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Posts Tagged ‘Kauffman Foundation’

Entrepreneurs expect profits to grow next year

Saturday, October 27th, 2012

Kauffman FoundationMost startup business owners doubt that the national U.S. economy will grow next year, but nevertheless believe their own profits will, according to the fourth-quarter Kauffman/LegalZoom Startup Confidence Index, released  by the Ewing Marion Kauffman Foundation and LegalZoom.

The number of entrepreneurs who say they expect their firm’s profits to increase in the next 12 months hit 83 percent, up 4 percent from the previous quarterly survey and the highest confidence level expressed in 2012 surveys.

Forty-one percent of entrepreneurs reported being very confident in future profitability in the fourth-quarter survey, compared to 39 percent in the third quarter. The number of respondents who were somewhat confident in future profitability rose from 40 percent in the third quarter to 42 percent in the fourth-quarter survey.

Youngest entrepreneurs the most optimistic

Sixteen percent of small business owners applied for loans or lines of credit in the last year, a number that remained unchanged from the previous quarter, but of these applicants, 14 percent more had their loans approved than in the previous quarter, a significant jump.

The youngest entrepreneurs – those 18 to 30 years old – exhibit the greatest optimism, as they did in the third-quarter survey.

Among this group, 93 percent were confident or very confident that their businesses would become more profitable in the next 12 months than they are today. This number is considerably lower than in the previous quarter, however.

Young people still show a rise in confidence from the start of the year, but from the third quarter to the fourth, there’s a marked drop-off.

Confidence is a leading indicator

“We believe these findings are important because entrepreneurial confidence could be seen as something of a leading indicator, as new and young businesses prepare to lead the next economic expansion,” said Dane Stangler, director of research and policy at the Kauffman Foundation.

Expectations for the U.S. economy rebounded from the July 2012 quarterly survey. Forty-four percent of startup owners now believe the economy will improve over the next 12 months, as compared to just 32 percent in the third-quarter survey, 38 percent in the second-quarter survey and 38 percent in the first-quarter survey.

“Over the last four quarters of tracking entrepreneurial confidence, the one number that has grown steadily is ‘intent to hire.’  It is encouraging to see it at its highest rate yet this year,” said John Suh, CEO of LegalZoom.

Nearly 40 percent of startup owners said they plan to hire additional employees in the next 12 months, which is the highest percentage reported in any of the 2012 quarterly surveys.

Entrepreneurs’ outlook for consumer demand also is becoming more optimistic. In the most recent fourth-quarter survey, 45 percent said they expect a moderate to significant increase in consumer demand in the next 12 months – 10 percent more than in the third-quarter survey.

 

Nearly half of U.S. startups founded by user entrepreneurs

Tuesday, March 13th, 2012

Kauffman Foundation“User entrepreneurs” have founded more than 46 percent of innovative startups that have lasted five years or more, even though this group creates only 10.7 percent of U.S. startups overall, according to a study by the Ewing Marion Kauffman Foundation.

“Who Are User Entrepreneurs?” is the first study to quantify the prevalence and characteristics of user entrepreneurs – those who have created innovative products or services for their own use, then subsequently founded firms to commercialize them – and identify how the firms they start compare to other U.S. startups in terms of revenue growth, job creation, R&D investment and intellectual property.

Users ignite tech change

“Users have ignited technological change in industries ranging from medical devices to sports equipment to juvenile products. In many cases, users, not producers, have the best information, and their incentive is to build something better for their own use. As a result, they are able to create truly novel innovations. When they commercialize these innovations, we all benefit,” said Sonali Shah, assistant professor and Buerk Fellow at Foster School of Business, University of Washington, and co-author of the report.

“This report provides the first comprehensive documentation of the prevalence of user entrepreneurship. Users make significant innovative and economic contributions to society – contributions that we are just beginning to understand and acknowledge.”

“Importantly, we observe significant differences between user entrepreneurs and others along dimensions that matter to economic growth and innovation, including access to outside equity capital and the intensive use of intellectual property protection,” said Sheryl Winston Smith, assistant professor of strategic management and entrepreneurship at the Fox School of Business, Temple University, and co-author of the report.

