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White House Teams Up With Industry to Boost U.S. Entrepreneurship

February 02, 2011

Following up on President Barack Obama's State of the Union pledge to focus on American competitiveness and innovation, the White House announced the Startup America initiative, a program to support and celebrate U.S. entrepreneurs. On Monday, a panel of cabinet members, White House officials, executives and economic development leaders provided an outline of the public/private effort, which has already generated $400 million in private commitments. Startup America aims to expand a number of federal programs to provide capital and mentoring services to entrepreneurs, and to create a nationwide partnership that will leverage private sector partners to provide entrepreneurial support resources. The initiative also will support the expansion of several existing TBED-related initiatives across the country.

The Obama administration plans to commit $2 billion to encourage private sector investment in early stage and potentially high-growth companies over the next five years. Two new programs, administered by the Small Business Administration (SBA), will use the operating infrastructure of the Small Business Investment Company (SBIC) program to match private capital raised by investment funds to invest in promising businesses at no new cost to taxpayers. The $1 billion Impact Investment Fund will offer a 2:1 match to funds that invest in high-growth, high-tech companies in underserved communities. SBA's $1 billion Early-Stage Innovation Fund will provide a 1:1 match to private capital raised by early stage and seed funds.

As part of the initiative, Treasury will expand the New Markets Tax Credit program and will hold a conference in March to seek input on how to simplify and streamline the program. Treasury's New Markets program would be funded at $5 billion, up from $3.5 billion, to spur investment in lower-income communities. In addition, the administration plans to recommend in the FY12 budget making the capital gains tax exclusion for certain small business stock permanent.

The Economic Development Administration (EDA) will relaunch the i6 Challenge, which funded community tech commercialization and venture formation efforts, as i6 Green. The $12 million program would support proof of concept centers that focus on cleantech, environmental sustainability and regional economic development. Funding would go to efforts that are supported by regional partnerships that bring together corporate, university, nonprofit and foundation stakeholders.

Another major focus of the initiative is entrepreneurship education and mentoring. SBA and the Department of Energy (DOE) plan to support four new private business accelerators and a network of mentors for clean energy entrepreneurs. The program will target entrepreneurs who previously have received funding from DOE and ARPA-E. The agencies hope to expand the effort over time, recruiting 200 mentors to support an additional 100 clean energy startups. If the program is successful, SBA and DOE may open additional accelerators in the future.

Other federal aspects of the initiative include:

  • Two new business accelerators, to be launched by the Department of Veterans Affairs, dedicated to assisting veteran entrepreneurs;
  • A series of eight roundtables and an online suggestion tool to help the administration identify barriers to small business and entrepreneurship; and,
  • A new three-track examination system at the U.S. Patent and Trademark Office to offer accelerated services, at a fee, to some applicants.

More details will be available when the President's budget is released later this month.

Find out more about the federal side of Startup America at: http://www.whitehouse.gov/issues/startup-america-faqs.

This week's announcement also served as the launch of a new national alliance to enhance U.S. entrepreneurial competitiveness. The Startup America Partnership is an alliance of corporations, entrepreneurs, universities, foundations and other groups dedicated to expanding entrepreneurship education, increasing the commercialization of new technologies and expanding entrepreneurial mentoring. Steve Case, co-founder of AOL and chairman of the Case Foundation, will chair the group, with Carl Schramm, CEO of the Kauffman Foundation serving as a founding board member. The partnership will help leverage the involvement of private corporations to create and fund new initiatives that help achieve those goals. Intel and IBM have committed $200 million and $150 million, respectively, to help provide capital and mentoring to entrepreneurs. HP and Facebook also have announced entrepreneurship efforts in conjunction with the partnership.

Several successful entrepreneurship initiatives around the country also have indicated their intent to expand in conjunction with the Startup America Partnership. TechStars, a startup accelerator with locations in Boulder, New York City, Seattle and Boston, is launching the TechStars Network, an affiliation of 15 independent accelerators based on the mentorship-driven TechStars model. The MassChallenge Startup Competition and Accelerator plans to provide services to over 1,000 entrepreneurs this year with support from many of the private companies associated with the partnership. Funding provided by Startup America's corporate and foundation partners also will help Astia, a community that supports women-led startups, double the number of women entrepreneurs they provide services to. The partnership also has announced projects with the Deshpande Foundation, JumpStart America and the National Collegiate Inventors & Innovators Alliance to build new venture acceleration programs and with the Network for Teaching Entrepreneurship, the Blackstone Foundation, and Mark Ecko to improve entrepreneurial education for young people.

Find out more about the Startup America Partnership at: startupamericapartnership.org.