Startup America: How’s It Doing?





Back in January, President Obama announced the launch of Startup America, a national campaign to help “knock down barriers in the path of men and women in every corner of this country hoping to take a chance, follow a dream, and start a business.”

The initiative focuses on five areas (listed below) and included the launch of the Startup America Partnership, an independent alliance of entrepreneurs, corporations, universities, foundations and other leaders working to fuel innovative, high-growth startups.

Eight months in, how is Startup America faring? The Administration recently released a progress report. Here’s a closer look at some highlights for each of the five areas of focus.

obama money

1. Unlocking Access to Capital

  • The SBA has committed up to $2 billion over the next five years to match private sector investment in promising high-growth companies. Specifically, the SBA is committing $1 billion to Impact Investment Funds targeting priority areas, including underserved markets and emerging sectors such as clean energy and education. The SBA just licensed its first Impact Investment Fund in Michigan. An additional $1 billion in Early Stage Innovation Funds is set to launch in 2012.
  • To encourage additional investment in small business, the Administration has proposed permanent elimination of the capital gains tax on certain small business stock. This is part of the President’s Fiscal 2012 budget proposal, awaiting Congress’s action.
  • The Treasury Department has also proposed reforms that would make it easier to invest in early stage startups in low-income communities.

2. Connecting Mentors

  • The SBA, Department of Energy (DOE) and Advanced Research Projects Agency-Energy (ARPA-E) launched the Entrepreneurial Mentor Corps program, which funds four clean energy business accelerators that match mentors with clean energy companies around the country.
  • The Department of Veterans Affairs (VA) launched two business accelerators focused on helping vets start businesses—one serving Wisconsin and another serving Virginia and Pennsylvania.

3. Reducing Barriers

  • Immigrant entrepreneurs can be an important source of innovative business startups, and skilled immigrants are a resource for high-tech, high-growth companies. The Department of Homeland Security has proposed changes that would make it easier for both immigrant entrepreneurs and highly skilled immigrant employees to obtain visas.
  • To help reduce barriers to funding innovative ideas, the SBA has revamped the SBIR.gov website so it’s simpler for small businesses to find funding opportunities across 11 federal agencies.

4. Accelerating Innovation

  • The National Science Foundation has established the NSF Innovation Corps, a public-private partnership that connects NSF-funded scientific research with the technological, entrepreneurial and business communities.
  • The Department of Commerce, together with 16 federal agencies, has created the $33 million Jobs and Innovation Accelerator Challenge, in which high-growth clusters from 20 rural and urban regions across the nation will compete for federal funds to help their regions’ entrepreneurial economies grow.

5. Unleashing Market Opportunities

The Administration believes health-care reform; the Recovery Act’s $80 billion investment in clean energy research, development and deployment; and the Race to the Top initiative and $650M Investing in Innovation (i3) Program will create new opportunities for small businesses in health-care information technology, clean energy, and educational technologies and services.

There are many more aspects to Startup America. You can visit the Startup America site to find out about specific initiatives and how well they’re progressing. What do you think of these initiatives? Will they have any effect on your business?

24 Comments ▼

Rieva Lesonsky


Rieva Lesonsky Rieva Lesonsky is a Columnist for Small Business Trends covering employment, retail trends and women in business. She is CEO of GrowBiz Media, a media company that helps entrepreneurs start and grow their businesses. Follow her on Google+ and visit her blog, SmallBizDaily, to get the scoop on business trends and free TrendCast reports.

24 Reactions

  1. They are doing TERRIBLE. I have gone to all three “weminars” and registered on their site for both the program itself and their partner program – and their has been not one single contact from that organization. This is not for “startups” or for the 40 million small companies in this country with no employers. This is some kind of corporate welfare or crony capitalism for the people involved with the system. I would be HAPPY to be proved wrong, but this program is a huge disappointment.

  2. Martin Lindeskog

    Rob Gordon brings up an interesting reflection. When will the administration cut the red tape for real and stop interfering in the market place?

