When to Sell Your Company

When to Sell Your Company — on startups — Medium: " . . . 1. The offer captures the upside - Every business has natural growth limits. If someone offered you $10 million for your coffee shop that does $250,000 a year in sales, it’s pretty clear you should sell—from a purely financial perspective. Finances are only one perspective, but if you have many shareholders, it’s one you are obligated to take seriously. . . . 2. Imminent threat - There’s potential, and then there’s risk. And there’s always risk, even in the best situations. But there are cases in which your chances of reaching your potential are slimmer than normal and maybe even totally out of your control. Consider YouTube’s legal issues or PayPal’s fraud challenges. . . . . 3. Personal choice . . . .


more news below

Follow @vcexp

Unreasonable at Sea Accelerator

Unreasonable@Sea 2 Minute Video! from Unreasonable Media on Vimeo.
(www.unreasonableatsea.com) Unreasonable at Sea is a mentor driven accelerator for tech entrepreneurs who desire to take their ventures into new international markets. We are selecting exclusively for technology based companies who are working to solve the greatest social and environmental challenges of this century. Why Unreasonable? The 100 day program will be run on a ship as it travels more than 25,000 nautical miles around the globe and ports in 14 countries.

Why 100 Silicon Valley Entrepreneurs are Sailing Around Asia Right Now
Tech in Asia
This concept of being unreasonable, according Daniel Epstein, the sailingfounder of Unreasonable at Sea, is derived from a famous quote from George Bernard Shaw who said that “all progress depends on the unreasonable man” because he “persists in ...

Tech in Asia

more news below

Follow @vcexp

Google and Twitter execs form VC fund

Exclusive: Google and Twitter execs form VC fund - The Term Sheet: Fortune's deals blogTerm Sheet: "The new firm is called Homebrew, and is raising $25 million for its debut fund. According to documents viewed by Fortune, the investment strategy would be to back technology startups that "enable the people-based economy" for both consumers and enterprises. The portfolio would be fairly concentrated -- fewer than two dozen companies -- with around half being incubations and the other half being seed-stage financings. Homebrew would offer a variety of services to portfolio companies -- co-location space, recruiting, etc. -- and also would provide a small slice of carried interest to entrepreneurs (kind of like what First Round Capital has done)."

A reminder for start-ups of the limitations of "plans--
Alcatel Chief Is Out as Turnaround Stalls - WSJ.com: " . . . The company unveiled its "Performance Program" in late July. The plan promised to slash €1.25 billion in annual costs by the end of 2013, by reorganizing the company and cutting 5,500 jobs—or roughly 7% of its 2011 workforce. The company said it would exit underperforming contracts, many of them in Europe, and focus increasingly on more profitable businesses like Internet routing. It didn't take long for the plan to be overtaken by events. The company burned €360 million in cash during the third quarter. Its already junk-rated debt hit distressed levels with some bonds trading for 60 cents on the dollar in August. "The fear was that the company would run out of money," said Yannick Naud, a portfolio manager at Glendevon King, a London-based asset-management company. Company executives said they had enough cash to handle maturing debt through next year, but they were pressured as the cost to insure their debt against default rose. So they began exploring a loan deal with banks. . . . "

Guide, a new technology startup based in Miami, announced Tuesday it has closed a $1 million round of seed funding from investors including theJohn S. and James L. Knight Foundation, Sapient Corp., MTV founder Bob Pitman, actor and producer Omar Epps, and early Google employeeSteve Schimmel. The Knight Foundation is supporting Guide through its new early-stage venture fund, the Knight Enterprise Fund.
Read more here: http://www.miamiherald.com/2013/02/06/3218833/miami-startup-that-turns-text.html#emlnl=Business#storylink=cpy
(Source: Miami Herald) more info: http://www.gui.de/

Dell's Wasted Billions Explain Fuzzy Math on Deal: Street Whispers - TheStreet: "As of 2012, Dell repurchased nearly 1 billion shares worth roughly $24.8 billion over the previous eight years. The repurchases, which came at an average price of just over $25 a share, represent a loss of roughly $11.3 billion at Dell's proposed $13.65-a-share takeover price. In the past five years, Dell has bought back about $10.4 billion shares at an average price of $18.92, which equates to an almost $3 billion loss given the terms of Tuesday's deal. Simply putting a stop to value-destroying share repurchases that have wasted billions in cash at the PC maker may go a long way in helping Michael Dell and his consortium to finance and profit from the takeover."