Three particularly interesting patterns emerge:

  • First, user entrepreneurship appears to be particularly common among innovative startups, and a high fraction of professional- and end-user entrepreneurs receive venture capital financing. Almost 6 percent of end-user entrepreneurs across all industries reported receiving venture capital in their first six years of operations.
  • Second, professional-user entrepreneurs seem to possess greater amounts of and richer human capital relative to other types of entrepreneurs. Their firms also seem to prosper with respect to revenue generation and were more common in the high-tech industries.
  • Third, end-user entrepreneurship may be a particularly attractive path for women and some minority groups. Although end-user entrepreneurs do not appear to possess greater human capital compared to other types of entrepreneurs and were different with respect to comparison groups, again a relatively high fraction of these firms reported receiving venture capital financing.

“User entrepreneurs are different from other entrepreneurs,” E.J. Reedy

“User entrepreneurs are different from other entrepreneurs,” said E.J. Reedy, Kauffman Foundation research and policy fellow and co-author of the report. “It is clear that these entrepreneurs are coming into their businesses with more tangible ideas, innovations or customers to build a successful firm. This was a first pass at analysis, and we will be going back to look at them in more depth.”

The authors compared three types of user entrepreneurs – end-user entrepreneurs (those who developed products or services for personal use); professional-user entrepreneurs (those who developed products or services for business use); and hybrid professional-/end-user entrepreneurs – with other “innovative” U.S. startups that had performed R&D during their first year of operations, and with U.S. startups in general.

The findings draw on data from theKauffman Firm Survey longitudinal study tracking nearly 5,000 firms founded in 2004.

Several previous industry-level studies suggested that user entrepreneurs were the first to introduce many key innovative products and services into the commercial marketplace in industries as diverse as medical devices, juvenile products and sporting goods.

User entrepreneurs have founded many well-known and successful companies, including Yahoo!, Black Diamond and Medtronic. Firms founded by the three user entrepreneur types also differed from U.S. startups overall, and from one another, in terms of market sectors, revenue, financing methods and intellectual property ownership.

To read the full, original article click on this link: Nearly Half of Innovative U.S. Startups Are Founded by ‘User Entrepreneurs,’ According to Kauffman Foundation Study

Understanding angel investors helps entrepreneurs pitch their business

Tuesday, January 3rd, 2012

Kauffman FoundationA new study by the Ewing Marion Kauffman Foundation found that up to 39 percent of angel investors don’t even get a positive return on investment, meaning they end up losing money.

This statistic is important to any small business owner or entrepreneur seeking funding for their small business. Angel investors are one way that small businesses get funding.

Consequently, it is important for small business owners to know what’s going on with Angel investors in order to better sell their business model.

In the recent blog post “Angel Investing Described as a “Low ROI” Investment,” the Business Finance Store discusses new statistics on angel investing and how small businesses can use this information to their advantage.

If one assumes that angel investors read up on finance and understand the current business climate, then one would know that they’re looking for businesses offering as much of a guarantee on positive return on investment as possible.

More knowledge will always put small business owners and entrepreneurs at an advantage.

Read more about new statistics regarding angel investing and how to make the most of it at the Business Finance Store blog.

The Business Finance Store is a business financing and consulting firm that offers customized Business Financial Solutions.

 

Economics bloggers share gloomy outlook on U.S. economy

Monday, October 31st, 2011

Kauffman FoundationUsing words like “uncertain,” “fragile” and “weak,” 96 percent of top economics bloggers now share a gloomy outlook on the U.S. economy. According to a new Ewing Marion Kauffman Foundation survey released today, respondents’ expectations of higher annual deficits and top marginal tax rate increases, coupled with recession concerns, are a “depressing surprise.”

Personally, we suspect the U.S. economy is more resilient than this survey suggests. Recent figures showing the U.S. economy actually grew by 2.5percent in the third quarter – well out of recessionary territory. With holiday spending about to boost Q4 numbers, a double-dip recession seems less likely.  Of course, deep cuts in federal spending loom and the world economic situation remains unsettled.