    I clicked on the Startup America link and got an error message: “404 Page Not Found”

    Is the web master at White House taking a vacation together with the President? πŸ˜‰

  3. The government needs to get out of the way, not institute some complex program that is funded by taxes taken *from* businesses.

  4. Robert,

    I so agree with you! But in addition we should look at the math of those numbers. The 2 billion is over 5 years and if I divide that by all the states in the US that number becomes…too tiny to have any impact to say the least.

  5. This program needs to be cut. If you want to help small businesses, let us keep more of the money we rightfully earn, rather than sending it to some bureaucrats so they can (re)distribute our money. We know more about how OUR money can help grow OUR businesses than some politicians who invent these programs to sound good, but don’t do anything. America is broke. How about we try and get some hard, concrete, tangible ROI?

  6. My patience is waning for those who pretend to be advocates of small business when in fact they are advocates of big government and/or big business, sent out into the small business population to lobby for how great big government and big business are for the little guy.

    Enough.

    I’m with the Daily Kos on this one, which finds Startup America reprehensible in every way: http://bit.ly/pYur8D

    Kos sees Startup America as it really is – these are their bullet points:

    1) Missing a Vision
    2) Elitist and Exclusionary
    3) Reeks of Cronyism
    4) Built in conflict of interest (supposed to be for “small business”, but openly admits its looking for that freakishly small percentage of companies that grow fast – “ensuring the success of a limited number of companies in pre-selected industries”)
    5) IT HAS BEEN HIJACKED BY BIG BUSINESS
    6) It doesn’t scale – started by recruiting giant government and giant businesses to work together – an arrogant top down approach with few stakeholders, controlled by the “bigs”.

    KOS says it will be a “political disaster” for the politicians because it ignores the tens of millions of TRUE small companies in America. I can only hope so.

    Kos is wrong in one way. It wasn’t hijacked by big business. They didn’t need to. It was started by giant corporations and giant government for the express purpose of making the little guy think they were doing something.

    This is simply another lobbying piece by someone who makes their living off big corporations and big government [DELETED BY EDITOR PER SITE COMMENT POLICY].

    Go read the article in the Daily Kos to find out the truth about Startup America from someone advocating for small business, not paid by big business or big government.

  7. @Chuck Blakeman – that was not really DailyKos, that was me – anyone can start a DailyKos account and post something there, but thank you – your summary is better than I could have done πŸ™‚ To say we are like minded, would be an understatement, and I would like to talk to you if you are available sometime.

    Note that I am working on building an alternative to Startup America at http://American-Startups.com – but it is still early in development. I will likely be contacting you shortly.

  8. Rob,

    Sorry for the missed props – just easier to point to the source site name that people will recognize. GREAT article by YOU. πŸ™‚

    There is a growing tide of people like you and me who going to have to:

    a) expose the collusion of the Bigs http://chuckb.me/xG, including ongoing regulation collusion, handouts, bailouts, and political favoritism,
    b) [DELETED BY THE EDITOR PER SITE COMMENT POLICY]
    c) create a unified voice for true small businesses under 20 employees (98% of all businesses) that puts the interests of SMALL ahead of other political interests, and plenty after this.

    I emailed you some contact info.

  9. Anita Campbell

    I am not a big fan of these extra government initiatives. With the country choking on a huge deficit, somewhere we have to learn to “stop.” That means we have to say “No, it’s just not in the budget.”

    We already have the SBA and money earmarked for the SBA. I think everyone should stay out of Karen Mills’ way and let the SBA do its thing, subject to proper oversight.

    I am not saying it’s not a good thing to support startups. But we can convince ourselves that anything is a good thing. I can do that with my own personal budget. But at the end of the day, if I don’t have the money for all those “nice to have” things, I’m being irresponsible and putting my family, my business and everybody who depends on me at risk by overspending.

