On January 31, 2011, during President Obama’s State of the Union address, he said, “Entrepreneurs embody the promise of America: the idea that if you have a good idea and are willing to work hard and see it through, you can succeed in this country. And in fulfilling this promise, entrepreneurs also play a critical role in expanding our economy and creating jobs.” Then, on February 1, 2011, the Small Business Administration (SBA), announced Startup America, a new Administration-wide effort to support small, high-growth firms that drive innovation and job growth. The Startup America conference spent a lot of time celebrating entrepreneurs and the “American Dream.” But, beyond being a feel-good conference, what does this mean for startups and entrepreneurs?
The Obama Administration is making some concrete commitments to expanding capital for entrepreneurs. Financially, the SBA will commit $2 billion as a match to private sector investment over the next five years. SBA will commit $1 billion to those funds that invest growth capital in companies located in underserved communities. SBA will provide up to a 2:1 match to private capital raised by these funds, partnering with private investors to target “impact” investments. The SBA will focus another $1 billion on early-stage companies. Early-stage companies face difficult challenges accessing capital, particularly those without the necessary assets or cash flow for traditional bank funding.
In addition, the Administration will propose permanent elimination of the Capital Gains Tax on certain Small Business Stock (see our previous blog post for more on this topic. The Treasury Department plans to host a conference in March 2011 to discuss access to capital for small businesses.
Startup America also promises to increase education and mentoring. Startup America is in an early launch phase, but the White House is putting money into this and fresh publicity on the startup ecosystem is always good.
For more information, visit www.startupamericapartnership.org