Has the Entrepreneur Era Arrived?

By October 23, 2014 1 comment

Since the economic crisis arose in 2008, entrepreneurship has been enjoying a boom in popularity. With a consistently high number of new companies appearing, startup incubators flourishing and plenty of investment capital available, leading to some astronomical company valuations, enthusiasm for business creation is running high on all sides.

Did the 2008 economic recession trigger a resurgence in entrepreneurial spirit? Statistics for the United States seem to bear out this suggestion. According to the Kauffman Index of Entrepreneurial Activity (KIEA), a ‘leading indicator of new business creation in the US’ founded by the entrepreneur Ewing Marion Kauffman, the entrepreneurial rate among the US population already stands well above that recorded during dot.com bubble of fifteen years ago, although the latest (2013) figures have slipped back somewhat from the high point of 320 new entrepreneurs out of every 100,000 adults that was reached in 2011. Nevertheless, this still adds up to over 20 million non-employer businesses in existence stateside today, with more being started up every day. And beyond the profit motive, lots of people are increasingly looking to fulfil themselves by coming up with a solution that will make the world a better place. People’s view of the world of work seems to be changing as ecosystems designed to help and support entrepreneurs are starting to flourish. Increasing numbers of business accelerators are appearing, and there has never been so much investment capital injected into early-stage companies.

Investment on the increase

Recent reports reveal that investment in startups is also accelerating in Europe, even though the entrepreneurial scene on the old continent remains fragile. In addition to the macro-economic and social factors which underpin the recent enthusiasm for setting up one’s own business, the appearance of a large number of fledgling companies is due to the availability of startup funds, as nowadays venture capital firms seem prepared to pay what it takes so as not to let the next Facebook or Snapchat slip through their fingers. David S. Rose, noted blogger and CEO of Gust, a platform which links startups with potential investors, says that VCs financed close to 1,500 projects last year. Although a direct consequence of the startup boom is that there is enormous competition to obtain funds, barriers to market entry have been steadily falling. Several years ago an e-commerce website cost tens of thousands of euros to set up, but now you can do so for little or nothing, and a new smartphone app can be fully developed for under €10,000. New venture capital firms have been appearing in Europe, including White Star Capital, which specialises in tech startups, and Passion Capital. Meanwhile the startup accelerator phenomenon is well known, with such success stories as Airbnb, which was mentored by the iconic incubator Y Combinator, hitting the headlines.

Changing attitudes to company jobs

These high-profile support programmes for fledgling businesses have helped to attract capital to the startup world. Over the last few years valuations for (mostly tech) startups have continued to soar. Back in 2006 Google acquired YouTube (now the world’s biggest TV channel) for only a billion dollars, whereas this year Facebook’s takeover of Whatsapp, a startup with around thirty employees that has attracted 500 million users to its messaging app, cost $19 billion.  The number of startups worldwide valued at $1 billion or more is currently put at between 25 and 40, and a year from now that figure is expected to rise as high as 100. Entrepreneurs now have at their disposal tools which did not exist a short while ago to help them develop their business. Moreover, these days there is a burgeoning international market for tech services, which means that young companies are able to take a ‘glocalisation’ approach – i.e. designing and delivering global solutions that have total relevance to every local market they plan to attack – and use the power of the social networks to create unprecedented customer engagement.  On top of this, large corporations, which were the main engines of growth during the twentieth century, have proved themselves ill-equipped, both in terms of production culture and management practices, to come up with promising innovations when faced with the disruptive ideas and products developed by more agile startups. It seems that hopes have never been so high for creative entrepreneurs, and this is changing the whole image of what it means to work at a company.

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1 Comment

These incubators are great. I have been to the one to the Kauffman Center and they are creating most of the innovations. I also read this book on the subject and found it remarkable http://www.amazon.com/Startup-Incubators-Business-Accelerators-Acceleration/dp/1502911876/ref=sr_1_8?ie=UTF8&qid=1414438297&sr=8-8&keywords=jobe+leonard

Submitted by pam.fuyk (not verified) - on October 27, 2014 at 09:51 pm

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