  10. I don’t think there is anything wrong with the government supporting startup companies – if it was a well designed program, but this one apparently is not. Most of our systems in America today are designed for another era – unemployment for example. Those people get almost two years of benefits now, but if a self employed person experiences a slump they just starve. If you get a chance, read what I wrote about this program that was partially quoted in the comments here http://goo.gl/1oBZj . I am also working on a site that will emphasize startups helping each other – something Startup American probably should have done. It has not formally launched yet, but people are invited to preregister at http://American-Startups.com

  11. Anita Campbell

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    Here’s the reason for the policy: when people are attacked for their views, it poses a chilling effect on the discussion of the issues. Then people become afraid of expressing an opinion or taking a position, because they fear being personally vilified.

  12. Thank you, Rieva, for posting about Startup America’s progress. I work with the Campaign for Free Enterprise, a project of the U.S. Chamber of Commerce and we are a founding partner of this initiative. Free enterprise has made our country great by allowing entrepreneurs to start companies and create jobs, a vision that the Startup America program shares. We agree that progress has been made in gathering support for small businesses and entrepreneurs, but there is still a great deal of work to be done, particularly in reducing barriers to starting a company. We’ll continue to work with Startup America to advance startup-friendly policies.

    -Hillary,

  13. Hillary, The U.S. Chamber of Commerce has nothing to do with small business in America – in fact most people think they are hostile to small business. It is an organization that lobbies for the need of major corporations. That’s fine, but they shouldn’t pretend they are helping small business when they do that – the needs of small business and startups and major corporations are very different.

    Be that as it may, it is obvious the Chamber’s philosophy has had a profound impact on the program – what there is of it. Even in your post you say this – that the goal is “reducing barriers” by the government to starting a company. I have never met a startup company who thinks the main problem is “barriers” from the government – maybe there are a few in certain industries, but that is really a large corporation issue.

    Almost everything Startup American has done so far has been “cheer leading” – endlessly talking about how great entrepreneurship is. It is a top down effort that doesn’t even involve any small companies – just look at the advisory board they just started- not a single small business on it.

    So far, Startup America has been a top down effort that has accomplished almost nothing for the 40 million small companies in America. Don’t believe me? Try this yourself. Go register at the Startup America website and pretend you are a small business – a real small one. Say you are starting a landscape company or something. You know what will happen? I will tell you what will happen – nothing! There is no program in place. Nothing, nada, zilch. Their “Partners Program” is the same – I applied for it, and didn’t even get the courtesy of an email reply. It is clear that for Startup America “small business need not apply”. It has clearly been designed for large corporation to either say they are doing something, or in some cases to hawk their products.

    There might still be time to save that program – I hope so, but I have to tell you, they are going about it completely backwards.

  14. Anita,

    You mention “everyone should stay out of Karen Mills’ way and let the SBA do its thing, subject to proper oversight.”

    However, Startup America, along with a myriad other government interferences with business that are declared as new forms of assistance, demonstrate a very clear tacit admission by the government that the SBA does not “do its thing”. It is one of the worst offenders when it comes to clearing the way for small business to operate.

    The SBA is not set up in any way to help the 97.67% of businesses in America with 1-19 employees, which the SBA itself says is the #1 job growth engine sector, which it then ignores in favor of businesses 50-500.

    It is not populated by small business experts either. Of the top 141 people in the SBA, only 13 were EVER a business owner, and only 3-4 in the last 15 years. and only 6 (4.3%) ever started a business. 49% are career bureaucrats and 25% spent their entire careers as employees in big business, or 74%. Only one of 141 invested their entire career in running a business with fewer than 20 employees – the sector the SBA says is the engine of our economy.

    And we’re supposed to stay out of the way of these people?

    Karen Mills was born into the Tootsie Roll fortune, with a family that makes an estimated $8 million a year for nearly a century and worked in giant companies her entire career until she started lending $10-15 million at a pop to established (not startup) businesses. And the second in command, Marie Johns, was also a career giant corporation person, finishing as the CEO of Verizon w/ thousands of employees.

    And we’re supposed to stay out of the way of these people?

