Jonathan Ortmans

Building One Global Entrepreneurial Ecosystem

Month: June 2009 (page 1 of 2)

The Condition of U.S. Research Universities

Four Members of Congress have asked the National Academies to assess the competitive position of our research universities, both public and private. In a letter delivered on June 22 to the Ralph Cicerone (President of the National Academy of Sciences), Harvey Fineberg (President of the Institute of Medicine) and Charles Vest (President of the National Academy of Engineering), the bipartisan congressional asked that an Academies’ panel answer the following question:  “What are the top ten actions that Congress, state governments, research universities, and others could take to assure the ability of the American research university to maintain the excellence in research and doctoral education needed to help the United States compete, prosper, and achieve national goals for health, energy, the environment, and security in the global community of the 21st century?”
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Creating a White House Office of Innovation Policy

The innovation legislation pieces discussed yesterday in the House Committee on Science and Technology corresponded with three sectors of innovation policies—information technology, energy, and services—discussed at a gathering I attended the same day by The Information Technology & Innovation Foundation (ITIF). Stuart Benjamin and Arti Rai of Duke Law School discussed the benefits of establishing a White House Office of Innovation Policy (OIP).
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An Entrepreneurial Silver Lining

A new study has confirmed it. A close look at our entrepreneurial history reveals that entrepreneurship is an engine for job creation and economic growth even during difficult economic times. The study, The Economic Future Just Happened reveals that more than half of the 2009 Fortune 500 companies started in a recession or bear market. Similarly, nearly half of the firms on the 2008 Inc. list of America’s fastest-growing companies were launched during a recession or bear market.

This new study by the Kauffman Foundation’s Dane Stangler suggests that policies that support entrepreneurship also support recovery. It also reveals that job creation from startup companies tends to be less volatile and sensitive to downturns when compared to the overall economy. Are there factors in economic tough times that encourage potential entrepreneurs to take the risk of translating their ideas into a startup?

Several are identified. First, firm founders might perceive that their prospective competition might be weakened. Second, entrepreneurs may view unemployment as an opportunity to start a company. In other words, they beat unemployment with a startup. Further, unemployment presents the opportunity to tap into a larger pool of potential employees.

Naturally, not all new ventures survive, not even during healthy economy times. But although the link between new firms and aggregate economic performance is not so straightforward — some of the startups experience an initial expansion only to contract in its second to fifth year before expanding again — in times of recession, the important contribution of new firms regardless of their ultimate fate constitutes their immediate positive impact on job creation. New firms also contribute to innovation, thereby driving economic growth and often restructuring the economy with new patterns of economic activity.

Companies that reach the Fortune 500 and Inc. fastest-growing lists demonstrate strength, innovativeness and flexibility. These companies were once invisible, but their founders were able to turn a problem into an opportunity. I encourage you to read about some of these success stories in “Profiles in Innovation” section. I would not be surprised if some of the entrepreneurs behind these big companies failed for various reasons beyond a depressed economic environment before successfully reemerging. The entrepreneurial process is complex, but as this new study shows, risk-taking offers big rewards in an entrepreneurial economy both to the entrepreneur and the larger economy.

Knowing this, is the government’s response to this recession supportive of entrepreneurs? Despite the spur of entrepreneurship during recessions, obstacles remain, potentially mitigating the positive contributions of entrepreneurs during such difficult economic times. On top of the list is perhaps the tight capital market. In this regard, Financing the Entrepreneurial Recovery: A Kauffman Foundation Summit, offered interesting insights. Its participants, which included economists, researchers, investors, and entrepreneurs, discussed and debated a wide range of policy recommendations. Most urgently, they called for relief from the strangling costs of providing health care and Sarbanes-Oxley compliance. When asked for new models of financing entrepreneurs, participants expressed strong support for the continuation of the SBIR program, federal support for university proof-of-concept centers, and a national tax credit for angel investments.

More is sure to come from this and other similar discussions, but one thing is certainly clear – entrepreneurship is the path forward to recovery.

A Bill on the Future of SBIR

The Senate Committee on Small Business and Entrepreneurship introduced this week a legislation to reauthorize the Small Business Administration’s (SBA) Small Business Innovation Research (SBIR) program along with the Small Business Technology Transfer program (STTR), which were scheduled to expire at the end of July and the end of September, respectively.  The legislation will reauthorize the programs for 14 years. Continue reading

House Gives Vote of Confidence to Entrepreneurs

As part of an effort to get our economy back on track by unleashing entrepreneurship, the U.S. House of Representatives passed a bill designed to provide small businesses and entrepreneurs with new and expanded assistance. H.R. 2352, the Job Creation through Entrepreneurship Act of 2009promises to assist small business owners or aspiring entrepreneurs to get access to finance, training and education.
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