more news below

Follow @vcexp

Next computing deployment phase

The computing deployment phase - Chris Dixon: "Some questions to consider: What industries are the best candidates for the next phase of deployment? The likely candidates are the information-intensive mega-industries that have been only superficially affected by the internet thus far: education, healthcare, and finance. Note that deployment doesn’t just mean creating, say, a healthcare or education app. It means refactoring an industry into its “optimal structure” – what the industry would look like if rebuilt from scratch using the new technology. . . .Where will this innovation take place? The historical pattern suggests it will become more geographically diffuse over time. . . . one comment (excerpt): call the next phase the governance layer because it is really about internet-based networks (i.e. platforms) disrupting the nation-state as a model of governance. that's the real deal, and all roads eventually go down that path. amazon's new virtual currency is another example -- the virtual currency is going to be the breakthrough moment, akin to what search is for the application layer. as an amzn fanboy i applaud their efforts here, although it's a game that favors a startup for sure. . . . "

General Liability Policies May Cover Antitrust, Patent, and Other Business Litigation – Part 1 | Farella Braun + Martel LLP - JDSupra: "General liability insurance is frequently overlooked in business litigation. These policies, however, include coverage for “disparagement” and “malicious prosecution.” Both terms are construed broadly and may provide coverage for a variety of lawsuits, including antitrust claims, patent disputes, trade secret claims, as well as other commercial litigation between competitors, or suppliers and their customers."

Google, Facebook led private tech M&A activity in 2012 as companies spent $46.8b on over 2,200 deals - The Next Web: " . . . 76% of private tech companies that were bought up last year had bootstrapped instead of turning to VCs. As expected, California saw the most private tech M&A deals last year, more than the next five states combined. North Dakota was the only US state that didn’t host a private tech acquisition in 2012. Internationally, the UK was the top acquirer, followed by Canada. India emerged as an up-and-comer at the third top international market. Web and mobile commerce were the most popular types of companies to acquire, comprising 173 of overall deals. Notable acquistions in 2012 included: Facebook purchasing of Instagram, Microsoft snatching up Yammer, and Twitter acquiring Posterous. . . ."

more news below

Follow @vcexp

Tory Burch Great Advice

Tory Burch : Great Advice : Get Inspired | Tory Burch Foundation:
"WHEN STARTING A COMPANY YOU MUST...
Have a unique idea, absolute focus and the tenacity to follow through.
THE BEST BUSINESS ADVICE I'VE RECEIVED IS...
Always be transparent and straightforward.
NEVER UNDERESTIMATE...
The importance of being an information gatherer and doing thorough research.
I LOVE WHAT I DO BECAUSE...
It's the perfect balance of being creative and entrepreneurial.
NEVER BE AFRAID OF...
Change. It's usually hard but often is essential.
MY GREATEST TALENT IS...
Recognizing talent in others and building a fantastic team. . . ."

Just in Time for Valentine’s Day: When Employees Place Bets in the Workplace Dating Pool… | Ogletree, Deakins, Nash, Smoak & Stewart, P.C. - JDSupra: " . . . A recent survey from Vault.comshowed that 59 percent of employees admitted to having engaged in a workplace romance, both in the form of a fling (23 percent of men, 15 percent of women) and a long-term, serious relationship (14.7 percent of men, 22.2 percent of women). The survey also suggested that nearly a third of all employees engaged in an actual “romantic encounter” (this is a family blog, folks) while at the office, with 4 percent being caught in the act. The most interesting stat to me, at least from a human resources (HR) standpoint, is that of those who have once had a workplace romance, 63 percent of those surveyed would do so again. At the same time, the Equal Employment Opportunity Commission reports that in the 2011 fiscal year, 11,364 charges of discrimination were filed alleging sex harassment. Granted, this was the lowest number since 1997, but still represents a significant percentage of the overall number of charges filed in this country. Since every charge filed costs the company in terms of time (and, more often than not, money), anything the company can do to limit the likelihood of a harassment claim should be considered, if not implemented. . . . " (Read more at the link above)


more news below

Follow @vcexp

America needs immigration reform--and foreign-born engineers and scientists!