    I have a client who lost a 20 year business on July 15 because the State Dept. created a VERBAL (not even written) regulation that put thousands of small business owners under in one day so they could have only a few giant corporations to deal with instead. Since July 11 we have had zero response from the SBA Office of Advocacy on this issue, which should be at the very core of what they are supposed to do. My client and many like her have been left in the lurch by the SBA. See http://chuckb.me/x4Z for details.

    And we’re supposed to stay out of the way of these people?

    If anything needs to be dismantled, it’s the SBA, with the re-emergence of a cabinet level small business advocate to stop the graft and collusion between big business and big government.

    Karen Mills needs to get out of my way, and that of millions of other business owners she is pretending to serve.

    • Anita Campbell

      Chuck,

      My point is a simple one: I’m tired of all the unrestrained government spending and the constant layering on of new programs, new bureaucrats and new expenses that taxpayers must pay for.

      I think we should let the existing government programs do their thing, and not keep adding new ones.

      Anita

  15. Rob, thank you for putting the time into a thoughtful comment. We wanted to respond to give you some information about all the work the U.S. Chamber does with and for American small businesses.

    While we do work with larger companies, 96% of the U.S. Chamber’s members are small businesses and we have ongoing dialogue with small businesses every day. We host an annual event called “America’s Small Business Summit” which brings hundreds of small business owners together to discuss their biggest challenges. The Campaign for Free Enterprise and its Center for Entrepreneurship were specifically created to work with small businesses and entrepreneurs. In fact, the U.S. Chamber was recently named a Small Business Influencer champion by Small Business Trends for the work it does with small businesses.

    Our community of entrepreneurs as well as our advisory council for the Center of Entrepreneurship have told us that there are significant bureaucratic and regulatory barriers to entry that they face everyday. At a recent event for Our Time, an organization aimed at supporting entrepreneurs under 30, we heard again and again about the time and cost of complying with regulations, both for launching businesses and growing them. (http://www.youtube.com/watch?v=qx6yLpKhztY)

    Those are the people we are fighting for and we think there is real value in that, especially considering that regulations disproportionately impact small businesses that don’t have as many resources to comply with them.

    We agree that Startup America has more work to do, indeed we all have work to do to get the economy back on track, but raising awareness about the needs and issues of entrepreneurs is an important first step.

    -Hilary

  16. Hillary,

    This where the false SBA definition of small allows us all to say we’re helping small business when we’re not. The SBA defines it as under 500 employees, which is 99.6% of all businesses in America – a meaningless non-definition. But it was very purposeful to make it that broad, because it allows groups like the U.S. Chamber, the SBA, giant corporations and myriad politicians to focus on 50-500 employee companies while proclaiming their loyalty to small business, whom they ignore.

    Why is this non-definition important? According to the SBA, the #1 job growth sector is businesses from 1-9 employees and the #2 job growth sector is 10-19, the two least served sectors by all of the above.

    98% of all businesses have 1-19 employees, and from your statistics, only 96% of your clients are under 500 (assuming you use the standard SBA definition.) So the U.S. Chamber has a significantly lower population of 1-19 employee firms than average.

    The Small Business Summit – a once a year bone thrown to the small business owners in the U.S. Chamber – 96% of all businesses in America are 1-9 employees, but this annual event has only a 40% share. 31 of the 32 speakers were a who’s who of giant corporations, national politicians, and a few large academic institutions; only one person with a true small business (under 19 employees), or even a small business background. Pretty well focused on giant corporations for a once-a-year nod to small business owners.

    The Chamber was started decades ago to serve small businesses and give them collective power, but has long since lost its way with an addiction to the Bigs (big business and big government). That is why we have started 3to5 Clubs this year – http://3to5club.com , focused solely on businesses from 1-19 employees. We feel it will become a great replacement for the Chamber concept worldwide. Already they are in three states, Ireland, Kenya, South Africa, and DR Congo and spreading quickly. The Chinese government just had us in Bejing to talk to 400 business people and the mayors of the 15 major cities about starting 3to5 Clubs there.

