There’s a photo floating around the Internet that periodically resurfaces: It’s a slightly blurry image of nine young men and two women dressed in unfortunate late 1970s fashion, sporting long hair and evincing a hippie vibe. The kicker, of course, is that this snapshot captures the original founders of Microsoft in 1978, including an impossibly young Bill Gates.
It’s hard to imagine that this scruffy little band would create the business powerhouse that now employs 90,000 people in more than 190 countries. Forbes magazine estimates that Gates has a net worth of more than $67 billion.
In many ways, this simple image exemplifies both the promise – and mystique – of entrepreneurship.
Entrepreneurs envision a better, faster, cheaper or more efficient way to produce a product or service. On the strength of that vision, they work to turn their idea into a profitable business enterprise.
By doing so, entrepreneurs create economic opportunity for themselves and others. Entrepreneurs may even start a new industry or spark consumer demand that was previously unimagined.
While Gates and his co-workers exemplify one extreme – in that they created a large-scale business that employs tens of thousands – entrepreneurs are also those who open small businesses and employ only a few people.
The unifying factor remains that someone, somewhere, saw a market opportunity and embraced the risk of capitalizing on that idea.
Entrepreneurship in the United States
Tracking the national impact of entrepreneurship in the United States is something of a tricky business. According to the U.S. Department of Labor’s Bureau of Labor Statistics (BLS), “Entrepreneurship plays a vital role in the growth of the U.S. economy.” However, as statistics from the BLS Business Employment Dynamics program also point out, entrepreneurial activity has suffered a setback over the past few years.
Between 1994 and 2010, the BLS tracked jobs created by entrepreneurial businesses that were less than a year old. It reported that jobs created by these new businesses peaked in 1994 at 4.1 million, and decreased to 2.5 million by 2010.
In December 2007, generally seen as the beginning of the most recent recession, business startups plummeted to the lowest number since the BLS began tracking such activity.
However, despite a recent dip in new business formation, entrepreneurship remains a powerful way for an individual to take control of his or her own future. In fact, one of the most prolific groups of entrepreneurs includes immigrants to the United States who otherwise may face challenges in finding more conventional employment.
The official White House blog from Aug. 8, 2013, noted that in 2011 alone, immigrants started 28 percent of all new U.S. ventures, despite accounting for only 13 percent of the population. It also noted that between 2006 and 2012, 44 percent of high-tech Silicon Valley startups had at least one immigrant founder.
Factors that Affect Success
Myriad factors have an impact on entrepreneurial success, including the entrepreneur’s own business savvy and preparedness to run a business, his or her tenacity in light of discouraging events and the ability to attract both talent and financial resources to a new venture.
One way to examine the recent downturn in entrepreneurial activity is to look at the landscape for funding over the past few years.
Professional venture capitalists (VCs) are groups of specialized investors who typically provide capital to entrepreneurial businesses with extremely large potential markets and the potential to either go public or be profitably sold within five to seven years after the initial investment.
The National Venture Capital Association, which is comprised of professional VCs, noted in its 2013 Yearbook report that the number of professional venture capital firms fell from its peak of 1,089 in 2002 to 841 in 2012. Fundraising became increasingly difficult for VCs in recent years as investors shied away from riskier investment prospects such as venture capital.
Now, however, after four years of declining investment, the past two years have seen increasing commitments. The NVCA reports that in 2012, investors promised $20.1 billion in funding to 183 venture funds. While that amount is only two-thirds what was raised annually between 2005 and 2007, it marks a significant uptick in potential funding for future efforts.
Right Here in Minnesota
Minnesota has a long history of entrepreneurial activity, ranging from the medical arena (Medtronic) to the computer industry (Control Data) to the hospitality industry (Carlson Companies) to the retail market (Best Buy) to the agricultural/food industry (General Mills, Cargill and many more).
Thousands of Minnesotans owe their livelihoods to these entrepreneurial businesses, and residents likewise benefit from corporate financial philanthropy that supports the community and social fabric of the area.
