{"id":3126,"date":"2015-01-28T13:37:39","date_gmt":"2015-01-28T21:37:39","guid":{"rendered":"https:\/\/masonmyers.com\/?p=3126"},"modified":"2015-01-28T13:37:39","modified_gmt":"2015-01-28T21:37:39","slug":"entrepreneurship-exploding-or-dying","status":"publish","type":"post","link":"https:\/\/masonmyers.com\/entrepreneurship-exploding-or-dying\/","title":{"rendered":"Disparate Data Points: Entrepreneurship Exploding or Dying?"},"content":{"rendered":"<p>An explosion of young companies that are bootstrapped, or financed outside of traditional venture capital (i.e., Silicon Valley) or traditional bank financing, is what I see every day. \u00a0I see many companies finding their way to\u00a0a point of lift-off, stability, and medium-sized revenue and profit without ever raising traditional financing.<a href=\"https:\/\/masonmyers.com\/wp-content\/uploads\/2015\/01\/bootstrap.jpg\"><img decoding=\"async\" loading=\"lazy\" class=\"alignright size-full wp-image-3134\" src=\"https:\/\/masonmyers.com\/wp-content\/uploads\/2015\/01\/bootstrap.jpg\" alt=\"bootstrap financing and entrepreneurship\" width=\"275\" height=\"183\" srcset=\"https:\/\/masonmyers.com\/wp-content\/uploads\/2015\/01\/bootstrap.jpg 275w, https:\/\/masonmyers.com\/wp-content\/uploads\/2015\/01\/bootstrap-150x99.jpg 150w\" sizes=\"(max-width: 275px) 100vw, 275px\" \/><\/a> \u00a0These companies are therefore more independent and able to plot their future with more flexibility. \u00a0Having gotten to this place, they treasure flexibility to pursue business strategies of their own choosing. \u00a0By all means, they should strive to maintain that flexibility and I hope my investment fund, <a title=\"Financing Funding for $1-3 million EBITDA businesses\" href=\"http:\/\/greybullstewardship.com\" target=\"_blank\">Greybull Stewardship<\/a>, is a vehicle for them to do that.<\/p>\n<h3>Trends of entrepreneurship now<\/h3>\n<p>Data below suggest that entrepreneurship and dynamism are declining in America. \u00a0I do not see that. \u00a0Some of the current trends that I believe are supporting the idea that there are more companies reaching lift-off without conventional financing are:<\/p>\n<ul>\n<li><strong>Entrepreneurship education and role models are available.<\/strong> \u00a0More education and training of entrepreneurs exist in the world today as more schools offer entrepreneurship courses. Also, more books, conferences, and advisers are available to aspiring entrepreneurs.<\/li>\n<li><strong>Growth of angel investing.<\/strong> \u00a0The growth of Angel\u00a0List and of many angel investing communities around the United States demonstrates how this has become a common financing tool for young firms. \u00a0There are many more books and other forms of education for angel investors that are helping standardize how this is done. \u00a0I see quality companies everyday that have had some help from\u00a0angel financing and have\u00a0grown well beyond that stage. \u00a0Angels tend to be a bit more forgiving than professional investors, and that helps get companies off the ground.<\/li>\n<li><strong>Companies cost less to start.<\/strong>\u00a0 From simple productivity tools to inexpensive servers, storage, and bandwidth, to the ability to build software overseas, to the ability to avoid office space and have a virtual company, many of the costs of creating companies seem to have declined.<\/li>\n<li><strong>Internet scale.<\/strong> \u00a0The Internet is enabling younger companies to reach larger markets enabling them to grow and to achieve some level of stability.<\/li>\n<li><strong>JOBS Act.<\/strong> \u00a0While it has not changed things dramatically yet, this legislation signals society&#8217;s interest in helping young companies get going and broaden the sources of financing available.<\/li>\n<li><strong>Peer to peer lending.<\/strong> \u00a0Lending Club, Prosper, and even On Deck, all seem to be creating more options for smaller or younger companies to find financing.<\/li>\n<li><strong>Enterpreneurship is part of popular culture.<\/strong> \u00a0Maybe because consumer Internet companies play such a large role in so many lives today, popular culture is influenced by the explosive growth and creative services developed by Internet companies.<\/li>\n<\/ul>\n<h3>Counter Point: Entrepreneurial Companies\u00a0are Declining As a Percentage of the Whole<\/h3>\n<p><img decoding=\"async\" loading=\"lazy\" class=\"alignright size-medium wp-image-3127\" src=\"https:\/\/masonmyers.com\/wp-content\/uploads\/2015\/01\/firm-entry-and-exit-rates-300x237.jpg\" alt=\"Firm Entry and Exit Rates\" width=\"300\" height=\"237\" srcset=\"https:\/\/masonmyers.com\/wp-content\/uploads\/2015\/01\/firm-entry-and-exit-rates-300x237.jpg 300w, https:\/\/masonmyers.com\/wp-content\/uploads\/2015\/01\/firm-entry-and-exit-rates-150x118.jpg 150w, https:\/\/masonmyers.com\/wp-content\/uploads\/2015\/01\/firm-entry-and-exit-rates.jpg 810w\" sizes=\"(max-width: 300px) 100vw, 300px\" \/>At the same time, there is data to suggest the dynamism of the American economy, including entrepreneurship, has been declining since the 1970&#8217;s.