Entrepreneurship

Kauffman Foundation's State of Entrepreneurship Address Proposes Policies to Expand Financing Entrepreneurial Growth

Release Date: 2/5/2013

Contact:
Rose Levy, 212-319-3451 x641, Goldin Solutions
Barbara Pruitt, 816-932-1288, Kauffman Foundation 

Kauffman Foundation's State of Entrepreneurship Address
Proposes Policies to Expand Financing Entrepreneurial Growth  

New white paper and expert panel explore innovative ways to fund entrepreneurship

 Event features opening remarks from Small Business Administrator Karen Mills
and Senator Jerry Moran of Kansas

(Washington, D.C.), Feb. 5, 2013 – Despite recent innovations in entrepreneurial finance, particularly at the early stage of business creation, many new and young companies continue to face hurdles to acquire capital. The Kauffman Foundation today addressed current challenges and opportunities in financing entrepreneurial growth, a key driver of job creation and economic expansion, at its fourth annual State of Entrepreneurship Address. The event featured remarks from Small Business Administrator Karen Mills, U.S. Senator Jerry Moran and Kauffman President and CEO Tom McDonnell.

“The good news is that there is a national consensus that encouraging entrepreneurship can help revive our sluggish economy, and the challenging environment for acquiring capital has sparked tremendous innovations in finance,” McDonnell said. “But for the financing innovations to pay dividends, there will need to be a variety of regulatory reforms, particularly related to the country’s capital markets, on both the debt and equity side. We are presenting recommendations today that will help to do just that.”

In his address at the National Press Club in Washington, McDonnell offered policy recommendations to increase financing of entrepreneurial ventures that are featured in a paper on the same topic. Key recommendations include:

• Crowdfunding: The Securities and Exchange Commission should approve rules under the JOBS Act that encourage experimentation without excessive regulation

• IPOs: Greater use of auctions, such as the Dutch auction used by Google, rather than the more common practice of setting a specific price for new stock offerings

• Bank Debt: Introduce more flexibility into the regulatory process – such as providing the Federal Reserve, Comptroller of the Currency and Federal Deposit Insurance Corporation the authority to make judgment calls at the local level

• Regulation: Allow shareholders of companies the right to vote whether Sarbanes-Oxley accounting rules are necessary

• Venture Capital: Create longer-term venture funds that include significant “skin-in-the-game” investment from General Partners, so their interests are aligned with Limited Partner investors over a reasonable time horizon

Robert Litan, director of research at Bloomberg.gov, moderated a discussion exploring the role of capital in jumpstarting America's entrepreneurial engine with a panel of experts in financing entrepreneurs:

• Chance Barnett, co-founder and CEO, crowdfunder.com
• Jeff Fagnan, partner, Atlas Venture
• Donna Harris, managing director of Startup Regions, Startup America Partnership
• Ramana Nanda, associate professor of business administration, Harvard Business School
• Alan Patricof, founder and managing director, Greycroft Partners

Downloadable video of today’s address and panel discussion, which was webcast, compliments of Bloomberg TV, from the National Press Club in Washington, will be posted at www.kauffman.org/financegrowth.