the United States’ economic development.
Startup America has a lot going for it: a broad group of influential entrepreneurship stakeholders, real entrepreneurs at the heart of the dialogue, a sincerely committed president and an independent convening S.W.A.T. team who are making entrepreneurship a top priority and a powerful, well-connected, smart board with a smart-looking interim CEO. In my book, Startup America has gotten the basics right; I don’t take this lightly – my observations of more than two dozen countries is that very few have done even this.
But like most entrepreneurial ventures driven by ambition and a strong sense of purpose, this one has a very long way to go. As plan and reality diverge, like most startups, Startup America will need to revise its business model, change or enhance its leadership, and deal with disappointments, and an ever-changing landscape.
So the launch on January 31, 2011 was just the opening shot: to turn this initiative into real results, a lot more has to happen. Here are a few suggestions:
- Be crystal clear about Startup America’s objectives. For every 100,000 or so residents, each major city (or region) should be generating annually, one new high-aspiration venture with at least one real, paying customer. This measurable goal will focus attention and galvanize stakeholders into action.
- Translate Startup America into hyper-local activities. Cities and counties should become the foci of intense activity, not the nation. Entrepreneurship is hyper-local in that all “species” of entrepreneurs gather around extremely small “watering holes” to draw from the resources (people, ideas, capital, customers) they need to start up and grow. One size does not fit all, so you need to help each locale cultivate the entrepreneurial culture that best fits it.
- Infuse Startup America with a global perspective. Entrepreneurs don’t need to help America “beat” China or Brazil; they need to partner with Chinese and Brazilian entrepreneurs to sell to customers everywhere. To be more global, we must also encourage entrepreneur immigrants; the Startup Visa proposal is only a drop in the bucket.
- Publish a “sell-by” date for Startup America. I propose December 31, 2015, which gives us almost five years for measurable results. A sell-by date will force the Startup America team to focus on achieving self-sustaining results. Success breeds success, and a powerful way of knowing if a program is successful, is to remove the props and see if it stands on its own.
- Encourage financial innovation. We need innovative financing models for the startup sector, because debt or equity providers support just a tiny, select minority. We must help innovative entrepreneurs develop profitable financing mechanisms targeted to a much broader base of deserving startups.
- Have a map of the entrepreneurship ecosystem. Without a map, we won’t know if we are headed in the right direction. Here is a simple version of an entrepreneurship ecosystem map with 13 elements, all of which must eventually exist for Startup America to achieve its goals. Encourage and empower each of the hyper-local initiatives to cultivate all 13 elements of their own entrepreneurship ecosystem, in ways that are unique to them.
These principles, and others, will help translate the great intention of the entrepreneurship stakeholders you have brought together, and to drive the Startup America to actually achieve concrete results.
Obama should help small business, but not too much
– P. Griffith Lindell is a veteran business consultant, speaker and author. His newest book is “Struggling With Your Business? Ten Questions to Consider Before Investing A(nother) Dime“. The views expressed are his own. –
President Obama focused part of his State of the Union address on the need for “government (to) create the conditions necessary for businesses to expand.” I applaud and agree with him. The lifeblood of America must flow through micro and small-business veins.
It’s going to take more than political pronouncements, however, to produce the revenues and profits that will change the rules of the current economic game.
It’s going to take some practical business programs – developed, implemented and overseen by those who understand the stresses of meeting a payroll – not by some isolated academics or the political elite with ivory tower views. The major arteries of governmental involvement are needed, but with fewer constrictions. Until our economic blood flows freely to the small capillaries of small business, the national economy body will be anemic.
Let’s be certain in 2011 that the circulatory system of economic turnaround becomes healthy. First, eliminate the stress of uncertainty, which only constricts. Second, provide a regular heartbeat of money at good rates to oxygenate the economy’s blood supply.
Regaining health will demand small business advocates with “hearts” that have been strengthened in a crucible that mixes: (1) the stresses of making a payroll; (2) with finding and keeping customers; (3) while blending in relief born of opportunities that generate enough revenue to continue to fund the business.
Local, state and national program leadership must come from those who have proven experience – they have developed simple, practical business plans that leveraged resources, managed cash and returned a profit. Such leaders recognize that resources (like small business loans) must come from all facets of the community and the government can help facilitate that process – without being the process.