After you take a look at what the economics bloggers think, tell us what you think. Is the U.S. economy poised for a recovery or headed off a cliff?

For the final Kauffman Economic Outlook: A Quarterly Survey of Leading Economics Bloggers of 2011, the Kauffman Foundation sent invitations to more than 200 leading economics bloggers as identified in the Palgrave’s econolog.net rankings. The Foundation surveys the bloggers each quarter about their views of the economy, entrepreneurship and innovation.

Top economics bloggers’ preferred policy option to stimulate the economy (selected from a small set of options) is to “remove restrictions on who can be ‘accredited’ investors (allowed to invest in startups, recently raised to $1 million net worth by the Dodd-Frank Act),” with 80 percent support.

Rich and diverse viewpoints from bloggers

More than 70 percent of the participants support the approval of the Keystone XL Pipeline, an idea to open up more domestic areas to oil and gas exploration and drilling.

“The economics blogging community has proven to be very insightful with rich and diverse viewpoints, but by nature they understand the importance of entrepreneurship because that’s ultimately who they are,” said Tim Kane, Kauffman Foundation senior scholar.

“We’ve been fortunate to aggregate the insights of top economics bloggers, including expert scholars such as Jim Hamilton at UCSD and Brad Delong at UC Berkeley, but also popular commentators outside of the ivory tower, with powerful results.”

Research highlights include:

  • A two-thirds majority of respondents believe the government is too involved in the economy, despite the largely non-partisan identification of panel members.
  • Only 2 percent of leading economics bloggers assessed the U.S. economy’s overall condition as “strong and growing” — actually a slight improvement over last quarter, when no respondents gave this answer.
  • The bloggers expect global output to rise faster than anything else. A significant difference from the previous reports is that only about 50 percent of respondents anticipate employment growth in the United States. Opinion remains split about expectations of higher poverty and inequality levels, with 5 percent believing that poverty is decreasing.
  • When asked to consider the timeframe for the U.S. real estate market to stabilize and return to historically average home-price appreciation and foreclosure rates, only 4 percent believe the U.S. market will stabilize within twelve months while the vast majority sees a timeframe of four or more years.
  • The concept of a gradual gas-tax increase for additional infrastructure spending was favored by 43 percent. Another 40 percent would increase the gas tax and put revenues toward reduction of the deficit or other taxes, while only 6 percent support an outright reduction of the gasoline tax.

The panel also revealed their poetic talents, rising to the survey’s first-ever challenge to describe the U.S. economy in haiku. Nearly 20 haiku were submitted and subsequently voted on by more than 500 public readers. The most popular was by Professor Art Diamond :

jobs and Jobs are gone
need more Jobs to get more jobs
innovate to grow

Internet has pronounced positive effect on startup businesses

Friday, October 21st, 2011

Kauffman FoundationThe Internet’s profound effect on how U.S. businesses operate is even more pronounced among young companies, according to a research report released today by the Ewing Marion Kauffman Foundation.

The study, “Casting a Wide Net: Online Activities of Small and New Businesses in the United States,” reveals that new businesses have a higher propensity to use websites, email, and to sell online, and that these inclinations have an impact on capitalization and longevity.

The research compares data from the Kauffman Firm Survey, which follows 4,928 firms from their founding in 2004 through 2009, with recently released data from various government sources on businesses overall.

New businesses go digital faster than older ones

While adoption and use of online activities differed depending on the business type, owner characteristics, industry and other factors, the study showed that new businesses tended to implement e-business activities at higher rates than existing businesses did.

In 2007, for example, young businesses were more likely than not to have a website, as compared to only about a quarter of U.S. businesses overall. Six percent of all U.S. businesses had online sales that year, while more than 25 percent of young businesses were selling online.

“Startup companies often are at the forefront of technology implementation that streamlines productivity and gives them a competitive advantage in the marketplace,” said Alicia Robb, Kauffman Foundation Senior Research Fellow and co-author of the report.

In addition to new businesses’ higher likelihood of selling online, new businesses were also much more likely to generate more than half of company sales online. Among online sellers, a quarter of young businesses generated more than 50 percent of their revenues online, almost double the rate seen in the general business population.

