How National and Local Government Can Promote Entrepreneurship

David Teten, ff Venture Capital
David Teten is a Partner with ff Venture Capital and Chairman of Harvard Business School Angels New York.

I’ve recently met with several universities, nonprofits, and government employees who’ve all asked the same question: how can we promote entrepreneurship? Just like me, they’re distressed about the poor economy and jobs situation, which contrasts dramatically with the growth and tight labor market in the technology ecosystem. They’re concerned with this issue at both the local and national levels.



The first and primary role of a government is to provide basic public goods competently. Like many Americans, I’m disappointed that our government sometimes fails to do this. Above all, I’d like our friends in government and the policy world to figure out how the US government can deliver what it’s supposed to but sometimes doesn’t: sound money; an affordable budget; effective education; functioning infrastructure (e.g. airports, less-intrusive airport security); functional legal system (tort reform); logical immigration reform; and a functional tax system (tax simplification). To Mayor Bloomberg’s credit, he is using his bully pulpit for exactly this purpose, e.g., decrying US immigration policy as ‘national suicide’. Sadly, he doesn’t control our immigration policy.



There are a range of organizations that help address issues in the technology ecosystem, including: Women in Technology, Technology Policy Institute, New York Technology Council and various other state technology councils, Center for Policy on Emerging Technologies, Information Technology Industry Council, Silicon Valley Leadership Group, and Tech Policy Central. I support their goals of making entrepreneurship accessible to those who have the ingredients to become a successful self-starter. Like virtually the entire tech industry, I am particularly in favor of Startup Visa, which has the goal of stimulating our domestic startup community through acts to keep our foreign-born entrepreneurs in the United States.



Following is a list of some of the ideas I’ve working on (to various extents). If you see something that piques your interest and want to get involved, please contact me. I have ranked this list in ascending order of cost (defined as combined time and money).



- Educating the VC/angel community on the city/state resources available to them to build companies. I’ll likely organize a Harvard Business School Angels of NY event on this topic in 2012.



- Studying best practices of VCs in supporting portfolio company operational improvement. I am now leading a Columbia MBA team (ex-Mckinsey and BCG) on a study regarding best practices of VCs in supporting portfolio company operational improvement. This is effectively a sequel to my study of best practices in deal origination, published in the Journal of Private Equity, Harvard Business Review, Institutional Investor, and Business Insider. You can see preliminary results of this value creation study here.



- Encouraging non-US companies to set up operations in the US.As the former CEO of an Israeli startup with a (modest) US and UK presence, this is an obvious way to create more jobs here.



- Creating angel groups with other alumni organizations, using HBS Angels as a model, e.g., alumni of major NY schools (Columbia, NYU) and institutions (McKinsey, Goldman Sachs). I’ve talked informally with some universities about doing exactly this. -



Creating a for-profit business with the goal of helping students conduct research projects for businesses, so that they’re more connected with potential employers. I wrote a blog poston this.



- Organizing events for local mid- to large-company CIOs / CEOs to meet technology startups, in order to help startups get traction and keep their momentum going. HBS Angels will likely execute this in 2012.



- Publishing notes on local tech events. New York has an extremely active Meet-up culture; almost every night there are 3-10 tech-focused events. However, no one systematically provides notes/videos of these events. Here’s a win-win way to address this: recruit a team of students who would attend these events and publish their transcripts/videos, so that everyone learns more and faster and can network more easily. I’m already doing this on an experimental basis on my blog.



- Publishing joint research. See ffvc.com/topicsfor a full list of topics we want to research. Part of our strategy as a VC is to do in-depth research on the questions that interest us, in order to make us smarter and to help improve industry best practices. We typically do this by partnering with graduate student teams. In particular, we think it would be helpful to the ecosystem if someone were to publish research on who are the most active and most successful New York-area angels, superangels, and early-stage VCs, in order to identify the leaders with whom entrepreneurs should most want to work. (it is likely that ‘active’ and ‘successful’ are not synonymous.)



- Creating a master operating checklist for New York entrepreneurs. Visualize a grid, with the standard entrepreneurial steps down the y-axis (ideation, market research, incorporation, etc.), and the major New York industries across the X-axis (internet, food, retail, fashion, etc.). It would be valuable to have checklists for all of the intersections in this grid. We’ve created some but not all of these checklists for the tech industry; see our presentation notes and links on our resources page. Other useful checklists we’ve identified include Biztree, Wickedstart, Goodwin Founders Workbench, American Express Open Forum Crash Courses, StartupToDo , Entrepreneurcountry, and StartupPlays.



- Organizing angel pitch nights focused on special-interest communities, including industries (healthcare, retail, fashion) and affinity groups(Women, Asian-American, Latino, LGBT, African-American). I am now talking with some affinity groups in these domains about co-organizing such pitch nights under the umbrella of HBS Angels. Our goal is to source and fund great entrepreneurs, regardless of personal or industry background. We are planning a healthcare-focused evening on February 29, and are working on an evening focused on African-American entrepreneurs and on the mobility sector. Details to come.



Here are some much more ambitious and expensive ideas:



- Setting up a ‘virtual seastead’, perhaps on UN headquarters territory, for high-quality entrepreneurs who do not have US visas. A team in California is already creating a offshore seastead for non-US citizens who want to build companies in the US. The UN headquarters in New York is technically located on ‘international territory’. I’m sure there are already some for-profit businesses there, e.g., restaurants. I wonder if it is possible to set up an apartment building near UN HQ as a virtual seastead? I’m unclear whether this legal arbitrage is possible. Is anyone else looking into this?



- Launching a seastead acceleratoroffshore from New York.



