Last week, I [Johnathan Ortmans] participated in the NASVF Annual Conference in Oklahoma City where experts discussed again how to ensure that credit crunches do not negatively impact start-up performance. The good news is that those gathering at this conference started from a common appreciation that entrepreneurship cannot be on the sidelines of economic and financial policy. Breakfast speaker Rick Wade, Deputy Chief of Staff to the Secretary of Commerce, noted rigorous research at the Kauffman Foundation that revealed that entrepreneurs drive job creation in the U.S. with firms less than five years old accounting for all net job growth in the U.S. Moreover, job creation from startups is much less sensitive to downturns than job creation in the entire economy, according to research by Kauffman’s Dane Stangler. This may seem counterintuitive. However, this does not mean that entrepreneurs do not respond to business cycles. As Stangler points out, "a downturn might actually act as an extra spur to founding a new company, if the founders perceive that their prospective competition might be weakened." Others see starting a company amid a recession as a way to take their future into their own hands. Perhaps a major economic restructuring actually produces a lot of new unexpected opportunities. What is clearly understood is that entrepreneurs steadily recreate the economy, generating jobs and innovation.
Seed Capital, Entrepreneurs and Economic Recovery