“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.
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