If we could just get past your first point- the issue of uncertainty, it would be a breakthrough for this economy! Having policy makers that continue to shove their progressive garbage down the throats of American business is choking industry- not helping!
Community lenders get a mini bailout
It’s considerably less than the multi-billion bailout the commercial banking sector received as part of President Obama’s Recovery Act legislation, but battered community banking institutions will gladly take it.
On Monday, Treasury Secretary Tim Geithner pledged $90 million to help 59 Community Development Financial Institutions (CDFIs) in 26 states and Puerto Rico. CDFIs help companies, including many small businesses, in economically distressed urban, rural, and Native communities.
Geithner’s announcement comes on the heels of Federal Reserve Chairman Ben Bernanke’s speech that called for help for CDFIs at the Global Financial Literacy Summit in Washington, DC two weeks prior. Bernanke said, “while community development is a small part of our overall capital and credit markets, the Federal Reserve recognizes that these financial flows are critically important for many low- and moderate-income communities.”
In making his own announcement on CDFIs, Geithner said the increased funding “will help generate capital for small businesses, mortgage loans for homebuyers, and funding for affordable housing projects and other facilities in communities across the country.”
According to a forthcoming CDFI Data Project (“Providing Capital, Building Communities, Creating Impact – Fiscal Year 2007″) there are more than 1,000 CDFIs in the U.S., with a collective $25 billion in assets.
The government’s budget for the CDFI Fund this year is $107 million, a figure President Obama plans to more than double to $243.6 million for 2010.
Mark Pinsky, president and CEO of the Opportunity Finance Network (OFN) – a nationwide network of CDFIs – said while the government funds are appreciated, it represents a minuscule portion of the overall capital.
Daniel,
You said,
“Encourage financial innovation. We need innovative financing models for the startup sector, because debt or equity providers support just a tiny, select minority. We must help innovative entrepreneurs develop profitable financing mechanisms targeted to a much broader base of deserving startups”
We couldn’t agree more so we built it!
If you want to Startup America here is how you do it.
First you need to be able to see who the entrepreneurs are, where they are located, and how much capital they need to launch and succeed, so we built a digital map showcasing Startups Across America.http://startupsacrossamerica.com Now anyone launching a new company in the USA can stake their claim for a piece of the American Dream on the map and broadcast their funding needs to a nation of possible investors. The number of start-ups and the funding dollars they are trying to raise is totaled by state and showcased on the map so everyone can see where the opportunities are and the money that is needed. We can no longer wait for or depend on conventional forms of capitalization, i.e. small business loans, angel and venture capital to provide access to capital to get us out of the economic crisis. Last year the number of applicants who got venture or angel capital was shockingly low, and too many great ideas, products and inventions never saw the light of day. We must provide another option. To achieve a more level playing field for access to capital, wealthy individuals need to take a more active role investing in entrepreneurship and innovation to help rebuild the American economy. But they can’t do that if they don’t know where the need is, where the pioneers are, and how much capital entrepreneurs need to launch and succeed. And we need to remove certain regulatory roadblocks that for too long have limited access to investment. We hope entrepreneurs everywhere will join our campaign and encourage startups to sign up onto the map as a first step in a new process to create an expanded flow of investment capital and a new way of clearly seeing the promising Startups Across America.
Second part:
So that everyone can get down to business together and fully understand the business model that their funding is needed ,we created the Funding Roadmap
http://fundingroadmap.com
on the cloud accessible from a smart phone, which provides detailed step-by-step questions to which investors and lenders expect answers, and guides entrepreneurs through a comprehensive pre-qualification and reporting process to identify the strengths and weaknesses of their particular funding request well ahead of time. Multiple-choice selections are designed to educate applicants to take the steps necessary to correct any deficiencies before their presentation. The platform aids startups to mid-sized business owners through the process of preparing a Funding request document to present to lenders and investors across the state or across the country to “get funded faster (and not waste everyone’s time when they are not prepared or provide boiler plate business plans that never get read,) and provides a polished online presentation that stands out for review by lenders, VCs and angels, as well as friends and family investors. Along with its comprehensive profile of a proposed business, Funding Roadmap features a streaming video feature for elevator pitches. The presentations are available 24 / 7 on-the-cloud to potential lenders, investors and partners, and can be kept current for everyday guidance and ongoing funding needs. Users can save months of time, money, and frustration while increasing their chances of getting funded faster.
Ruth E Hedges CEO