Presentation Transcript

1. The Educational Needs of Young Entrepreneurs

   William Kelly Cesar Devers
2. Why Young Entrepreneurs? Mobility Financial freedom (exception: student loans) No family to support No existing career to abandon Lower standard of living expectations Health Familiarity with technology Part of a vital consumer demographic Fresh perspective on any industry
3. Things Change With Family $12,000- average cost per child $16,800- average homeowner’s cost $6,328- average health insurance premium Total: $35,128 per year Sources: Department of Agriculture, US Census Bureau
4. The Framework
5. Changes in Context The discussion of young entrepreneurs must be framed in the context of the world our generation is living in So… what does this world look like?
6. Changing Landscape:2000-2011 Changes in Technology More open source software More online resources, communities, and wikis that provide information for free Changes in Economy Rising unemployment Rising college tuition Changes in Entrepreneurship YC-style seed stage funding Advent of social entrepreneurship
7. Changes in Technology Free or cheap online resources and educational materials reduces training cost Media convergence in computer, TV, and mobile allows for more market opportunities in technology sector Online networking, social media, and cloud resources allow for remote partnerships to be productive Overall reduction in cost of launching a new enterprise
8. Changes in Economy Unemployment Youth unemployment higher than every other demographic Also experiencing higher growth Seed stage funding YC and its clones Tech Stars NYC Seed Plug and Play University programs Stanford SSE Labs Yale Incubator IDEA at Northeastern
9. Social Entrepreneurship Didn’t become a major trend until after the dot-com bubble Youth have a strong and growing presence Strong link to education Over 500 professors nationwide now teaching courses on social enterprise
10. Social Entrepreneurship Social entrepreneurship is an undervalued vehicle to respond to social issues Self-sustaining businesses that also do good things Possibility of government support for a profitable charitable business limits the need for constant cash infusion Maybe too focused on the developing world?
11. Has Government Kept Up With These Changes?
12. Not really.
13. Entrepreneurship by GDP
14. Shortcomings
15. Shortcomings- Education Decline (or at least not increase) in number of high schools that offer computer science courses Education on entrepreneurship-related topics is limited Even basic inter-disciplinary work is not done until college Cost of enterprise being so low now means meaningful projects can be done cheaply and at a young age
16. Shortcomings- Financial 67% of students graduated with debt in 2009 Average debt load: $24,000 Unemployment among recent grads: 8.7% Source: Project on Student Debt Entrepreneurs fall through cracks in deferment programs Crippling taxes mean little take-home for growing businesses (corp. taxes, self-employment tax, income tax, etc.)
17. Funding
18. Current Funding Options Debt Commercial loans SBA loans Equity Private venture capitalists Private angel investors SBA New Markets Venture Capital (NMVC)
19. Debt Financing All debt programs are impractical for many young entrepreneurs Students already have crushing loan debt Little or no established credit The risk of innovative companies makes debt very dangerous No existing resources to cover interest or survive default No collateral Increasingly high standards make loans hard to secure anyway and come with higher rates
20. Debt Financing Commercial loans High rates Requirements often impossible to meet for tech startups Age discrimination SBA Loans 7(a) program uses commercial lenders, so above issues apply 7(m) is better, but in danger of budget cuts
21. Equity Financing Equity financing is a great option for many entrepreneurs, but the problem is one of availability Often regionally limited Focus on personal networks
22. Equity Financing Private Venture Capital Extremely high competition for funding Unique needs of VC (high return potential, fast growth, limited portfolio life, requirements of limited partners, etc.) leave many viable startups ineligible Private Angel Investors Hard to find without existing networks Difficult to vet (individual angels may have unique needs or be difficult partners)
23. Equity Financing SBA NMVC program Limited to very specific geographic areas Limited to very specific socioeconomic groups By working through private VC’s, program suffers same availability issues as private programs
24. Recommendations
25. Recommendations- Financial What can government do to bridge this gap? Expand NMVC to all startups? Offer micro-grants as stimulus? Invest in startups directly? Fund very small “applied research” grants from NSF/DoL/DoEd/DoD for innovation? Reduce financial burdens on entrepreneurs? Student loan repayment/deferral programs Self-employment tax exemption/reduction
26. Recommendations- Education Increase collaborative projects in early years (middle and high school) Summer programs such as Governor’s School Increase technical course requirements in high school to meet the needs of future high tech landscape Shift focus from learning about examples of entrepreneurs to projects that actually make something Increase research done on youth entrepreneurship by academics
27. Recommendations- Resources More accelerator/incubators as a results of government/higher ed/private sector collaboration More awareness of resources on the internet or pro bono services provided locally Role for government in this? Provide programs that offer relatively cheap services for free to young people who would find it hard to pay for otherwise Free/cheap internet Working space
28. Questions?