“It’s clear that many young businesses are integrating online sales into their strategies for reaching customers and generating revenues,” said E.J. Reedy, Kauffman Foundation Research Fellow and report co-author. “But it’s important to realize that in addition to Internet-only sellers, many young businesses also report sales generated through other channels.”

Online businesses started bigger

New businesses that used websites, email and online sales generally were starting bigger, with greater financial capitalization at birth (almost $55,000 more if a firm had a website, almost $46,000 more if the business owner had email and more than $25,000 more if the firm later reported online sales) and also higher levels of employment, especially for firms starting with a website.

Founders whose companies had websites at startup tended to be younger and more educated than were founders who did not have websites. They more frequently had previous entrepreneurial experience but less industry work experience, and were dedicating about eight more hours per week to the venture than were entrepreneurs whose companies launched without a website.

High-tech startups were most likely to begin operations with websites and email, but were no more likely to be selling online than were non-high-tech companies. Across industry types, companies in Manufacturing; Wholesale Trade; Professional Services; Retail Trade; Finance, Insurance, and Real Estate (FIRE); and Arts, Entertainment and Recreation were most likely to begin business with websites and email. The lowest level of Internet sales was among Professional Services and FIRE.

Durham-based LaunchBox Digital 4th on ranking of US Startup accelerators

Wednesday, May 4th, 2011
American Underground

artist's rendering of the American Undergroun at the American Tobacco Campus in Durham, NC

DURHAM, NC – Durham’s LaunchBox Digital is the only Southeast firm, unless you count two in Texas, to make a list of the top 15 U.S. Startup Accelerators by Tech Cocktail.

The list, compiled as part of filed work for the Kauffman Fellows program by Aziz Gilani in partnership with Tech Cocktail and Kellogg School of Management, weighed financing events, the success of companies funded after completing the program, and program characteristics to establish the rankings.

TechStars Boulder edged out Y Combinator for the top position, while Chicago’s Excelerate Labs and LaunchBox Digital were very close as the third and fourth top programs.

Others, in order, are: TechStars Boston, Kicklabs, San Francisco, TechStars Seattle, Tech Wildcatter, Dallas, DreamIt Ventures, Philadelphia, The Brandery, Cincinnati, OH, Capital Factory, Austin, NYC SeedStart, Betaspring, Providence, RI, BoomStartup, Salt Lake City, UT, and AlphaLab, Pittsburgh, PA.

We recently reported on LaunchBox startup Spring Metrics, which landed seed funding and moved to larger offices in downtown Durham not long after joining the program. Spring Metrics CEO Doug Kaufman recently told us the accerlerator, located in the American Underground in the American Tobacco Campus in Durham, was essential to its quick start and ability to get seed funding.

TechJournal South is a TechMedia company. TechMedia presents the annual conferences:

SoutheastVentureConference: www.seventure.org

Internet Summit: www.internetsummit.com

Digital East: www.digitaleast.com

Digital Summit: www.digitalsummit.com

Google picks Kansas City for high speed broadband network

Thursday, March 31st, 2011

GoogleKANSAS CITY, KN – Google (Nasdaq:GOOG) will build its first high speed broadband network called Google Fiber in Kansas City, Kansas in 2012, the search engine firm says. The company disclosed the choice on its official blog

More than 1,100 cities vied for the much coveted Google Fiber project, which will provide Internet speeds of 1 gigabit a second, more than 100 times faster than most current U.S. broadband connections.

Google said, “In selecting a city, our goal was to find a location where we could build efficiently, make an impact on the community and develop relationships with local government and community organizations. We’ve found this in Kansas City. We’ll be working closely with local organizations including the Kauffman Foundation, KCNext, and the University of Kansas Medical Center, to help develop the gigabit applications of the future.”

Other cities may also get their chance at having Google bring ultra high speed broadband to their municipalities, according to Goggle’s Vice President of Access Services, Milo Medin. Medin wrote in the blog post that “Over the coming months we’ll be talking to interested cities about the possibility of us bringing ultra high speed broadband to their communities.”

Many cities in the Southeast submitted proposals seeking to be Google’s first choice for the Google Fiber project.

