Jeff Cornwall in his blog, The Entrepreneurial Mind, pointed out something today that really resonated with me. He said:
“I continue to be concerned about the inordinate amount of attention that Washington is giving to venture capital. There seems to be an assumption that VC investment is a White Knight that will help spur entrepreneurship in America and pull us out of our recession.Remember, venture capital only funding a small part of the entrepreneurial sector. In fact, one study found that 99.962% of entrepreneurial ventures in the US had NO venture capital investment.”
This reminded me of conversations I would have back at Rollins College with my friend and chairman of the Crummer Graduate School Center for Entrepreneurship Board of Advisors, Bill Grimm. Every year, after the entrepreneur of the year awards were handed out in Orlando, we would look through the list of companies that were in the running of the award, and we would usually find, if we were lucky, one company in ten that was venture backed. The others were done through bootstrapping. Yet, throughout the country, the interest is always in seeing VC firms come to town, and now Washington has picked up on that same theme. Jeff is right, the current assumption making the rounds of our nation's capital is that the VCs will be the ones to get us out of the mess we’re in. While they will certainly help, in truth, it’s going to be that 99 plus percent of companies that are started slowly (with help from family and friends), grow gradually, and hire continually that will be the ones that are the true catalysts for change in the United States.