Tag Archives: startups

VC Continues to be Overrated; Policy Makers Beware!

For years I have been reminding people that less than 5% of firms ever take any kind of venture investment — that is one of the reasons I find the growth of business plan competitions so odd. Why prepare students for pitching to Venture Capitalists when most of them will never do it? (We’ll answer that in another post).

Well, there is a growing chorus of entrepreneurship bloggers sounding the alarm that policy makers are focusing too much on the VC model when talking about economic recovery.

Growthology (a blog out of Kauffman) and The Entrepeneurial Mind (Jeff Cornwall) have both pointed to a study by Paul Kedrosky of Kauffman: Right-Sizing the US Venture Capital Industry. From the study (p.5):

External capital is sometimes required by some private companies in their early stages, and it is good that there is a class of professional investors with enough financial resources to provide that assistance when it is needed. However, venture capital and entrepreneurship are separate phenomena, even among growth companies, and conflating the two, let alone implying that the former causes the latter, is untrue and unhelpful.

This is a short paper and well worth reading. Thanks to Kauffman and Kedrosky for putting this out there.

Bootstrapping: Weapon of Mass Reconstruction

Forbes columnist Sramana Mitra has a new book out on bootstrapping. She interviews 13 entrepreneurs from Silicon Valley. The review at the Sustainable Work Blog offers a nice snippet from Mitra’s opening (especially in light of the $30.4 billion that Obama is giving to GM today):

“So, what next? Where to from here? From my perspective it is clear that small business must be a top policy priority. There are approximately 5 million small businesses in the United Sates with fewer than 20 employees. Another 20 million mom-and-pops endeavor day in and day out without employees. Let us hope that in the coming decade, those numbers will double, then triple and quadruple. For here is the most powerful engine of economic growth and sustenance. Here is our way back”

“If the next Google is to emerge and bring with it thousands of new jobs, it must first start over some kitchen table where not only hope but opportunity is readily available. Where entrepreneurs not only start businesses at a higher rate, but also survive and thrive at a higher rate.”

“Through much discussion, writing, and brainstorming on each topic, I arrived at one core thesis: Not just entrepreneurship, but bootstrapped entrepreneurship is the true weapon of mass reconstruction.”

“Businesses often fail to take flight because they cannot raise funding. Well, start with the assumption that funding will not be available until the business is substantially further along, if ever, and that bottleneck is removed.” Continue reading

U of C MBA Students Launch App Firm

According to a tech blog at the still standing Chicago Tribune, 2 university of Chicago Booth School of Business 1st year students have launched a iPhone/iTouch app firm called Bump Technologies. Their first app allows iPhones/Touch users to ‘bump’ each other in order to share information (like a fist bump). From the piece by Eric Benderoff:

The new iPhone app, called “Bump,” transfers data from one iPhone to another (or an iPod Touch) simply by bumping each other. While one person holds an iPhone, he “bumps” hands with another user holding her iPhone. Then detailed contact information or just select data, such as a phone number, is shared.

The company says information is exchanged in less than 10 seconds. 

Presenting @ Mason Entrepreneurship Research Conference 3/27

This Friday, March 27, 2009, is the Mason Entrepreneurship Research Conference. I presented a few years back on Social Capital and Business Plan Contests and will be presenting this week on The Frontier in US History, The Modern Campus, and Entrepreneurship. Last year I posted from the event a few times. Our friend Tim Berry is the key note speaker.

Here is some background on the conference and its mission. Interestingly, it is a joint venture between the School of Public Policy and the School of Management.

Yale Campus Entrepreneurs Want U to Get Paid to Recycle

Check out this new venture from Yale campus entrepreneur Bob Casey. YouRenew.com provides an opportunity for people to sellyourenew their old personal electronics (recycle) and get paid. With so many old cell phones, mp3 players, digital cameras, and smart phones around, this is a huge market opportunity. With such an appetite for electronics in and around the campus, it is not suprise that YouRenew came from students at Yale.

I look forward to learning more from Bob about his firm and about how Yale University has granted him sabbatical to go after this opportunity as part of the Yale Entrepreneurial Institute’s Incubator.

New MIT Case Study Highlights Power of Campus Entrepreneurs

A case study of the entrepreneurial economy spawned by MIT was released last week. The report, Entrepreneurial Impact: The Role of MIT by Edward B. Roberts and Charles Eesley (both of MIT) looks pretty interesting and some of the numbers and statements in the press release are pretty amazing. Here is a snippet from the Kauffman Foundation’s website — you can download the report there. (I will post more on the report after I have read it)

According to the study Entrepreneurial Impact: The Role of MIT analyzes the economic effect of MIT alumni-founded companies and its entrepreneurial ecosystem, if the active companies founded by MIT graduates formed an independent nation, their revenues would make that nation at least the seventeenth-largest economy in the world. Within the U.S., these companies currently generate hundreds of billions of dollars and hundreds of thousands of jobs to regional economies, particularly those in Massachusetts and California. Globally, a less conservative estimate of their annual world sales would equal $2 trillion, producing the equivalent of the eleventh-largest economy in the world.

Fudgemaker Wins Brooklyn BPlan Comp

Just saw a fudgemaker won 15k in a Brooklyn Bplan competition put on by the local library. This is the fourth year of the PowerUp! competition sponsored by the Brooklyn Business Library and supported by the Citi Foundation (don’t know if that will continue). From the article by Joyce Shelby;

The basic recipe for Brooklyn Fudge has been in the family for generations, said Jones, who majored in acting at New York University. Her business is an outgrowth of her decision to alter the recipe, making it suitable for kosher and vegan diets. Check out the Web site (www.brooklynfudge.com).

The PowerUp! competition is sponsored by the Citi Foundation.

There were two second-place winners in this year’s contest: Nzinga Knight of Nzinga Knight International, who designs modest evening wear suitable for Muslim women, and Elissa Olin of Green Home Green Living. She plans to open a one-stop shop for environmentally friendly goods in Fort Greene. Each winner received $5,000.