 

TechJournal South is a TechMedia company. TechMedia presents the annual conferences:

SoutheastVentureConference: www.seventure.org

Internet Summit: www.internetsummit.com

Digital East: www.digitaleast.com

Digital Summit: www.digitalsummit.com

 

Startup America Partnership names Scott Case CEO

Thursday, February 17th, 2011
Scott Case

Scott Case

WASHINGTON, DC – The Startup America Partnership, the private sector alliance launched at the White House on January 31st to celebrate and accelerate entrepreneurship, has named Timothy “Scott” Case CEO.

Scott is currently CEO of Malaria No More (www.MalariaNoMore.org), a public-private partnership he helped start in 2006 to end malaria deaths in Africa by 2015, and will remain with the organization as a Vice Chair.

“I’ve been an entrepreneur my entire life and have helped build hyper growth companies that transformed the lives of employees, customers, and clients.” said Scott Case. “I’ve also experienced the challenges entrepreneurs face firsthand as they seek to build great companies. I’m delighted to lead the Startup America Partnership as I believe driving American entrepreneurship is critical to creating jobs and sustaining our nation’s global leadership.”

Prior to Malaria No More, Scott was involved in several entrepreneurial startups, including Priceline, the “name your own price” company that was one of only a handful of startups in US history to reach a billion dollars in annual sales in less than 24 months.

As co-founder and Chief Technology Officer, he was responsible for building the technology that enabled Priceline’s hyper-growth. Previously, Scott helped build a portfolio of intellectual property at the Walker Digital Invention Laboratory, and is a named inventor on dozens of U.S. patents. Scott also co-founded Precision Training Software, a software company that developed the world’s first PC-based simulated flight instructor and photo-realistic flight simulator.

The Startup America Partnership is an alliance of the country’s most innovative entrepreneurs, corporations, universities, foundations, and other private sector leaders working to dramatically increase the prevalence and success of high-growth enterprises in the U.S.

The Partnership was created as an independent, private-sector response to President Obama’s Startup America initiative, a White House campaign to celebrate, inspire, and accelerate high-growth entrepreneurship throughout the nation. AOL co-founder Steve Case chairs the partnership and the Kauffman and Case Foundations are founding partners, providing initial funding and strategic guidance. For more information on the Partnership, visit www.startupamericapartnership.organd follow at www.twitter.com/startupamerica and www.facebook.com/startupamerica.

The Startup America program has already been criticized as too much hype and no beef, although it has just launched.

Personally, we think anything that helps focus attention on the job creation potential and critical innovations of startup companies as opposed to say, pumping money into financial institutions that helped cause the recent recession, is a good thing.

TechJournal South is a TechMedia company. TechMedia presents the annual conferences:

SoutheastVentureConference: www.seventure.org

Internet Summit: www.internetsummit.com

Digital East: www.digitaleast.com

Digital Summit: www.digitalsummit.com

New innovation program to help launch UNC startups

Wednesday, October 27th, 2010

UNCCHAPEL HILL, NC – A new program at the University of North Carolina at Chapel Hill will provide business and technical expertise to UNC startup companies. The Innovation Fellowship Program will help launch and grow early stage university startups as well as build entrepreneurial talent for the Research Triangle Park region by funding two-year Innovation Fellows to work with fledgling companies.

Carolina was one of three universities designated by the Ewing Marion Kauffman Foundation today as “Kauffman Commercialization Leaders.” The award recognizes UNC, Carnegie Mellon University and the University of Missouri System for their creative approaches to help to accelerate the process of bringing student and faculty innovations to market.

The Kauffman Foundation is awarding each university a $100,000 grant for their selected programs or initiatives.

“These universities exhibit a strong commitment to bringing the innovations developed on campuses into the commercial marketplace, which benefits society and ultimately enhances economic growth,” said Carl J. Schramm, Kauffman Foundation president and chief executive officer.  “We are very pleased to recognize and support their efforts.”

Additional funding

Additional funding came from UNC’s Translational and Clinical Sciences (TrACS) Institute, one of 55 medical research institutions working together as a national consortium to improve the way biomedical research is conducted across the country. Carolina KickStart, a core program of TraCS that fosters the building and launching of UNC startups, will administer the program.

