If Start Up America wants to meet its goals, CAMEO believes it must understand that 1) all start-ups create jobs and 2) consideration of and help for very small businesses need to be part of the conversation. Microbusinesses constitute 88% of America’s businesses and have very different needs from other start-ups that are not addressed by SUA.
hpickman (at) microbiz (dot) org
San Francisco, CA (PRWEB) February 9, 2012
For Start Up America to reach their goal of 100,000 registered start-ups by March 31, the initiative has to do more than engage venture capitalists in a contest. CAMEO believes the effort needs to engage the 25.5 million small businesses that are micro-businesses (fewer than five employees). Sure the discounts on laptops and six months of free online payroll subscription are great, but what many of these businesses really need is help with their business plan or cash flow projections.
“In 2010, venture capitalists invested approximately $22 billion into 2,800 companies. With a small fraction of the money, micro enterprise development organizations served over 200,000 businesses with entrepreneurial training (think mini-MBA) and microloans (loans under $50,000),” says Claudia Viek, C.E.O. of CAMEO. “If Start Up America is serious about registering 100,000 businesses, it needs to cultivate the existing micro-business infrastructure in addition to the VC community.
According to the 2011 Venture Impact study, produced by IHS Global Insight, originally venture-backed companies accounted for 11.87 million jobs and over $3.1 trillion in revenue in the United States (based on 2010 data). Those totals compare to 21% of GDP and 11% of private sector employment.
In comparison, according to Association for Enterprise Opportunity micro-businesses are 88% of all businesses, generate $2.4 trillion in receipts, account for 17% of GDP and employ more than 31 million people.
With less than three percent of the money, micro-businesses employ more people than venture capital firms and generate about 2/3 of the GDP.
If Start Up America wants to make it to its second birthday, it would do well to embrace all types of entrepreneurs from the florist and vet on Main Street to the next Twitter.
The following chart as pdf: MDO and VC investment
Micro Enterprise Development Organizations (MDOs)
Number of Organizations: 696
Businesses Assisted: 221,000
Money Invested: $90 million=loan volume; $500 million=approx. budgets of MDOs
GDP Receipts / Percentage: $2.4 trillion / 17%
Employment: 31 million
Investment per Job: $19
Venture Capital Firms
Number of Firms: 492
Businesses Assisted: 2,749
Money Invested: $22 billion VC invested
GDP Receipts / Percentage: $3.1 trillion / 21%
Employment: 11.87 million
Investment per Job: $1,833