The US is educating thousands of engineers and scientists, and then making them leave the US because of outdated immigration laws--and yet an op-ed in the New York Times tries to justify this idiotic immigration policy. A cogent response from James Pethokoukis (excerpt below)--

No, America does not have a ‘genius glut’ | AEIdeas: " . . . a New York Times op-ed by the union-backed Economic Policy Institute, “America’s Genius Glut,” ventures into the hysterical when attacking the idea of a tech workers shortage and a new bill that would increase the number of high-skill temporary and permanent visas . . . Some of those high-skill immigrants become entrepreneurs . . . Economist Giovanni Peri:
1. While accounting for only 13 percent of the population, foreign-born individuals account for about one-third of U.S. patented innovations.
2. One-quarter of all U.S.-based Nobel laureates of the past fifty years were foreign born. Immigrants have been founders of 25 percent of new high-tech companies, with more than $1 million in sales in 2006, generating income and employment for the whole country.
3. Over the period 1975–2005, all of the net growth in the number of U.S.- based Ph.D.s was due to foreign-born workers.
4. Currently about half of the Ph.D.s working in science and technology are foreign born. Innovation and technological progress are the engines of economic growth.
5. A high-skill job in a city creates 2.5 additional jobs in the local nontradable sector through linkages of production and local demand effects.
6. An increase in the share of college-educated immigrants by 1% increases productivity and wages for everybody in a city by 1%.
7. Immigrants accounted for well over 50% of the growth in employment in STEM-related fields between 2003 and 2008. . . ."


more news below

Follow @vcexp

Preparation for new gTLDs

What Do We Do Now that the World Didn’t End in 2012? | McDermott Will & Emery - JDSupra:" . . . In light of the new generic top-level domains (gTLDs) that are scheduled to launch in the latter half of 2013, companies should now review their global trademark portfolios for marks they want to protect. The new gTLDs will allow companies to have “.brand” extensions (e.g., .yahoo, .nike) and allow the creation of new domain name registries with extensions containing generic words and locations (e.g.,TheFrenchLaundry.restaurant, BuddhaBar.paris). With the launch of almost 1,400 new gTLDs, the World Wide Web is poised to explode with new marketing opportunities and, it can be assumed, opportunistic cyber squatters and domain name thieves. Now is an ideal time to conduct an audit of your company’s global trademark portfolio and decide which trademarks, if any, need to be defensively registered with the Trademark Clearinghouse (TMCH) in order to be protected against potential misappropriation.The TMCH is a centralized depository of information that will function as an authentication/validation mechanism for protecting registered, court-validated and statute- or treaty-protected trademarks as the new gTLDs roll out. Registering trademarks with the TMCH will provide trademark owners (1) access to the Sunrise Period, i.e., the priority domain name registration period before registration opens to the general public; (2) Claims Notices, which will alert trademark owners when a new gTLD is registered that matches their exact trademark; and (3) access to the Uniform Rapid Suspension system and other dispute mechanisms for taking action against abusive and infringing domain names registered by third parties. . . ." read  more at link above


more news below

Follow @vcexp

Why Facebook and not Mars colonies

Why we got Facebook and not Mars colonies - Paul B. Farrell - MarketWatch: " . . . But “even during the years when VCs were most risk-happy, they preferred investments that required little capital and offered an exit within eight to 10 years.” Truth is, “VCs have never funded the development of technologies that are meant to solve big problems,” says Pontin, in a direct challenge to Silicon Valley’s so-called Big Problems syndrome. And that forces him back to the core question raised by Buzz Aldrin, Peter Thiel and every high-tech investor interested in quarterly profits and big payoffs: “Putting aside the personal-computer revolution, if we once did big things but do so no longer, then what changed?” Pontin does a brilliant job diagnosing five key Big Problem macrotrends: 1. More important public policy alternatives, like investing on Earth  . . . Seriously, is Silicon Valley’s Big Problem a real problem? Or did their high-tech geniuses make it up? Pontin says “sometimes we choose not to solve big technological problems. We could travel to Mars if we wished. NASA has the outline of a plan,” and “if the agency received more money ... humans could walk on the Red Planet sometime in the 2030s.” But “we won’t, because there are, everyone feels, more useful things to do on Earth. . . . ”

more news below

Follow @vcexp

Zipcar: the limits of capital, scale, and marketing

Zipcar: Entrepreneurial Genius, Public-Company Failure - Corporate Intelligence - WSJ: " . . . there’s no denying it: We live in a Zipcar world right now – one in which we think little of “sharing” a car for a few hours, or renting a Parisian flat via Airbnb, or sharing sports gear, pets, or heavy construction equipment. All kinds of technology made this possible, but it was the inspiration of Zipcar’s founders in 2000 to stitch it into one, seamless experience. This is what Zipcar’s CEO Scott Griffith meant when he said in November that Zipcar was a “business model company.” The full liberation and efficiency of this “hyper-rental” economy has really just begun. And yet as Zipcar is showing, innovation does have its limits. Mainly the limits of capital, scale, and marketing. Zipcar was a prodigious money-loser. Funding growth around the world, it never once turned a profit, losing about $55 million since 2007. And the entry of behemoth Hertz made its task all the more costly. . . "

