Small Business Startup News

Entrepreneurship Expanding In The U.S., According To Investors And VCs

Written by Tim Morral
Published: 2/19/2013

At Kauffman Foundation event, investors report about the rising tide of entrepreneurship in technology and other market sectors.

For centuries, aspiring business owners have hung shingles and strived to transform their American dreams into American success stories.

Entrepreneurship Growing or Shrinking in United States

Although entrepreneurship fell into a steep decline during the 2008-2009 recession, a recent Business Journals report by Kent Hoover points out that there is now a growing wave of entrepreneurism being felt by investors, business incubators and others who are on the frontlines of the startup scene.

At the Kauffman Foundation's recent State of Entrepreneurship event at the National Press Club, venture capitalists and panel participants were abuzz about how much activity they're seeing in the entrepreneurial sector.

"I've never seen activity like I've seen last 24 to 36 months," said Alan Patricof, founder of the Greycroft venture capital firm and a forty-year investment veteran.

The entrepreneurial spirit appears to be particularly strong among college students, many of whom would traditionally be navigating a corporate or professional career trajectory. Jeff Fagnan, a partner in the early stage VC group, Atlas Venture, said that when he talks to college students at Ivy League universities, "everybody wants to be an entrepreneur."

Although the factors behind the rise of entrepreneurship are complex, lower entry costs are clearly a driving force. According to Fagnan, $1 million in capital goes as far as $10 million did a few years ago in the technology sector. Relatively low startup costs play a role in risks and rewards for entrepreneurs, and make the startup concept more appealing to individuals who might otherwise seek employment at an established firm.

Additionally, it's expected that crowdfunding will further fuel the current entrepreneurship boom when the SEC issues regulations later this year. Once enacted, crowdfunding will allow small businesses to directly connect with large numbers of small investors online, streamlining the funding process and making it easier for promising startups to find necessary capital.

However, while the technology startup scene is thriving, Hoover adds that capital-intensive sectors like biotechnology, manufacturing and energy are struggling to secure funding -- underscoring the financial realities that lurk beneath the surface of entrepreneurial dreams in all sectors.

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