|
Small biz wanting for $
|
 |
July 28, 1999: 6:55 p.m. ET
Study says government start-up capital rarely reaches entrepreneurs
|
NEW YORK (CNNfn) - The United States is awash in private capital for the nation's many business start-ups, according to a study released Wednesday. But while some $60 billion is available each year, the great majority of it comes from family, friends and venture capitalists -- not from government small business assistance programs, the study's authors say.
The findings by the Kauffman Center for Entrepreneurial Leadership and Babson College could be significant because of the link between entrepreneurial activity and a country's economic growth.
The nation's 20 million small companies create two of every three new jobs, produce 39 percent of the gross national product and invent more than half the nation's technological innovation, according to Small Business Administration.
And an earlier study by the same authors found that as much as a third of a country's economic growth may be due to its entrepreneurial activity.
But while Wednesday's study determined the country has a solid system of start-up programs, the program are poorly publicized. Prospective entrepreneurs rarely know they exist. As a result, they are seldom a source of funds.
Entrepreneurial activity strong
The report estimates that each year Americans start 600,000 to 800,000 new companies that hire employees. The figures are in line with Canada's and higher than any other country in the Group of Seven leading industrialized nations.
And as many as 8.4 out of every 100 U.S. adults, or 16 million, currently are trying to start a business.
But despite an abundance of capital, the GEM report maintains it is hard to obtain.
As a result, friends, family and work contribute the lion's share of seed money: $56 billion. Venture capitalists provide about $4 billion.
The study did not quantify the amount of government assistance to entrepreneurs, except to say: "Only two to three percent of all small businesses are helped by the federal government's Small Business Administration loan guarantee programs.
"And most of those are not even start-ups," the authors said.
An SBA spokesperson was not immediately available for comment.
|
|
|
|
|
 |
|