more news below

Follow @vcexp

Caribbean Journal’s Entrepreneur of the Year

Caribbean Journal’s Entrepreneur of the Year 2012: Jamaica’s Tyrone Wilson: "The idea first started around 2006, when Wilson was attending the University of the West Indies. “At the time, it was IPTV, internet protocol television, and I was looking at I can get into this TV market, because in Jamaica it’s really hard to start a television network — there was a real barrier to entry,” he said. When he started eMedia, at the time, eZines, he temporarily shelved the video idea, he said, finding it easier at the time to find funding for the magazine.  As he progressed with the magazines, however, he was approached by Pan Caribbean about expanding. “Right away, iVu was the idea that I pitched and they were sold on it,” he said. The key for iVu, Wilson said, its unique advertising platform — one that allows advertisers to put local, Jamaican ads on the channel. That’s in contrast to streaming sites like YouTube, which puts contextual, typically non-local ads on its video."


more news below

Follow @vcexp

Why startups shouldn't be afraid of bigger companies

It's always a fear, and sometimes a reality--

Why startups shouldn't be afraid of Facebook cloning them | The Social Analyst - CNET News " . . . Remember when Facebook tried to make a Foursquare competitor? How about the time it tried to make a Groupon competitor, and it went nowhere? The same is true of its Quora competitor(Facebook Questions) and even its Craigslist competitor (Facebook Marketplace). I could go on and on, but the point is clear: a big company launching a clone can be scary, but it doesn't mean Armageddon. There are two other factors to consider: defensibility and vision. . . . a product's defensibility comes from either its technology or its traction. Technology startups' products aren't easy to clone because they have proprietary technology that even the big companies don't have. Just imagine AltaVista trying to clone Google -- it wouldn't have succeeded. . . .


more news below

Follow @vcexp

Start-Up Nation Explodes Economic Myths

Dan Senor and Saul Singer's "Start-Up Nation" Explodes Economic Myths, Promotes Some Too - Forbes: " . . . Back when he was alive, and in his brilliant book The Economy In Mind, Brookes mocked such tax subsidies. As he saw it, in an economy of the mind a company’s most important assets are its people, not plant or equipment. FedEx has airplanes that take goods around the world, but the company’s real assets are the brilliant individuals who organize package delivery on a global scale. Goldman Sachs may have a state of the art building in lower Manhattan, but its success is a function of the bright minds that arrive to work each day. Israel’s modern economic story confirms Brookes’s intellectual economy. Evidence supporting this is billionaire Warren Buffett’s $4.5 billion investment in Iscar, a machine tools company located within easy reach of enemy rockets. Shouldn’t this have fazed Buffett? Not a chance.As Buffett’s biographer, Alice Schroeder, told the authors, “if Iscar’s facilities are bombed, it can go build another plant. The plant does not represent the value of the company. It is the talent of the employees and management, the international base of customers, and the brand that constitute Iscar’s value.” Too bad politicians and economists miss this as they fiddle with the tax code in order to promote production and heavy equipment purchases. Unsurprisingly they get it all backwards. Not Senor and Singer. They write that “missiles, even if they can destroy factories, do not, in Buffett’s eyes, represent catastrophic risk.” People, not equipment are the future of advanced nations. We should remember this the next time our leaders bail out banks (just a collection of talent, the talent would regroup) and car companies. . . . "


more news below

Follow @vcexp

App Developers - managing risk and reward

App Developers: Here’s How to Get Paid Properly | MIT Technology Review: " . . . This is the role that VC’s play for at least a subset of apps: they invest in a portfolio of potential winners with the understanding that many will fail, some will produce solid returns, and - hopefuly - one or two will be huge hits. However, venture is just a piece of the solution, and a highly imperfect one. First, VC’s need to be convinced of the possibility of a home run, something most apps just can’t plausibly offer. Second, VC interest in the consumer app space has cooled, at least for now. So Yglesias’ question is still a good one. How do we manage risk in the hit-driven app business? It’s possible that crowdfunding could play a role. Creating a market for apps that gain traction but don’t amount to businesses will help get some developers paid, but doesn’t fully address the question of risk. But there’s a much more practical if unsexy answer that’s already put into practice. Mobile developers can band together to make a good living producing apps for third parties while devoting some time and revenue to a variety of original apps. Though the Times story does mention developers subsidizing their work with freelance income, it dismisses this tactic as draining critical resources from original development. But I think that’s too pessimistic. There’s a parallel here with Google’s 20% rule, where employees are encouraged to spend a sizeable portion of their time on projects of their own choosing. And, rather than one or two developers doing some freelance, the more developers that band together, the broader the portfolio can become. If the firm’s apps fail, well, that’s what the contract work is for. If they hit, the team captures the upside. Less risk, still plenty of reward. . . . "


