Survey Says: Resources for Startups Are Hiding in Plain Sight

6/1/10

“I would love to start a company, but I can’t get financing, find affordable office space, or recruit capable talent.”

If you are an entrepreneur, or someone with close ties to the entrepreneurial community, this statement may sound familiar. But it turns out that there are plenty of resources available, some of which are hiding in plain sight.

I recently completed the Entrepreneur’s Census, a study on entrepreneurship (available at www.bit.ly/entrecensus), in Boston, New York, and Silicon Valley. According to the 300 plus entrepreneurs who were kind enough to participate, free office space is available, public financing is highly effective and underutilized, and reasonably priced, capable programmers can be found. In fact, 42 percent of respondents with commercial office space in New York City did not pay rent last month. 24 percent of Boston’s respondents and 22 percent of those in Palo Alto worked in “free” space as well.

The statistics on financing were even more surprising. For example, just 13 percent of respondents applied for public financing (e.g. grants and fellowships) in the last twelve months. Seventy percent of those who did apply received some funding; but, the word “some” hardly does it justice. The median raise for those that received public monies was $2 million. In comparison, the median raise for those who raised money from venture capital firms and angel investors was just $275,000. Further, only 30 percent of those who tried to raise private capital were able to attract as much capital as they sought.

Respondents also shared encouraging information about the availability of programmers. Of those companies that advertised a programming position last year, 40 percent received 11 or more applications. In Boston, 66 percent of these companies successfully hired a programmer within 3 months. Fifty percent of the companies that hired programmers were able to do so for $70,000 per year or less.

While these results were encouraging, we found several areas in which cities like Boston, and the academic institutions within, could promote and improve entrepreneurship. In the report, we outline ideas including: student loan forgiveness for entrepreneurs, the creation of “immigrant friendly” cities, the use of city-funded offices to help entrepreneurs identify and apply for public financing, and tax incentives for established companies that house new ventures.

Perhaps the most encouraging aspect of this study was the support of the entrepreneurial community. Over 50 organizations, including meetups, angel investor groups, venture capital firms, incubators, lawyers, professors, and strategic investors, offered their ideas for the survey design and suggestions like the ones listed above.

The moral of the study: the venture community is resourceful, strong, caring, and interested in re-establishing the United States as the best economy in the world.

Matt Shapiro is the Author and Founder of the Entrepreneur’s Census (www.bit.ly/entrecensus) and the Chief Executive Officer of Tooble, a new educational software venture. Contact: matt.shapiro@yale.edu. Follow: @entrecensus Follow @

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  • http://sethahmed.com Seth

    so, I just visited the government run small business site, http://www.business.gov/financing/grants/
    and it clearly states that “The federal government does not provide grants for starting and expanding a business.”
    Matt, would you be kind enough to provide little more details on your paragraph–”For example, just 13 percent of respondents applied for public financing (e.g. grants and fellowships) in the last twelve months. Seventy percent of those who did apply received some funding; but, the word “some” hardly does it justice. The median raise for those that received public monies was $2 million”– I am little confused on the truth behind that statement. Thanks

  • http://www.bit.ly/entrecensus Matt Shapiro

    Seth,
    Thanks for your comments. Please refer to this site http://www.sbir.gov/solicitations/ for more information regarding public monies available to new businesses. Glad to discuss more.
    Best,
    Matt

  • Alan

    Hey Matt,
    I am really impressed by the availability of funding, rent free space and good programmers. I saw above you mentioned a good resource for public funding for high tech. Any similar suggestions for rent free space and for finding programmers?

    Alan

  • Mike Hansom

    It’s good to know there are better resources available than immediately apparent. However, the question remains how long this will last in today’s crisis environment.

    However, other resources are also available.

    My company got in touch with eSolve Capital and they have a division handling high tech startups (you can find under http://esolvenano.com/about ) which has access to a wide range of funding offers providing excellent conditions.

  • http://www.bit.ly/entrecenus Matt Shapiro

    Hey Alan,
    Thanks for the comments. Free office space is available in the form of public and private incubators on a formal level, and agreements with private businesses on private level. In New York, for example, incubators include Dogpatch Labs, Polaris Ventures sponsored and free to tenants to my understanding, also in Boston, NYU-Polytech, an incubator with very low cost funding options. Rose Tech has an incubator near Madison Square Park. In Boston, TechStars, Cambridge Innovation Center, DogPatch are three incubators with whom I spoke. The structures for each are different. Even more common seems to be the use of “dead” space. These situations, where a startup is using space that is paid for but unused by a larger venture, happen through personal relationships and potential strategic partnerships. I recommend attending networking events (e.g. NY Tech Meetup in NY, WebInno in Boston) to meet potential partners.
    Hope this helps!
    Matt

  • http://www.bit.ly/entrecensus Matt Shapiro

    Mike,
    Thanks for your comments.
    The amount of public funding available will always vary according to current policy, which is directly (or indirectly) related to the economic environment.

    We hope that entrepreneurs pay attention to the funding now available (perhaps as a result of the economic environment) and leverage this funding to generate great new businesses. The efficient use of currently available funds to create businesses with impact is the best way to encourage policy makers to continue to fund innovation. In short, the more “deal flow” that we can generate for the public agences that spend these public dollars, the more likely we are to generate positive results through these programs and the more likely we are to see more money spent on such programs in the future.

    Esolvenano looks interesting, though i am not exactly sure what they do. If you feel comfortable, please describe what service they provided for you and for what type of compensation.

    Thanks!
    Matt

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  • Mike Hanson

    Well Matt, they seem to have a rather outstanding network that allows them to come up with highly attractive funding offers for start-ups in the hightech sector (often from sovereign funds). But suggest to talk to them directly, Wilfried Kayser is one of their senior guys

  • Boon

    Hey, Matt, Mike, Alan,
    eSolve sounds like a great deal. Are there other “investment supermarkets” that offer investment sources you can chooose from? Also, does eSolve Nano or eSolve Capital invest in Nano technology only, or other hi-tech innovative start ups and production facilities as well? I wonder if the nano-theme of an investment project is a limiting or expanding opportunity factor…
    -Boon

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  • https://www.SharedBusinessSpace.com Julie Clark

    A great resource for startups and entrepreneurs to find affordable office space is https://www.SharedBusinessSpace.com

    Find or list business to business shared office, shared studio and shared warehouse space at http://www.SharedBusinessSpace.com.

    Please contact Julie@SharedBusinessSpace.com with questions and comments.