Panel, Conference Presentation
Fueling American Entrepreneurship
Milken InstituteSteve Case, Patrick McHenry, Laura Roden, Peggy Wallace, Peter Williams, Sean Greene
- Job creation is prioritized as a critical national issue, with net new jobs expected to continue originating disproportionately from small businesses and high-growth enterprises.
- Entrepreneurship is projected to expand beyond traditional hubs like Silicon Valley, with a robust increase in regional growth driven by access to local capital, talent, and mentorship in 32 specific regions.
- The venture capital industry is currently in a four-and-a-half-year crisis characterized by funding levels at 20% to 40% of requirements, necessitating smaller, capital-efficient investments in software while capital-intensive sectors like life sciences and clean tech face continued constraints.
- Despite current constraints, the venture capital market shows signs of recovery in recent quarters, with a long-term outlook favoring a "second internet revolution" in education, healthcare, and government procurement.
- The angel investing market is described as stable and institutionalizing, with the sector expected to remain roughly the same size as the venture market.
- Women entrepreneurs are projected to increase their share of angel funding to 12% to 15% and venture funding to 7%, driven by diversity initiatives on boards.
- The JOBS Act is anticipated to democratize capital markets by increasing allowed shareholders, lifting bans on general solicitation, and enabling average investors to participate in local real estate and crowdfunding offerings, though full IPO provision impacts may take a few years to materialize.
- Crowdfunding is identified as having the greatest potential for disruption in regional entrepreneurship lacking seed networks, potentially replacing the traditional angel model for early-stage companies.
- The private placement market, currently exceeding $1.1 trillion, is expected to realize value through more efficient pricing and transaction volume once JOBS Act rules are implemented.
- Companies raising $5 million to $10 million or more are expected to see the largest impact from lifted solicitation bans, provided rules do not price out investors.
- Immigration reform is viewed as an economic necessity to boost the U.S. growth rate and reduce unemployment, with legislative momentum hoped to pass the Senate soon enough to influence House proceedings within a few months.
- Failure to aggressively compete for global talent against nations like Canada and Singapore risks diminishing the U.S. entrepreneurial lead.
- Deep science commercialization requires a 15 to 20-year cycle supported by public-private partnerships and continued focus on SBIR and NIH initiatives.
- Intellectual property protection costs create a "too small to succeed" risk for many entrepreneurs, necessitating massive funding to maintain viability.
- Government policy is expected to shift toward incentivizing professional and institutional investors via tax incentives rather than making direct investments in venture companies.
- Entrepreneurial sentiment over the next few years is described as optimistic, highlighting the sector's role in national strength and the potential for a "wonderful life" for the next generation.
- Market regulation reforms addressing disclosure costs are required to correct flaws in public markets that have created a vacuum in small IPOs following Sarbanes-Oxley.
- Regional work through initiatives like Startup America and Startup Weekend aims to create network density and increasing returns in specific localities.
- Individual contributions through mentorship, such as an hour a month, and seed investments are identified as actionable ways to support entrepreneurs.
- A bullish outlook is maintained on debt financing for startups due to changing capital flows and the ability to crowdsource debt outside major metropolitan areas.
- The venture capital model is expected to evolve, with success increasingly dependent on network value and capital efficiency rather than capital alone.