    So when you say “these are the people we are fighting for”, that’s the problem. You are not fighting for true small businesses (1-19 employees) who are the engine of the economy, but large corporations from 50-50,000 employees. You, the SBA, and politicians all say they are fight for small business, when in fact you are fighting for a much larger constituency that makes big donations and pays big dues.

  17. Chuck,

    Thank you for your post. I just signed up for the 3 to 5 club. I’d like to not something else.
    I have been looking at the local chambers of commerce and find that they do not really offer anything to the small business owners who have just started. Sure, you pay your annual fee and get in a local directory but actual help or a network of people who support small start-ups you still don’t get. Give me your feedback if you like!

  18. Annett,

    I don’t want to hijack this conversation to start one about 3to5Club – that’s rude. πŸ™‚ see http://3to5Club.com or http://MakingMoneyIsKillingYourBusiness.com for more info.

    But the Chamber’s have truly lost their way on small business. Example – I do a weekly lunch that is free for small business owners – we get 50-75 people there every week. Nobody sells anybody anything and I just share business principles in a highly interactive environment. I’ve been doing it for 4 1/2 years now. I was a member of the largest chamber in my area and they told me that I was a “competitor to the Chamber” because of the lunch and other things I do for free to help business owners.

    Imagine that? A non-profit created for the purpose of promoting it’s paying members, telling the paying member they are competition, but please do keep paying us to promote you. They can’t help themselves – they are addicted to giant corporations who pay a lot of dues.

    Anita,

    Sorry I went on a little rant there. I do get your point. I’m just at the point where not expanding is no longer good enough. I would obviously advocate elimination of the existing SBA and other programs for the very same reason we don’t want an expansion of them – they are expensive, very ineffective, and serve only as tools for politicians to pretend they’re doing something.

  19. Hillary, You seem like a nice person, but I have to express that the involvement of the Chamber of Commerce in Startup America makes me nervous. Almost everything the Chamber does supports the agenda of big corporations, even to the detriment of small business, and especially startups. We know how fiercely you guys fought to make sure we will never be able to get medical care, for example.

    You may have a fair number of medium sized companies, but almost all the money the Chamber gets is from big corporations – most of the corporations on the New York Stock exchange are your biggest supporters, and it is them that you seem to represent – like pushing for financial industry deregualtion even after they all but destroyed the economy. These are not issues that will help real small business in America. Chuck makes a good point above – we really don’t know that we are even talking about the same thing when we talk about “small business” or even “startups”. Again, there are 40 million self employed in America now -and a good number of them are small businesses or startups, but I haven’t seen anything from this program yet that is even moving in the direction of trying to help them.

    I am also a little skeptical that startup companies are telling you that there are “significant bureaucratic and regulatory barriers to entry that they face everyday”. I have never head of someone who wants to start a business saying they won’t do it because “bureaucratic and regulatory barriers” are stopping them. Everyone knows the U.S. Chamber of Commerce is an extremely conservative organization. You have to consider that you might have what is called a “selection bias” – not too many people join the U.S. Chamber unless they are already politically conservative, and almost no one would jump on an airplane to express that the government is their problem unless they were already pretty successful.

    I just don’t buy it – that everything will be great as long as the goverment sits on its ass and does nothing. Look at the progress report above – everything that has been accomplished so far has been done by the Government. The “Startup America Partners” is constantly touting that they are “the private sector” and even though they scored a few billion from the government, as of yet they don’t seem to have done next to anything that could actually help.

    I am wondering if there is a serious problem of “group think” there as a result of your top down approach. I just wrote a blog post about that awful “Startup Act” proposal that the Kauffman foundation came up with. This legislation was clearly designed for big corporations – which is fine, but they shouldn’t pretend it is for us. I was really turned off when the very first thing Kauffman did with Startup America funds was give a sole source, no bid contract of $200,000 to one of their “partners” – TechStars, for design of the platform – which we still haven’t seen yet. Can you really blame anyone for thinking you might be using these public funds to set up another “crony capitalism” system for your corporate friends?

