May 2009 Archives

1. CREDIT REPORTS - How many small employers in the last three years complained to a credit bureau about an inaccurate entry(ies) on their business credit records?  (Vol. 7, Iss. 7, Q#2a.)

2. HEALTH CARE - How many small employers spend 7.5 percent or more of payroll on employee health care, including employee health insurance?  (Vol. 7, Iss. 3, Q#15).

3. REINVESTMENT - How many small business owners have an outstanding mortgage on their homes that was taken out to reinvest in their business? (Vol. 8, Iss. 7, Q#18d.)

4. EMPLOYEE TRAINING - How many small employers in the last three years have obtained employee training materials or programs from a trade or business association?  (Vol. 5, Iss. 1, Q#23a1.)

5. CELL PHONES - How many small employers changed business cell phone providers in the last three years?  (Vol. 4, Iss. 8, Q#8e).

6. SBA - What impression does the small employer population have of the U.S. Small Business Administration?  (Vol. 6, Iss. 5, Q#3.)  

7. LOCATIONS - How many business locations, excluding building or job sites, do small businesses occupy?  (Vol. 6, Iss. 3, Q#8a).

8. MORTGAGES - How many employing small business owners have an upside-down home mortgage, that is, the mortgage is more than the value of the property?  (Vol. 8, Iss. 7, Q#18c.)

9. FAMILY BUSINESS - What is the method (start, purchase, inherit, etc.) that most family businesses used to go into business?  (Vol. 2, Iss. 6, Q#12.).

The last stop on our visit to Europe brings us to Germany -- specifically Dresden, which was part of East Germany before the 1990 unification.  The students will be staying with family hosts while we are here. 

Entrepreneurship is part economic and part cultural.  One of the most striking forces against entrepreneurship in Germany is its culture.  Individual enterprise is not a part of the historic culture of Germany. 

Young Germans seem to be continuing this non-entrepreneurial value.  From the website International Entrepreneurship:

Entrepreneurship in Germany is low because of the lack of ambition of Germany students. 25% to 30% of young scientists have good chances for creating a business, but only 5% will take this step.

Germany also has an historically high tax rate, which has also stifled entrepreneurial activity.

The data about German entrepreneurship speaks volumes.  In the 2006 Global Entrepreneurship Monitor (last one with data on Germany), Germany had one of the lowest entrepreneurship rates in the study of less than 5% of the population engaged in early stage entrepreneurial activity (less than half of the US rate within the population).  When looking at the motivation for entrepreneurial activity, Germany has the highest rate of entrepreneurs who start businesses out of necessity rather than proactively pursuing opportunities identified in the economy.

Ironically, Germany does lead the pack in one entrepreneurship statistic -- government spending to spur entrepreneurship.  More proof that government meddling does little good.

Germany is a society that is grounded in rules, process and order.  While this has helped create some very successful large corporations, it has not fueled an entrepreneurial engine to their economy.  As the global economy comes out of the recession, this will put Germany at a distinct disadvantage.

With the demise of Advanta business credit cards, which focused on small business credit, one might assume that the credit situation for small business is bleak.  (I got my notice that my card will soon be, as they say here in eastern Europe, kaput).

But a new study from the SBA on small business bank credit shows that there is credit out there.

The study finds that for the year that ended in June 2008, the total value of small business loans outstanding increased 4 percent and the value of microbusiness loans outstanding increased 6.8 percent.  Both rates were down from the previous one-year period, but they were still in positive territory. 

The largest increase was in the number of microbusiness loans (under $100,000), which were up by 15.7 percent.  This may be an indication that more loans are being made through business credit cards.  The number of mid-sized loans ($100,000 to $1 million) fell by 23.3 percent.

Small businesses that are looking for loans will find the report useful because it provides state-by-state rankings of banks and other financial institutions on their small business lending.  These rankings show who made the most small and microloans in each of the 50 states and the District of Columbia.  

Blogging from Prague again this morning. 

I have been reflecting on the aftermath of communism while here in eastern Europe.  In listening to people here -- entrepreneurs, workers, managers -- I am struck by the lingering issues from their socialist past.

Although I am now worried about our move toward socialism in the US, I have become more worried about the aftermath. 

Economic decisions have a major impact on a culture.  Although the communist economic system is officially gone, its effects remain everywhere.  People here have become innately dependent upon the state.  It is become so much a part of the culture that it is difficult if not impossible for most citizens to break free of that dependence.  They are like a 47 year old man who never left home and still lives in his parents basement.  He hates his lot in life, but is stuck in a dysfunctional, dependent relationship from which he cannot escape.

It reminds me of a flood.  Although the flood itself is devastating, the aftermath can be even worse.  The stinking sludge that remains after the waters subside can take months to clean up.  And the rebuilding can take years.  But, nothing is ever the same when all is said and done.

We visited a small crystal factory outside of Prague yesterday that was privatized after the fall of communism.  While they are surviving as a business, their ability to compete and their ability to become truly a productive free enterprise seems to have been washed away.  They are just hanging on, not really understanding how to really break free and prosper.

