Stagnant economy and low valuations and “right-sizing” of VC industry… oh my! 2010 could have seemed like just another tough year for entrepreneurs. But there are always glimmers of light and this year, those glimmers were more like fireworks. What’s more, the fireworks aren’t going to die down anytime soon, and I think they reflect a new momentum in America that will only grow bigger over the course of the next several years. Here’s my list of the top 10 reasons that made it so:
10. Investment dollars are coming back. The year isn’t finished yet, but in Northeast Ohio, venture capital investment will have almost doubled from last year’s lackluster investment levels. Nationally, venture capital investing is up over 30%, with a particular focus on companies creating transformational innovation in medical devices, social media, cleantech, cloud computing, and biotechnology. While we still have a long way to go for all the worthy, venture-backable companies to be able to access the capital they need, it’s encouraging to see activity bouncing back from the most dismal of years.
9. Entrepreneurial education has never looked so, well, entrepreneurial. Like entrepreneurs, entrepreneurial education has expanded its wings to provide students with exposure, contacts, and skills beyond general entrepreneurial studies. Interested specifically in Digital Entrepreneurship? Check out the degree program at Neumont University near Salt Lake City. Interested to start your own non-profit? Check out Social Entrepreneurship programs at Duke, Stanford, or Babson, among other B-school heavyweights. Regardless of your entrepreneurial interest, there are now over 1,000 entrepreneurial studies programs at colleges and universities across the country to provide educational tools and more importantly, confidence.
8. New funding and jobs committed through the Invest in America Alliance. Hooray for the leadership of successful entrepreneurs and their companies are recommitting to our country through the Invest in America Alliance. In February, Intel CEO Paul Otelliniannounced the alliance, a partnership led by Intel and supported by many leading VC firms and corporations. The best parts of the Alliance are two new commitments: 1) a new $200 million Intel Capital Invest in America Technology Fund, focused on cleantech, IT, and biotech companies, and 2) a commitment from 17 technology leaders and corporations to increase their hiring of college graduates, some by as much as 200% for a total of 10,500 new jobs for graduates.
7. Innovation at the SBA. Under new leadership of Karen Gordon Mills (a former venture capitalist), the SBA has updated its product offering and processes based on feedback from its clients and independent third-party studies. SBIR 2.0 improvements include a simplified application process, streamlined (i.e. faster) approval process, and expanded financing options. Also reflecting a business-like approach to a government entity, the agency is implementing uniform performance metrics and is publishing performance data. Love the transparency!
6. Super angels emerge to play a leadership role. “Super angels” (investors, often entrepreneurs with exit experience, who are investing in seed and early-stage deals with smaller amounts of money than traditional VC investments) became a more recognized and critical part of the funding continuum in 2010. With 10 year venture returns falling drastically post-Google IPO, early-stage investing is just feeling a little too risky for more mature firms. These super angels are serving a new and critical role in bringing capital and experienced guidance to companies who would never get off the ground without them. (And – a plug for JumpStart – we are continuing to invest in this same space at the velocity of 10-12 Northeast Ohio companies a year. With 50 portfolio companies as of today, and 3-4 more in due diligence, it’s never been so good to be in Northeast Ohio.)
5. Startups can hire the talent they need. There seems to be a renewed spirit of the importance of entrepreneurship across the country, and a growing acceptance that big companies are not going to be the status quo for job creation any more. This, combined with the challenging economy, makes working at an entrepreneurial venture–even starting an entrepreneurial venture–much more attractive than in recent years past (at least in places outside the Valley and Boston). I realize that startups require people with a special kind of DNA (good economy or bad), but I think there are people who demonstrate what we call “adaptable excellence” – they are outstanding performers in everything they do — who might consider being a part of a startup team in an economy like this, when the risks of a startup might be less attractive in a healthier economy.
4. Legitimate burn-rate reducers are now mainstream. If entrepreneurs need money like people need food, the web and growing entrepreneurial ecosystem has enabled entrepreneurs to go on a diet without sacrificing their health. Sites such as Crowdspring.com allow startups to get the quality marketing assets needed (just the basics, but they are the required basics – logos, web design, and copywriting) at a lower cost than ever before. With 150 million U.S. Facebook users, 4 million active Twitter users, and 32 million LinkedIn users, never before have entrepreneurs had as much opportunity to reach people on the cheap. PayPal enables the avoidance of hiring a payroll service, incubators provide access to professional meeting space, and the list goes on. The best part of this is that this is not a flash-in-the-pan; this trend will only continue to help entrepreneurs more in the future.
3. Increasing numbers of business plan competitions. In 2006, Kauffman Foundation identified 353 business plan competitions at colleges and universities across the country, and Bo Fishback (the Vice President of Entrepreneurship at Kauffman) believes that number may have doubled since then. These competitions provide street cred, excellent training and practice, and best of all, money. There’s almost no better way for a student to jump into this space and get her/his company growing as quickly as possible. Perfect example: CitizenGroove, which won a business plan competition in Northeast Ohio in the spring of 2008. Since that time, the company has raised over $1 million in organized angel and grant funding, secured 13 customers, and is creating jobs. In recognition of this progress, Citizen Groove’s leadership team was named among “America’s Top 25 Most Promising Entrepreneurs Under 25” by Bloomberg BusinessWeek.
2. The rise of “camp-like acceleration programs” (the “new incubator”). The founder of TechStars recently went on record in Reuters to predict a “bubble” in these types of programs this decade. Regardless, founders have never had as many helpful assets as they did in 2010 to help them take an idea, develop and test it further with experienced mentorship, and connect it easily to investors. From Founder Institute (now in 13 cities worldwide, launching 500 companies a year), to TechStars (now expanded to 4 cities), to the expansion of Bizdom U to the Cleveland market (announced in fall 2010) and dozens of others, focused education and connections with experienced people have never been better.
And don’t forget the online world. IdeaCrossing.org is one of the best matching products on the web, so if you don’t live in one of the cities hosting a program like this, you can still connect to valuable resources such as mentorship, investors, and service providers online.
1. The creation of the National Advisory Council on Innovation and Entrepreneurship. While JumpStart is a 100% bipartisan organization, there is no denying that the best piece of news for entrepreneurs in 2010 was the creation of this national Council by President Obama and Commerce Secretary Gary Locke. Stocked full of experts in this space (for example, it is led by AOL Co-founder Steve Case, Michigan President Dr. Mary Sue Coleman , and Sparta Group Chariman Dr. Desh Deshpande), this is not just a council of figureheads. The Administration is serious about asking for the advice of this Council and is working on a number of actual initiatives to accelerate and elevate entrepreneurship across the country, ultimately leading to accelerated job creation. As a public/private partnership, this council is moving at the speed of business, not the speed of bureaucracy. Entrepreneurs, stay tuned…there will be news forthcoming which may change your business.
What else happened in 2010 that you feel offers tremendous short and long term potential for entrepreneurs?
Cathy Belk is the Chief Relationship Officer of JumpStart. She specializes in branding, marketing communications, and business and relationship management. She brings 16+ years of experience in a variety of marketing and business roles, but gets her energy from working daily with entrepreneurs and their growing companies.