“These fellowships help fill a significant talent gap for early stage companies commercializing important technologies,” said Judith Cone, special assistant for entrepreneurship and innovation to UNC Chancellor Holden Thorp. “This program is just one part of the effort to help UNC become one of the most innovative and entrepreneurial campuses in the nation.”

First fellow named

The first Innovation Fellow is John Strenkowski, a UNC alumnus and recent Harvard Business School graduate. “John has a passion for startups and is ideally suited to work with these early-stage companies,” said Don Rose, director of Carolina KickStart. “He will be an important catalyst to get these companies launched and in a position for success.”

The program targets young entrepreneurial talent. Certain Innovation Fellows will have a business background and will provide important business leadership for the startups: developing the business strategy, negotiating a license to the technology and securing startup capital. Other Innovation Fellows will bring technical expertise to the startup.

Because having a good working knowledge of the fledgling technology is important, the source of the technical fellows will be recently graduated doctoral students and postdoctoral researchers working in the lab where the technology originated. The fellowship will support transition to the startup as they provide technology development and scientific leadership: securing Small Business Innovation Research funding, creating a product development plan and designing and testing prototypes.

Hatteras Venture Partners to provide seed capital

To further enhance the program, venture capital firms will invest in the companies with an Innovation Fellow. Hatteras Venture Partners, a venture capital firm based in Research Triangle Park with a focus on biopharmaceuticals, medical devices, diagnostics and related opportunities in human medicine, has agreed to provide seed capital to a fellow-led UNC startup.

“Successful startups need three things: good ideas, talented individuals and capital. UNC has brought the first two together and our hope is that our investment will increase the likelihood of success for these startups,” said Clay Thorp, managing partner at Hatteras.

“We sincerely hope others will join us in providing seed capital for these companies and new ideas. The Innovation Fellows effort is an excellent opportunity to drive innovation and develop the region’s entrepreneurial leaders of tomorrow.”

The Innovation Fellowship Program supports one of the five major recommendations in the Innovate@Carolina Roadmap, to “translate important new ideas more expediently and at an increased volume into innovations that improve society.” The Innovate@Carolina initiative also calls for an expansion of the KickStart program campus-wide.

Entrepreneurial activity rose to highest rate in 14 years

Thursday, May 20th, 2010

KauffmanKANSAS CITY, MO – Rather than making history for its deep recession and record unemployment, 2009 might instead be remembered as the year business startups reached their highest level in 14 years – even exceeding the number of startups during the peak 1999-2000 technology boom.

According to the Kauffman Index of Entrepreneurial Activity, a leading indicator of new-business creation in the United States, the number of new businesses created during the 2007–2009 recession years increased steadily year to year. In 2009, the 340 out of 100,000 adults who started businesses each month represent a 4 percent increase over 2008, or 27,000 more starts per month than in 2008 and 60,000 more starts per month than in 2007.

“Challenging economic times can serve as a motivational boost to individuals who have been laid-off to become their own employers and future job creators,”said Carl Schramm, president and CEO of the Kauffman Foundation. “Because entrepreneurs drive the economy, the growth in 2009 business startups is encouraging and hopefully points to a hopeful trend in terms of our economic recovery.”

Capturing new business owners in their first month of significant business activity, the Kauffman Index of Entrepreneurial Activity provides the earliest documentation of new-business development across the country.


Kauffman2010_trends

The percentage of the adult, non-business-owner population that starts a business each month is measured using data from the monthly Current Population Survey (CPS), conducted by the U.S. Bureau of the Census and the Bureau of Labor Statistics.

In addition to this overall rate of entrepreneurial activity, the Kauffman Index presents separate estimates for specific demographic groups, states and select metropolitan statistical areas (MSAs). It provides the only national measure of business creation by specific demographic groups.

New 2009 data allow for an update to previous reports, revealing important shifts in the national level of entrepreneurial activity, and in the demographic and geographic composition of new entrepreneurs across the country between 1996 and 2009. Interactive data spanning all 14 years is available at www.kauffman.org/kiea.