more news below

Follow @vcexp

4 Qualities of an Entrepreneur

4 Most Important Qualities of an Entrepreneur | Inc.com: " . . . 1. Intelligence . . .  Relan draws a distinction between general intelligence and "entrepreneurial intelligence." He says the latter combines a high I.Q. with street smarts. "There's a difference between an inventor and an entrepreneur," he says. An inventor isn't interested in the commercial aspects of the business. On the other hand, he says, a pure salesperson may not be right either. "There has to be a balance of the two." How can you tell if you've got the right combo? Relan counsels aspiring entrepreneurs to read four books:
Return to the Little Kingdom about Steve Jobs and Apple
Hard Drive about Bill Gates and Microsoft
The Difference Between God and Larry Ellison
Only the Paranoid Survive by Intel founder Andrew Grove . . . .
2. Attitude . . . 
3. Leadership Skills . . . 
4. Knowledge . . . "


more news below

Follow @vcexp

Employment or Entrepreneurship? Which pays more

Does It Pay to Become an Entrepreneur? - Forbes: ". . . Who in his right mind would forsake a well-earned and almost guaranteed path to success and comfort, to take on a mission where “they” don’t care how impressive your performance reviews at your last job were, where you went to school, or how you just missed a perfect SAT score? In fact, there is no “they” ― there’s just you, trying to create something from nothing. . . . the study found that the mean, median, and standard deviation of incomes for entrepreneurs ― controlled for education, general ability (as measured by standardized test scores), and demographics (including age and parental income) ― tended to be higher than those for good old-fashioned employees. And the difference is by no means small: mean income for entrepreneurs is almost 50% greater than for “employees.” And what’s more, this effect is not explained by “professional” entrepreneurial pursuits such as opening a medical or law practice. . . ."


more news below

Follow @vcexp

Juggle More Than One Startup

Can You Really Juggle More Than One Startup? | Fast Company: " . . . Others, however, like to juggle multiple interests. These entrepreneurs have passions pulling them to Germany, Taiwan, and India; they’re intrigued by the possibilities inherent in mobile marketing, gaming, and trading. Their varied interests consume them all at once. But does this latter group accomplish anything? They do if they court their ventures properly. What it Takes for Serial Entrepreneurship to Work - Every entrepreneur has to remember one thing: Entrepreneurship works within limits. We have a lot of good ideas thrown at us, but we simply can’t do everything. We must carefully consider the best of the bunch, investigating and analyzing our options to ensure we’re putting our money and effort behind ventures that have true potential. Here are key indicators that simultaneous serial entrepreneurship is worth considering:

• Time: Can you dedicate enough time and attention to each interest? How long will these ventures take? Are you remodeling a building in a handful of weeks, or are you constructing a resort over two decades?
• Money: Do you have enough cash to support the growth of your interests in the short and long run? Businesses can be as high-maintenance, or low-maintenance, as significant others.
• Location: Does one require you to be in Alaska, while the other demands you be in Australia the next day?
• People: Who’s involved in your situation? Do you have partners polluting--or supporting--your relationships? Do you have the right people to handle the workload and supply talent?
• Sequence: Is one development already underway, or are you jumping into bed with both from day one?
• Experience: What experience do you have as an entrepreneur? What kind of knowledge do you have in the field you’re adding?"