    I am going to do my best to keep an open mind about both the U.S. Chamber of Commerce, and the Startup America Partners, but after sitting through all three of those webinars I came to the conclusion many people did – that it was a program being designed for big business, not for us. I am proceeding with the development of a platform as an alternative to this program, that is open to EVERY American Startup, no matter how humble. I am just getting going on it but anyone is welcome to register at the link below. The service is very much an alpha test, but we are testing some matching technologies and plan to try some approaches to collaboration that I doubt are even being considered by Startup America.

  20. The nation needs a National New Business and Job Creation Network operating in a free economic enterprise zone in every county. See how unemployment can be eliminated without delay, how dislocated workers can help small businesses grow, how continuous work & learn opportunties can keep employees current, how entrepreneurs can continuously start up new businesses and maintain a stable and growing economy, how networking & collaboration can provide the critical mass for start ups, and how all this can be done with existing resources. The National New Business and Job Creation Network is emerging – incrementally – pay attention and contribute your ideas – http://goo.gl/gDpS8
    @Cognograpy

  21. As I’ve learned more about Startup America, I’d like to add an important follow up.

    SA is clearly not for true small businesses, and is at best, another patronizing collusion by giant corporations and giant government, neither of which have any intention of helping small business, and both of which would like you to believe they do.

    The #1 job growth sector is companies with 1-9 employees and the #2 job growth sector is 10-19 employees (SBA).

    So who does Startup America focus on? A freakishly tiny percentage of businesses that will benefit giant corporations and giant government. For the rest of us they offer a fancy coupon site that offers to take our money and give it to giant corporations, not help us get the economy re-started.

    From Startup America’s “About Us” section:
    “our principal focus will be on supporting the entrepreneurs who are leading existing firms with high-growth potential (what we call “speedups”).”

    They define speedups as having:
    1) “MORE THAN 25 EMPLOYEES” w/
    2) “NEW HIRES SITTING IN THE HALLWAY AND BREAKROOM”
    3) “MULTIPLE NEW HIRES PER DAY”
    4) “BEEN THROUGH AT LEAST ONE ROUND OF VC FUNDING

    There are 28+ million business in America, 98% of which will never get bigger than 19 employees and don’t want to. The number and percentage of these businesses that fit the above four profile descriptors is so small that it could be in the hundreds, at most a few thousand nationwide. By there own definition, the 28 million companies that represent the engine of job growth aren’t even on SA’s radar. Startup? America? It’s more like “where can we find our next acquisition?”

    Their excuse is that some research (not universally accepted) says the majority of growth comes from “high-growth” companies under five years old. Even if this is true, and many dispute it, the fact still remains that those high-growth companies start out with fewer than 19 employees and are part of the #1 and #2 job growth sectors until they move past 19 employees. Most of them see their highest growth from 1-19 employees, and an insignificant number of them grow to 50, 500 or 5,000 employees.

    If every one of the very few thousand companies that meet the SA profile grew by 500%, it wouldn’t begin to make a tiny dent in the recovery of our economy. There just isn’t enough of them to make an impact. But they sure do make great acquisition targets for the giant corporations sponsoring SA.

    SA is simply another in a very long series of veiled attempts by giant corporations and giant government to focus on their own self-interests – in this case, giant corporations-in-the-making that other giant corporations can either benefit from or buy out.

    And in the context of focusing on their own self interests, they once again have pretended to advocate for small business so that we’ll all feel better while they use us to find the few hundred companies that they really want to work with.

    Is anyone else as tired of the collusion between big government and big business that uses small business to get to their own self-interested objectives? Are we tired of being patronized by giant corporations and giant government that never invites us to the table but always has an all-wise and all-knowing solution for us?

    SA is just another patronizing and inconsequential collusion of the “bigs”. Not only should you not support it, you need to help expose it.

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