This article originally appeared on Mashable.
Welcome to the entrepreneurial race. President Obama declared we are now faced with the current generation’s “Sputnik moment.” How America responds to the marching orders for entrepreneurism will impact all of us. Success will require that we recognize the challenges and adapt to the demands. Most of all, it will require that we set our priorities straight, sacrifice and have patience.
To position itself to win the entrepreneurial race in the post-industrial, technologically-centered, global economy, America will have to foster entrepreneurism in ways that won’t produce results overnight. We will have to advance our position around the world in the areas of technology, innovation, education and entrepreneurial spirit. While these have been stated goals of our policy makers for many years, real progress will require real plans and real changes.
Fostering American Entrepreneurism
To fuel our economy, we need effective national policies working in conjunction with entrepreneurism. As a part of its role in this partnership, Washington must take key steps to position the country for success.
Ignite passions. This is job one. A primary benefit of the space race was that it ignited a passion in the country that hasn’t been seen since. It gave young people something to dream about. Quite a few young people became scientists, engineers and computer technicians because they were inspired by the space program. The same could happen with entrepreneurism. The national agenda encouraged us to dream and re-envision our world. The multiplying effect of creating internal motivation can not be overestimated. America needs to get people dreaming again.
Match R&D to innovation and opportunities. Economic growth results from the interaction of innovation and entrepreneurship. The private market simply can’t fund research and development at the level needed to win the entrepreneurial race. The government needs to provide R&D funding. But the private sector is best equipped to pick entrepreneurs. The magic moment occurs when the public and private sectors work in the same direction. Tying funding, innovation and opportunities together to create value is what fuels small businesses and our economy. It is imperative that Washington effectively aligns public R&D investment with innovations and opportunities that can become the commercial industries of tomorrow.
Free up private funding. Funding is a primary deterrent to would-be entrepreneurs and small business growth. If someone doesn’t have the money to pursue an idea or expand their business, they often hit a road block. Rather than offering tax benefits to entrepreneurs, America needs to offer funding opportunities. Ideas and the ability to pursue them spur entrepreneurism, not tax credits.
As Dr. Paul D. Reynolds, one of the leading entrepreneurial academic thought-leaders in the world, recently said to me: “I have yet to meet a business founder that told me their motivation in starting their business was the tax credit. People start businesses because there is demand and they can make money.” To help free up venture funding, Washington should work to redesign lending requirements for individuals and businesses, fund seed capital and start-up pools, and encourage early-stage investments.
Educate entrepreneurs. We need to focus on business and entrepreneurship education, in addition to math and science. As Dr. Larry Plummer, an assistant professor of management and entrepreneurship at the University of Oklahoma, recently said, “The commercialization of an innovation can be more difficult than the technological breakthrough in the first place. Focusing on entrepreneurship in our policies is a recognition of the other half of the story.” We need to do a better job encouraging and educating entrepreneurs across the spectrum. This starts in high school, continues through college, and even includes educational efforts in the business world. Entrepreneurship is a life-long learning process, often accompanied by productive failure along the way. Plummer points out that if we don’t teach these skills, the country could be “frustrated that new businesses are not being started as a result of the R&D investments.”
Recognize the constraints. There are a number of facts that no amount of rhetoric will change. Since supply follows demand, the economy will turn around only after demand increases. Another reality is that technology often takes a long time to develop. Many of the technological breakthroughs of the last century took 20 years or more to become technologies that could be commercialized. Finally, since people don’t start businesses just to hire employees, entrepreneurism is also a relatively slow solution to high unemployment. While jobs from new companies can add up to have a significant impact on unemployment, hiring is not a primary goal for businesses. There are no overnight solutions to our country’s unemployment woes.
Are Washington’s First Steps in the Race Innovative Enough?
Over the past week, the White House has taken the first real steps toward spurring the entrepreneurial race. The Startup America Partnership, announced yesterday, outlines a number of promising initiatives with an impressive list of partners. Most importantly, however, the alliance appears to be based on a strategy of bringing the public and private sectors together in a joint effort to grow entrepreneurism and the economy.
Some of the goals of the partnership are to expand access to capital for high-growth startups, strengthen commercialization of federally-funded research and development, identify and remove unnecessary barriers to high-growth startups, and expand entrepreneurial education and mentoring programs. All of these are long overdue objectives.
The partnership also includes efforts to foster new small businesses. In the past, small startups have often not been given enough meaningful attention by public initiatives. The involvement of the Techstars Network may be a signal that Washington is starting to understand where to focus its efforts to grow the economy. TechStars is an early stage investment program that offers selected entrepreneurs mentoring as well as up to $18,000 in seed funding to help launch a new business. As part of its collaboration with Startup America, TechStars has created a network of 17 independently owned and operated seed-stage accelerators across the U.S. that use a similar model of mentorship-driven investment in entrepreneurs. These types of new initiatives for small businesses are indispensable in the effort to rebuild our economy.
While the Startup America Partnership provides a good start, we can’t stop there. If President Obama intends to lead us on a national exploration of entrepreneurism, he will have to ignite our imaginations and set far-reaching goals that inspire us. Our policy makers will have to balance the recognition that we are living in a new day and age with equally new ideas, policies and support. And they will have to demonstrate an ongoing commitment to overcoming the challenges.
Americans have entered the entrepreneurial race. It is a race to maintain our position as the leading economy around the globe. It is a race for technology, a race for the web, a race for energy, and a race for human interaction. It is a race to innovate. And to “win the future,” Washington will have to be as innovative and dedicated as the entrepreneurs themselves.