Last year, I traveled more than 1,800 miles to witness first-hand the role that entrepreneurs are playing in reviving local economies and driving innovation in cities throughout the heart of America. I’m thrilled to see that the rest is certainly rising in places like Pittsburgh, which is taking advantage of its Steel City roots to usher in a new era of engineering and robotics innovation, or Cincinnati capitalizing on the iconic brands that call the city home to build the next generation of consumer companies. Or in Nashville, where startups are capitalizing on the city’s health care heritage to create new kinds of digital health and wellness companies, or St. Louis, which is emerging as a hub of innovation for agtech (agricultural technologies) and bioscience. But at a time when the opportunity gap is growing and the divisions in communities seem to be widening, we can’t forget that entrepreneurs can – and must – also play a role in creating pathways for all, and in helping to rebuild America’s shrinking middle class.
So when the University of Virginia approached me to help answer the question, “Can Startups Save the American Dream?” I jumped at the opportunity. While we’ve known for some time that young companies are responsible for a majority of new jobs created in the past several decades, less is known about the role that startups can play in creating jobs specifically for the middle class. Over the past several months, I, along with fellow co-chair Carly Fiorina and a dozen entrepreneurs, policy experts, thought leaders and journalists, have served on a commission organized by the Milstein Symposium at UVA’s Miller Center to explore innovative, yet practical, ideas on how to create and sustain middle-class jobs through entrepreneurship.
I’ve long said that entrepreneurs are the secret sauce of America – building not only iconic companies but entire industries. Historically, entrepreneurship hasn’t always been about the next big exit, but rather about creating pathways to the middle class and attaining the American Dream. And entrepreneurs must again be at the heart of rebuilding the American economy. There are many encouraging signs: as a nation we have created more than 10.9 million jobs over the last 57 months (the longest streak of private-sector job growth on record); the stock market is at an all-time high with the Dow Jones above 18,000 points; our high-school graduation rates are the highest they have ever been and more students are earning post secondary degrees than ever before; and policy reforms like the American Jumpstarting Our Business Startups (JOBS) Act, which creates better access to capital and incentivizes investment in young companies, were implemented.
At the same time, the income gap continues to widen, and not enough people are feeling the impact of the economic rebound. Too many people are still without jobs. And some of the data show a troubling slowdown in both new company starts and the rate at which young companies are creating new jobs. A 2014 study by Brookings shows that businesses are closing at a higher rate than being created for the first time in 30 years of data. This decline in business dynamism is happening universally across all U.S. regions. Kauffman research on entrepreneurial activity found that the rate of business creation declined from .30 percent of adults in 2012 to .28 percent of adults in 2013 continuing the downward trend from 2011.
It is with this backdrop that our Milstein Commission worked to develop recommendations for new ways to boost America’s entrepreneurial energy and provide new pathways for creating middle class jobs. We’re thrilled to unveil the following five recommendations in a new report out this morning:
Unlock Capital for Main Street Entrepreneurs
Programs like the Community Reinvestment Act and increased Community Development Financial Institution Investments (CDFIs) can provide access to critical sources of capital that entrepreneurs need to launch, sustain or scale their operations.
Accelerate impact investing through program-related investments (PRIs)
Impact investing can help transform and advance the middle-class through contributions to innovations in areas such as healthcare, energy and education, all important for middle-class households. Expanding awareness and accessibility of PRIs capital pools can encourage more impact investing among foundations and mainstream investors.
Build a Regulatory Roadmap
Starting and maintaining a business can be overwhelming with numerous rules and regulations to navigate. A “Regulatory Roadmap” can help entrepreneurs navigate the landscape and encourage regulators to streamline their processes.
Empower the next generation of entrepreneurial leaders
Many children have an entrepreneurial spirit to tackle the world’s problems and think outside the box, but by the time they go through school, all those instincts change. Creating a national competition for students at the K-12 level can help to energize students’ interest and expose them to entrepreneurial thinking and the possibility of taking the path to becoming an entrepreneur.
Equip civic leaders to build entrepreneurial ecosystems
Creating an “Ecosytem-in-a-Box” will give community and civic leaders the tools and knowledge to foster a thriving entrepreneurial community and boost their local economies.
It’s also important to note what we mean when we talk entrepreneurship. When you say the word “startup,” what comes to mind for many are technology and Internet companies. Tech companies have indeed been the source of invaluable innovation and job creation, but have also in some cases been job destroyers. The young companies that will rebuild our middle class will be those that focus on creating real jobs, not just on creating monetary value. Take Revolution Foods, for example – as a result of its mission to provide healthy school lunches, the company has created nearly two thousand middle class jobs in cities across the country.
Later this morning, Carly and I will join our fellow commissioners and Steve Clemons from The Atlantic at the Halcyon House to discuss these recommendations with a group of stakeholders from the government, corporate, nonprofit and entrepreneurial communities. We hope you’ll join us online via the livestream at: 10:30am via.
Our hope is to spark not just a dialogue, but collaborative action in moving these ideas forward as we seek to accelerate entrepreneurship and as a result create more onramps to achieve the American Dream. And, we need more spaces like the Midtown Global Market that I visited in Minneapolis, which empowers aspiring low income and immigrant entrepreneurs to start their own businesses – enabling people like Enrique, the owner of La Loma Tamales in the Global Market, to build what could be the next Chipotle. I encourage you to read the report HERE, share your thoughts with us #FutureofEnt and join us in taking action.