Many businesses can trace their inception to the presence of entrepreneurs who came before them. Minnesota historically has had an appreciation for entrepreneurs and their role in building a resilient, strong economy and, as such, the state remains a place where startup capital, advice and potential new markets remain accessible.
However, some see storm clouds in the future for Minnesota-based entrepreneurs.
A respected survey produced by the Kauffman Foundation revealed that in 2012, Minnesotans started fewer businesses than did residents of any other state. It was the state’s worst performance since the Kauffman Index began in 1996.
In light of the most recent recession, various regional players, including both government and private agencies, united to draft a “roadmap” for long-term economic development efforts in Minnesota. A Minneapolis-St. Paul Regional Business Plan Update was finalized in April 2011. It found that the state fell from its rank of 22nd in 2007 in the number of entrepreneurs per 100,000 residents to 48th in 2009. When compared to the 100 largest metro areas in the United States, Minneapolis-St. Paul ranks 44th in the rate of starts and closings of regional firms. The report highlighted growing concern over Minnesota’s ability to continue as a strong environment for entrepreneurs unless decisive action is taken to prepare for the future.
Recommendations in the report included bolstering entrepreneurial activity by increasing available investment funds for startups, creating a regional entrepreneurship accelerator and expanding gateways for bioscience startup efforts.
Opportunities at the Opus College of Business
While the group’s report was sobering, Minnesota still remains in a position to turn those trends around, in part because of the presence of many well-respected educational facilities in the state, including the University of St. Thomas.
At the university’s Opus College of Business, both undergraduate and graduate students can pursue degrees in a variety of areas. A unique unit of the college, the Schulze School of Entrepreneurship, offers students even more specialized opportunities designed to support their entrepreneurial ambitions. Named for Richard M. Schulze, founder of Best Buy, the Schulze School also houses a business incubator that provides assistance to students engaged in starting a company.
BreAnna Fisher ’12 was a student who benefited directly from the incubator. She used it as a space to test-market a business-to-consumer concept called dodrinks.com, which allowed users to buy drinks for others via a smartphone app. (Fisher noted that the business failed to find a strong market and that she and her investors are planning to wind down the company.)
Fisher received many honors and awards for her work on dodrinks.com and for her entrepreneurial research efforts. While an undergraduate, she competed in the Global Student Entrepreneur Awards, designed to spotlight young entrepreneurs who operate businesses while in college. After receiving a first place award in the regional GSEA competition in Chicago, she traveled to New York for the GSEA finals, one of only 30 student entrepreneurs to do so.
In addition, in June 2013, Fisher traveled to Moscow as part of an elite group of 400 young entrepreneurs to take part in the G20 Youth Entrepreneurship Alliance. The alliance, comprised of entrepreneurs from around the globe, convenes each year in advance of the G20 Summit, the meeting held by representatives of the world’s 20 largest economies to discuss policy and economic issues.
Fisher is an avid supporter of entrepreneurship. In fact, as a project during school she conducted her own extensive research regarding entrepreneurs and the Twin Cities market.
Her findings concluded that despite its challenges, Minneapolis and St. Paul contain incredible entrepreneurial promise, in part because of the area’s existing corporate strength in growing, processing and distributing food worldwide; expertise in all aspects of consumer goods; deep knowledge of the financial and materials sciences fields; and an extremely strong health care delivery infrastructure. She anticipates that the next decade could see an explosion of new entrepreneurial efforts here driven largely by former “corporate” denizens who strike out on their own. She also believes that organizations such as the Schulze School can remain at the forefront of such efforts by connecting and supporting like-minded entrepreneurial aspirants through events, classes, seminars and business space such as the incubator model.
And despite outside factors that have dampened recent entrepreneurial efforts, especially the roiling economy, a renewed public and private focus on regaining the state’s position as an entrepreneurial powerhouse should pay dividends for everyone in the coming years. While Minnesota currently faces significant challenges, it also contains incredible promise.
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