\u00a0 In a <a title=\"Study by Ian Hathaway and Robert Litan\" href=\"http:\/\/www.brookings.edu\/~\/media\/research\/files\/papers\/2014\/05\/declining%20business%20dynamism%20litan\/declining_business_dynamism_hathaway_litan.pdf\" target=\"_blank\">study by Ian Hathaway of Ennsyte Economics and Robert Litan of the Brookings Institute<\/a>, they explore the decline of &#8220;dynamism&#8221; in the US economy. \u00a0This chart shows that firms that are less than one year old are a declining percentage of the overall total, suggesting that the churn of business in America is declining.<\/p>\n<p>This decline is difficult for me to reconcile with what I see every day.\u00a0 I suppose it could be that the absolute number of young companies reaching lift-off point is increasing, while it is still a declining percentage of the whole. \u00a0It is also may be that the companies that survive are living longer and the overall base has gotten so large that there is an inevitable decline of start-ups compared to the whole. \u00a0Or, it may be that micro businesses like restaurants and dry cleaners are no longer being started as they once were (not sure this is a bad thing) as those businesses are historically very difficult.<\/p>\n<p><img decoding=\"async\" loading=\"lazy\" class=\"alignright size-medium wp-image-3135\" src=\"https:\/\/masonmyers.com\/wp-content\/uploads\/2015\/01\/aging-firms-proportion-chart-300x209.jpg\" alt=\"Old Firms Living Longer\" width=\"300\" height=\"209\" srcset=\"https:\/\/masonmyers.com\/wp-content\/uploads\/2015\/01\/aging-firms-proportion-chart-300x209.jpg 300w, https:\/\/masonmyers.com\/wp-content\/uploads\/2015\/01\/aging-firms-proportion-chart-150x104.jpg 150w, https:\/\/masonmyers.com\/wp-content\/uploads\/2015\/01\/aging-firms-proportion-chart.jpg 956w\" sizes=\"(max-width: 300px) 100vw, 300px\" \/>Another chart from this study shows the distribution of total firms by age.<\/p>\n<h4><strong>Related Posts and Topics:<\/strong><\/h4>\n<ul>\n<li><a title=\"Perfect Business Financing \u2014 Maybe No Outside Equity\" href=\"https:\/\/masonmyers.com\/perfect-business-financing-equity\/\">Perfect business financing &#8212; maybe no outside equity<\/a><\/li>\n<li><a title=\"Venture Capital Myths \u2014 Not the Answer for Many Companies\" href=\"https:\/\/masonmyers.com\/venture-capital-myths\/\">Venture capital myths &#8212; not always the best funds<\/a><\/li>\n<li><a title=\"Evergreen venture fund structure offers new strategy\" href=\"https:\/\/masonmyers.com\/evergreen-venture-fund-structure\/\">Evergreen venture funds offers a new strategy<\/a><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<div class=\"postmeta_wrapper\">\n<div class=\"postmeta classifications small\"><span class=\"post_categories\">Categories:<a href=\"https:\/\/masonmyers.com\/category\/financing-funding\/\" rel=\"category tag\">Business Financing &amp; Funding<\/a>, <a href=\"https:\/\/masonmyers.com\/category\/business-growth-and-business-opportunities\/\" rel=\"category tag\">Business Growth &amp; Opportunities<\/a>, <a href=\"https:\/\/masonmyers.com\/category\/investment-and-business-models\/\" rel=\"category tag\">Investment &amp; Business Models<\/a>, <a href=\"https:\/\/masonmyers.com\/category\/financing-funding\/business-financial-strategy\/\" rel=\"category tag\">Perfect Financial Structure of a Business (a series)<\/a>, <a href=\"https:\/\/masonmyers.com\/category\/financing-funding\/series-on-types-of-financing\/\" rel=\"category tag\">Types of Financing &#8211; a series<\/a><\/span><br \/><span class=\"post_tags\">Tags:<a href=\"https:\/\/masonmyers.com\/tag\/brookings-institute\/\" rel=\"tag\">Brookings Institute<\/a>, <a href=\"https:\/\/masonmyers.com\/tag\/business-growth-strategy\/\" rel=\"tag\">Business Growth Strategy<\/a>, <a href=\"https:\/\/masonmyers.com\/tag\/enterpreneurship\/\" rel=\"tag\">Enterpreneurship<\/a>, <a href=\"https:\/\/masonmyers.com\/tag\/equity-investor\/\" rel=\"tag\">Equity Investor<\/a>, <a href=\"https:\/\/masonmyers.com\/tag\/financing\/\" rel=\"tag\">Financing<\/a>, <a href=\"https:\/\/masonmyers.com\/tag\/growing-a-business\/\" rel=\"tag\">Growing a Business<\/a>, <a href=\"https:\/\/masonmyers.com\/tag\/start-ups\/\" rel=\"tag\">Start-ups<\/a><br \/><\/span><\/div>\n<\/div>","protected":false},"excerpt":{"rendered":"<p>An explosion of young companies that are bootstrapped, or financed outside of traditional venture capital (i.e., Silicon Valley) or traditional bank financing, is what I see every day. \u00a0I see many companies finding their way to\u00a0a point of lift-off, stability, and medium-sized revenue and profit&hellip; <a class=\"more-link\" href=\"https:\/\/masonmyers.com\/entrepreneurship-exploding-or-dying\/\">Continue reading <span class=\"meta-nav\">&rarr;<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6,7,18,26,17],"tags":[351,91,349,85,47,90,350],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Disparate Data Points: Entrepreneurship Exploding or Dying? - Mason Myers Blog<\/title>\n<meta name=\"description\" content=\"entrepreneurship data\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/masonmyers.com\/entrepreneurship-exploding-or-dying\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Disparate Data Points: Entrepreneurship Exploding or Dying? - Mason Myers Blog\" \/>\n<meta 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