(WASHINGTON) Feb. 11, 2015 – Venture capital and angel investing has surged, yet business creation remains slow, and access to capital is difficult for young companies. Despite these and other mixed indicators, there are plenty of reasons to be optimistic about the future of entrepreneurship in the United States, according to the Ewing Marion Kauffman Foundation.
At the Foundation's sixth annual State of Entrepreneurship Address at the National Press Club in Washington today, Acting President and CEO Wendy Guillies called for economic renewal through a new entrepreneurial boom, beginning with two of the biggest demographic forces shaping the U.S. economy: the aging of baby boomers and the emergence of millennials into the workforce.
"The United States doesn't just need economic growth. We need economic renewal," said Guillies. "We're optimistic that the boomers and millennials—together—can lead the entrepreneurship renewal that America sorely needs."
Guillies cited data from a report also released today titled "The Future of Entrepreneurship: Millennials and Boomers Chart the Course for 2020." The report notes that venture and angel investment levels in recent years mirror those of the late 1990s and very early 2000s, and that startup valuations have skyrocketed. At the same time, data show that U.S. business creation is trending downward. New firm survival rates have fallen for nearly 25 years, and high-growth firms are exhibiting less dynamism – a factor that could portend lower economic growth.
The event featured remarks from Secretary of Commerce Penny Pritzker and SBA Administrator Maria Contreras-Sweet, and experts who presented optimistic and pessimistic outlooks on the entrepreneurial potential for millennials and boomers to a panel of policymakers: John Delaney (Md.) and Tulsi Gabbard (Hawaii).
The report focuses on the entrepreneurial impact of Millennials (born between the early 1980s and early 2000s) and Baby Boomers (those born between 1946 and 1964). It notes that Millennials typically possess strong IT skills and have attained high levels of education, both of which are conducive to starting new businesses. Millennials also are entering the traditional "peak age" bracket – around 40 – for entrepreneurship and will comprise the largest cohort at that age in American history.
At the same time, many Millennials are burdened with student loan debt and have suffered financial setbacks due to the Great Recession. And, while entrepreneurship education has flourished on college campuses, it has yet to be determined whether entrepreneurship courses lead to more business startups.
Baby Boomers have been and will continue to be an entrepreneurial generation, especially as they live longer and work longer. Many Boomers who were hit hard by the Great Recession, however, can't afford to start new businesses. In addition, the pace of Boomer startups is likely to slow down as this cohort ages.
In response to these concerns, the Kauffman Foundation is joining forces with partners to explore how the entrepreneurial potential of these two cohorts is being impacted by student debt, taxes, preserving competition and reducing protection.