We are facing the flood of socialism right now.  But the aftermath when it fails -- and it will fail -- might be even worse than the initial waves of socialization.  Even when that day comes when we are able to begin to try to unravel all that is being put in place right now, the damage will remain for years to come.

My column in this week at the Tennessean I offer some tips on a home-based businesses:

Most new businesses start out of entrepreneurs' homes. Whether at the kitchen table, out of a garage or in the basement, working at home is a great way to bootstrap a business by keeping overhead expenses low.

However, for those new entrepreneurs who are coming out of a career in corporate America, working from home can mean challenges and adjustments.
The first challenge is to keep your personal time and your work time from getting blurred.

As easy as it is to be connected to our work 24/7, your personal life and your business will suffer if you do not set clear boundaries of place and time to define working at home.

Set aside a "work place" in your home, a designated office, and only go there during predetermined working hours. Think of the walk down the hall or up the stairs as your commute.

Once you are there you are no longer at home, you are at the office.

It is best to have two computers -- one for working at home and one for family and personal use -- to make sure the boundaries are kept clear and consistent. Keep one computer in your home office, and put the other in your living space.

Teach The Family Well

Other challenges arise for home-based entrepreneurs who have families.

If you have children, teach them what I call the "Beaver Cleaver's Dad Rule." On the old sitcomLeave it to Beaver, Beaver's dad, Ward Cleaver, had an office in their home.
The kids knew to only go in there when invited -- and if they were invited it was usually because they were in trouble. The kids need to learn that all of the cool stuff in their parents' office is not for their latest school project.

Have a cell phone or a second phone line that is only for business.

One of the cute things most 3-year-olds do is to try to answer the phone. They learn by imitating their parents, which can lead to embarrassing moments with clients.
It is easy to get distracted when working at home. Playing with your kids or hanging out with your spouse can sound like a lot more fun than the project you are working on. But, remember that your business is important to your family. It helps pay the bills.

Don't try to hide that you work from home with your clients. Home-based businesses have become common not only for entrepreneurs, but also for many employees of large corporations. Eventually the kids will make enough noise or the dogs will bark while you are on the phone. Be up front, and let customers know that home is your workplace.

Finally, work with an accountant if you plan to deduct expenses on your tax return related to a home-based business. The IRS rules on this have gotten much stricter over the years, and currently there is an increase in audits being done on small businesses.

Yesterday our travels brought us to the Czech Republic.  We stayed last night in the small town of Cesky Kromlov.  Today we head to Prague, where we will stay for several days.

Entrepreneurship is a major economic driven in the Czech Republic.  According to the Global Monitor Report study from 2006:

• Eight percent of the adult population aged between 18 and 64 is involved in new entrepreneurial activity in the Czech Republic, which puts it among European countries with the highest entrepreneurial activity.
• Compared with other countries, the Czech Republic shows a high share of nascent entrepreneurs and of entrepreneurs who are actually running new businesses.
• In the Czech Republic the prevalence rate of early-stage entrepreneurs is 2.2 times higher for men than women. In established business ownership there are 2.4 times more male entrepreneurs than female ones.
• The most entrepreneurially-active individuals are people aged between 45 and 54. In established business ownership the situation in the Czech Republic matches the situation around the world, but in early-stage entrepreneurial activity this age group is quite significant. On the contrary, individuals over 55 years of age show very little involvement in early-stage entrepreneurial activity (less than two percent).
• Most entrepreneurial activity is based in Prague.
• Entrepreneurial activity is relatively low among students over 18 years of age (only 4.2 percent).
• New entrepreneurial activity is closely related to household income. In low-income households it is only about two percent. On the contrary, in households with high incomes it exceeds fifteen percent.

The large concentration of entrepreneurship in older, more economically prosperous people in the largest city of Prague is somewhat worrisome for the long-term economic outlook for the Czech Republic.

My biggest concern is the relatively low rate of young entrepreneurs.  There have been steps taken to decrease the red tape associated with starting a venture.  But, it seems much more will be required to build an entrepreneurial engine that can sustain this country into the coming decades, especially when we take into account the low birth rates in eastern Europe.

Aaron K. Chatterj, a member of Generation Y, has written a thoughtful commentary at the Philadelphia Inquirer on how his generation is facing the new economic reality:

...[W]ith the world facing the most serious economic crisis in a generation, we are now the ones who need advice. The millennials (as members of my generation are also known) now graduating from college face a dismal job market. Ready or not, Generation Y - the multitasking, entrepreneurial do-gooders alternately glorified and admonished by the rest of the generational pyramid - is about to be put to the test.

Spending time with many Belmont University Gen Y students and those we are meeting in eastern Europe gives me great hope that this generation understands the challenges they face and is ready to pass the tests that lie ahead.  They are eager to lead us into a new era.

Here are some of our students during a visit to Corvinus University in Budapest.

During my visit to Budapest I have learned more about the entrepreneurial climate in Hungary.

First the good news.  Officials have recognized the need to cut the red tape that was getting in the way to launch a new business in this country and greatly streamlined the process.

Now the bad news.  There is a deep cultural belief that property rights will not be protected.  The scars from years under communism have created generations who do not believe that any wealth that they create and property that they control will remain theirs.  The collective memories of property confiscation by the state remain in the stories passed down through the generations.

