February 12, 2014

Kauffman Foundation report offers three steps to improve the U.S. economy

Tom McDonnell, CEO of the Kauffman Foundation, used the foundation’s fifth annual State of Entrepreneurship address to champion immigration reform, crowdfunding and entrepreneurial education.

Entrepreneurship has often been the nation’s job growth engine during recessions, but some worrying trends are underway, according to a new economic assessment.

In the fifth annual national State of Entrepreneurship address, given by leaders of the Ewing Marion Kauffman Foundation, CEO Tom McDonnell said new business formation had fallen steeply during the recent recession and hadn’t recovered yet.

“Furthermore, the types of new businesses being created over the last several years have not necessarily been the kind of dynamic, high-value firms that generate large numbers of new jobs and groundbreaking innovations,” McDonnell said Wednesday in Washington. “We need business builders, not business flippers.”

The Kansas City foundation’s

annual State of Entrepreneurship report

, a companion document to McDonnell’s remarks, also was published Wednesday. It expanded on three changes in policies or practices to enhance business and job creation:

• Immigration reform. Extensive research shows that immigrants to the United States are prime founders of high-tech, high-growth companies, but legal barriers make it difficult for such potential job creators to move here.

McDonnell urged Congress to approve a new “Startup Visa” for entrepreneurs.

• Crowdfunding. The Securities and Exchange Commission is workings on JOBS Act implementation rules involving equity crowdfunding — the legal ability of a broad number of people to buy into ownership of startups.

McDonnell urged the SEC to put a high priority on capital formation and said it would be “unfortunate if overly restrictive rules hamper crowdfunding.”

• Entrepreneurial education. The nation needs more thorough research to measure and support startups. It also needs educational institutions to build their entrepreneurship programs and turn out more “new talents and skills, new forms of human capital.”

McDonnell said government and private organizations must work better together to “modernize the structure of data collection and analysis” and “provide stronger bases for policymaking.”

The Kauffman CEO used EyeVerify, a Kansas City company that recently won national and international entrepreneurship awards, as an example of what can be done when a business founder teams with academics and organized mentorships.

EyeVerify founder Toby Rush commercialized an identity verification technology developed by Reza Derakhshani, an Iranian immigrant professor at the University of Missouri-Kansas City. Rush also participated in a mentorship program, Pipeline, designed for high-potential entrepreneurs.

“We need more EyeVerifys,” McDonnell said. “With economic indicators pointing in contradictory directions, we need to recharge our economic engine of entrepreneurship.”

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