Small Business

A State-of-the-Startups Survey


Where have all the good ideas gone? That's what Americans with money to invest in the next brilliant innovation are asking, according to an annual study that measures the vital signs of enterpreneurial activity in the U.S. and 20 other countries.

One out of every 10 adults in America is attempting to start a new venture, and 1 in every 15 adults invested in startups last year, says the study, which was conducted by Babson College in Wellesley, Mass., and the Kauffman Center for Entrepreneurial Leadership in Kansas City, Mo. But confidence among investors is dropping -- 52% saw 2000 as a year of good business opportunities, compared with 57% the year before.

The survey, which was launched in 1997 to examine the relationship between entrepreneurship and economic growth, queried more than 40,000 people. Among its findings:

-- The physical infrastructure (roads, schools, reliable power) and human infrastructure (software engineers and other skilled workers) fall short in many traditional meccas of entrepreneurial activity.

-- Two-thirds of venture capital in the U.S. went to five states: California, Massachusetts, New York, Texas, and Colorado. Nearly 80% of all venture capital invested in the country last year was devoted to information-technology companies.

-- Women and minorities, particularly Native Americans, are underrepresented among the ranks of entrepreneurs.

Entrepreneurs have slipped a few notches in the eyes of the public, the study found. They still have the respect of 76% of the population, but that's down from 91% the year before. The wave of Internet business failures is probably to blame. Stephen DeWitt, CEO of Cobalt Networks, a venture-backed company in Silicon Valley, told the survey takers: "There is a glut of money and not enough entrepreneurs. You are starting to see a wide gulf between entrepreneurs that can cut it and those that can't."

A startup's odds might be better if entrepreneurship were taught in grade school and high school, which is one of the policies recommended by the survey. Johnny, can you spell IPO? By Theresa Forsman in New York


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