more news below

Follow @vcexp

Feds say high-flying Miami millionaire was a fraud

High-flying Miami millionaire was a fraud, feds say - Broward - MiamiHerald.com: “ . . . No shareholder was invited into InnoVida on the prospect of making a quick buck,’’ he said, adding that he was more than two years away from going public. At the time, however, his empire was already crumbling. A judge had stripped him of the authority to run the company, whose headquarters were on Lincoln Road in Miami Beach. Chris Korge, a shrewd Miami developer and lawyer, said Osorio assured him that his company had about $40 million in cash and a lucrative deal with Middle Eastern investors to purchase $500 million in company stock. Korge invested $4 million before he began to suspect that something didn’t add up. “Jeb Bush was on the board, there were a lot of successful people convincing me. We went out and we met and I just began to realize that the cost-effectiveness of building with the materials would never work,’’ Korge said. By that time, however, it was too late. Creditors were already knocking on Osorio’s door, including the Swiss government, which claimed he owed $220 million in loans from Swiss banks that he obtained by lying about the soundness of his previous business venture, Miami-based CHS Electronics. That company went bankrupt in 2000. Korge’s attorney, Kendall Coffey, said Osorio had a knack for exploiting South Floridians’ quest for wealth and success. “Miami is a city of newcomers and opportunity. And the combination creates a perfect landscape for fraud,’’ said Coffey, a former Miami U.S. attorney. . . ."

Read more here: http://www.miamiherald.com/2012/12/07/v-fullstory/3131806/high-flying-miami-businessman.html#storylink=cpy


more news below

Follow @vcexp

Crowdsourcing and Remote workers

Unemployed? Buy An iPhone - Forbes: ". . . crowdsourcing is quickly turning into more than making a few dollars on the side.   The U.S. already has over 42 million (and growing) freelancers ranging from lawyers, accountants, childcare workers, photographers, graphic designers and other specialized professions. . . .While traditional full-time positions are slowly phasing out or being outsourced to lower-cost geographies, the workforce is undergoing a massive change. No longer do we work at the same company for 20 years, expecting the benefits and security that come with full-time employment.  The future of work is becoming increasingly global and mobile.  A freelance economy powered by work marketplaces allows employers access to vast labor pools and specific expertise that goes well beyond the borders of the enterprise. . . . As futurist Ross Dawson elegantly illustrates in his future of work framework, remote work and crowdsourcing will be key contributing factors to the high-performance organizations in the future.  This is already being demonstrated by efforts made by both large and small companies, who are recognizing that they must go beyond their employees in order to innovate fast enough. Companies like eBay, Microsoft and BMW are actively using crowd markets to extend their workforces and tap into specialized skills. . . ."

Links:
Fiverr
Gigwalk
oDesk
TaskRabbit

more news below

Follow @vcexp

Unemployment and Entrepreneurship

Risky Business | 4 Percent: " . . . Experts commonly invoke the “entrepreneurial eco-system” to explain how new businesses come into existence. The assumption is that localized environmental conditions make new businesses possible. But it may well be that much larger forces are responsible. Worrying about localities may be misplaced if the question is how to get more firms started in America. Even the content of the term “entrepreneurial eco-system” is hardly settled. It seems to suggest some features of a local economy (money, mentors, minds, and magic) that, when working together in some optimal way, produce more new businesses than might otherwise be expected. Since some places grow (e.g., Austin, Texas) and some contract (name any “rust belt” city), there is always an audience to hear why the former are more congenial to entrepreneurs. Michael Porter’s cluster theory, which holds that pre-existing conditions explain everything, is often invoked, as is Richard Florida’s notion of inducing more “creatives” to relocate by changing conditions such as “tolerance” and the inventory of loft housing. (The assumption, certainly open to question, is that people inclined to inventing new companies prefer such housing.) But it may be that place and other local ingredients seem important simply because they appear amenable to change. Porter’s and Florida’s theories actually might not have much to do with aggregate rates of new firm formation. Focusing on local characteristics and not on the macro forces influencing new firm creation is like looking at medicine rather than public health. In medicine, the patient in front of the doctor is the focal point; in public health, the whole population is of interest. Research initiated by the Kauffman Foundation in 2008 enables us to develop a “public-health” perspective on the nation’s entrepreneurial activity. At long last, a perspective on the nation’s entrepreneurial eco-system is beginning to emerge. . . . The data also permit us to speculate about a very important question: Why are fewer people starting new firms? Let me propose a link between new firms and the general level of economic activity. . . The entrepreneur, who could have taken a conventional job if he or she could have found one, knows that the difference between the normal 5% unemployment rate and the current nominal rate of 8% is more severe than just three percentage points. Indeed, from the entrepreneur’s perspective the chances of recovering from the risk of starting a company that fails is measured as some multiple of the current three percentage point difference between full employment (5%) and the current rate of 8%. Let us call this multiple the entrepreneur’s risk exposure index: It is the number that holds back entrepreneurs from taking the risk of starting a new company. . . ."


more news below

Follow @vcexp