Everywhere I seem to turn, I run into someone starting a business, running an early stage business, or incubating businesses. I am not talking about people I meet as a venture investor or entrepreneurs in our portfolio. I am talking about people I know around town. Here are some recent examples:
For most of these entrepreneurs, there is no crowd funding or angel funding or venture funding. This is bootstrapping – entrepreneurship funded with credit cards and savings accounts. The average age of the people involved is probably 45-50. They are fulfilling dreams, executing against opportunities, or replacing a lost job. For many of the women, this is the fastest and best way back into the workforce after having taken time off to have and raise children.
We are a country of entrepreneurship and of entrepreneurs and that spirit is not diminishing – in fact in a world where job security is in decline, where salaries are flat, where benefits are being slashed at large companies and where pensions will not exist for the next generation or in most cases for ours, the risk of being an entrepreneur is not so much greater than the risk of being an office worker. And the potential for wealth creation is so much greater as an entrepreneur than it is for those who toil in cubicles. Just ask the wealth management industry where they are looking for new accounts; entrepreneurs with exits represent the greatest new wealth opportunity to emerge in most markets.
Anecdotally, I would guess that entrepreneurship and self-employment is on the rise and this is proven out by the Kaufman Foundation research, dating from 2010, that showed that business creation statistics were higher than they had been in 14 years and were continuing to rise. I would bet they are even higher today. According to the report, 340 out of 100,000 people start a business every month. If you do the math, that is 558,000 new businesses each month, or over 6 million per year. That’s over 4% of the US workforce who take the leap and start a business each year. With that many new businesses started per year, one cannot say the American Dream is dead. Not to these folks who work and build and dream and succeed. . . or fail and start again.
We might be in an incubator bubble and a social business concept bubble but we are not in an entrepreneurial bubble. With six million new entrepreneurs setting out on their own each year, we are establishing a cultural fabric that will drive the next wave of growth and innovation and success and wealth creation in this country. Maybe one of the winners will be the people I know in my own little corner of Philadelphia, or someone you know in your part of the country or the world. Applaud their initiative. They are the 4%!