Read more: http://www.teten.com/blog/2012/02/02/how-national-and-local-government-can-promote-entrepreneurship/#ixzz1lKvpNxR4

New Start Up Resource

The name Wicked Start, while irreverent and fun, is also a play on a slang definition of “wicked,” meaning masterful. A "wicked start" is a masterful way of starting a business. At Wicked Start, we believe entrepreneurs and small business owners are on the forefront of business today, leading change and innovation with great ideas.

Starting a business is one of the biggest decisions that you will ever make, and it can be as daunting as it is exciting. To be successful, you must take lots of personal, financial and planning considerations into account. At Wicked Start, our objective is to combine a practical, manageable business approach with a dose of “heart” to manage these considerations during the entire start-up process. This “heart” is compassion, which plays an instrumental role in how you create, drive and build a successful business on based on principles, integrity, and best practices. By injecting compassion into your solutions, you will find a healthier business in the long term and a healthier bottom line.

Looking to jump-start your business? You might try entering a contest.

The Wall Street Journal reported that a growing number of corporations, nonprofits and universities are giving small companies a chance at a big break—by holding contests.

Covering a broad range of categories, from the most promising women entrepreneurs to the strongest tech ideas, these competitions offer a number of powerful lures. Some offer cash prizes that can range into the six figures. Then there are longer-term rewards, such as increased exposure and grist for future marketing campaigns. Even if they don't win, entrepreneurs often come away with valuable critiques from expert panels of judges.

But there's an art to deciding which contests to enter and making the best case for your company. Here are some keys to finding, entering and winning these competitions.

The best place to start looking for contests is www.AwardSync.com, a site that helps groups publicize their awards. Once you've focused in on some competitions, the groups' own sites can be valuable. For instance, you could scour their sites for more information about what they do—which might give you ideas about what to highlight in your presentation.

At the outset, start small with awards from, say, local chapters of national organizations. This has a number of benefits. You can refine your case and practice your presentation without as much at stake. You also stand a better chance of winning a smaller contest—and judges of larger events like to see that you have some victories under your belt.

Once you've homed in on some contests, network like crazy. Call previous winners to see what worked for them; more than anyone else, they'll understand why you're in the hunt—and typically they have nothing to lose because they're ineligible to win again. If you can get into the audience for an award's oral presentations, go do it one year, see what makes the finalists stand out, and then apply the next year. Read more here.

Foundations Offer Loans to Nonprofits: Possible Idea of Seed Funds

The Buffalo News reported that a $650,000 check in 2008 from the Community Health Foundation of Western and Central New York for a new program to assist the frail elderly in Cattaraugus County came with a caveat: Trustees of the foundation wanted the money back, with interest.

A single grant of that size was beyond the capacity of the foundation, so trustees decided instead to make it a loan.

The money allowed Community Care of Western New York to launch a program that will keep more than 200 rural elderly people safely in their homes. Without it, the project probably would have stalled.

"It would not have opened without us, and what is a really promising model for elder care in a rural community would have been lost," said Ann Monroe, foundation president.

Increasingly, foundations in Western New York and across the country are turning to loans, loan guarantees and other measures as a way to aid needy nonprofit organizations without giving away the store.

The John R. Oishei Foundation, the area's largest private foundation, currently has more than $12 million — nearly 4 percent of its $280 million asset base — being used in this fashion. And at least two other local foundations, the Margaret L. Wendt Foundation and the Joy Family Foundation, have experimented with alternative financing.

Known as "program-related investments," or more popularly "PRIs," the loans and loan guarantees are serving a dual purpose for foundations hammered by stock market losses in 2008.

PRIs, like grants, put money toward projects that might not otherwise get off the ground. Read more here.

Companies Still Increasing Strategic Spending

In a recent article featured by the Nonprofit Times, companies are expected to spend $1.55 billion on cause partnerships during 2009, a 2.2 percent increase from the $1.52 billion invested in those programs during 2008, according to Chicago-based IEG, LLC. The amount spent in 2007 was $1.44 billion, according to IEG.

Cause-related programs still remain popular among corporate marketers due to their ability to support worthwhile organizations while also driving sales.

In fact, some nonprofits that deal with poverty, hunger and other issues directly impacted by the economy have found increased corporate interest. “Recent research has shown that consumers expect corporations to increase their support of causes in this economy,” said Dan Kowitz, vice president of IEG Sponsorship Consulting.

For example, anti-hunger organization Share Our Strength has posted a roughly 15 percent increase in revenue from cause marketing programs during the past year, signing new deals with AT&T, Inc., Hickory Farms, Inc. and others.

Among other recent deals, juice and apple sauce marketer Mott’s LLP this year partnered with Susan G. Komen for the Cure and Feeding America to launch national cause-marketing programs. The company is leveraging the Komen partnership with the Pink to the Core campaign, which features limited edition packaging. It is working with Feeding America on the Wake Up with Mott’s and Marcia Cross program, around which consumers can make a donation by sending a pre-recorded telephone message about the need to fight hunger from the actress to family and friends.

For each call, Mott’s donates $1 to the nonprofit, with a cap of $134,000 -- the cost of feeding one million people.

Companies also are increasingly leveraging sports and other types of sponsorships to promote their nonprofit partners. For example, Farmers Group, Inc., is using its new tie to the WNBA Los Angeles Sparks to promote its longstanding partnership with the March of Dimes. The insurer is activating the tie with the We Assist You Assist promotion that asks consumers to pledge a donation tied to the number of assists the team makes throughout the season. Farmers Group will match the total raised from fans.

Further demonstrating the popularity of cause sponsorship, causes trail only sports properties and entertainment tours and attractions when it comes to spending by property type, according to IEG. Read more here.

Think about a partnership as a possible way to fund your venture. There is an opportunit for a new partnership that could give the business great exposure and access to new clients, while giving your nonprofit start up dollars for your entrepreneurial venture.