Also, due to periods of high inflation and a weak job market, young people who would like to start a business cannot afford to.  In fact, many of them cannot even afford rent for a small apartment even when they have a professional level job. As much of 80% of their salary must go for rent.

Taxes also remain very high, especially on small business.

The rule of law is not on solid ground.  Corruption rules markets more than a sound legal system.

In a joint session my students had with Hungarian students today at Corvinus University, it was clear that there is still a heavy dependence on the state.  All ideas for businesses seemed to predicate on "government support" and "government funding."  The culture of socialism remains deep in their psyches.

What is most interesting to me is the general reaction to the American economic crisis.  In a lecture I gave last evening to business people, scientists, and others from the community I found that they have not lost faith in markets and capitalism.  Quite the contrary -- they still believe that free markets are their best hope.

However, there was a strong consensus that capitalism must be deeply rooted in morality and ethics.  This cannot fall to the government, as they have learned through their past experience with strong government control.  It must be built through a strong cultural expectation that business people conduct themselves both ethically and morally.

I have enjoyed my stay in Budapest. Tomorrow we leave for Austria.

 

 

I am blogging today from Budapest.  The level of early stage entrepreneurship in Hungary is 6.9% according to the Global Entrepreneurship Monitor of 2007. 

That same study showed that about 75% of ventures were opportunity based, while 25% were out of necessity.In talking with people here in Hungary I get the sense that this mix may be swinging toward more necessity based entrepreneurs as the economy here worsens.

According to an EU report, Hungary has the lowest opportunity-based entrepreneurial activity in the EU25.  This same report gives Hungary a low entrepreneurial activity and low entrepreneurial climate score. 

There seems to be a strong cultural component to this, as seen in this conclusion from the EU report:

Similar to the average European respondent, the Hungarian is more likely to prefer being an employee to being self-employed. However, Hungary stands out when it comes to the reasons for the respective preference: Hungarian respondents who prefer being an employee, more often than individuals in other countries, say it is because the right entrepreneurial climate (e.g. lack of a business opportunity, lack of finances or excessive red tape) does not exist. Likewise, Hungarians who prefer being self-employed, more often than individuals in other countries, cite economic reasons for this preference and not the freedom and independence that being self-employed entails.

I trust big corporations only slightly more than I trust big government.

A case in point.....

I have been getting my digital world organized prior to our departure today for my trip with two other faculty and 20 students to the Czech Republic, Germany, Austria, and Hungary.

First, I wanted to be able to have cell phone access.  I went to the Verizon store to see what I would need to do to get cell phone access.  (Note:  I do think Verizon has the best coverage, but they are still a big, clumsy bureaucratic corporation).  On two different visits to the store, I was assured that my phone would work just fine in the countries we would be traveling in. 

When I went there one last time to get the details, I was told that what I was told (if I was in fact told this, according to the new person) was incorrect.  I would need to rent a phone to work in that part of Europe.

So I called support and ordered a phone.  I asked if I should just buy a phone, but was assured that it would be WAY too expensive.

When I went to the Verizon store yesterday, a young man said, "Why are you going to rent a phone?  I can sell you a new one for just a little more that will work anywhere in the world."  So I bought the phone and shipped the rental back.

Then I asked if I was all set for my laptop with my global modem they sold me.  "All set! Just insert it and you will be good to go," I was assured.

Being a rather obsessive type, I called global support one last time to make sure I understood what the global modem would allow me to do.

"DON'T use if for anything but e-mails!!  And if you open e-mails do not, what ever you do, open any attachments!  If you blog or go to websites you will use all of your 100 MB in one day," I was instructed. 

"That really stinks!", I said to the person on the line.

She told me that if I do use the Verizon modem for blogging I could expect thousands or even tens of thousands in charges.  "YIKES!!," I exclaimed.

Good thing I never trust what people who work in big institutions tell me!

I tell you all this story so you will be understanding if I don't blog as much as usual, and as much as I had hoped, during the next three weeks in eastern Europe.

When I find a hot spot or stay in a hotel with Internet I will blog, I promise.  

More start-up web entrepreneurs are realizing that they can bootstrap their new ventures and really don't need venture capital, according to a paper by Robert Hendershott in the next issue of the International Review of Entrepreneurship.

Writing about this new study in the New York Times, Claire Cain Miller notes that venture capitalists are beginning to adapt to this new reality:

[S]ome venture capitalists are tweaking the venture model to continue to take advantage of these new ideas, he writes. For example, Kleiner, Perkins, Caufield & Byers started the iFund to invest in iPhone application developers. Incubators like Y Combinator back very young companies. Union Square Ventures often invests less than $1 million in the first round of financing for just 5 percent to 12 percent of the company.

What a great example of how markets work.  No bailouts. No interventions. No targeted tax progrsm.  The venture capitalists are adapted to the new market reality all on their own.

(Thanks to Ben Cunningham for passing this along).

We had our Entrepreneurship Banquet for the Center for Entrepreneurship here at Belmont.  It was a night to celebrate the many accomplishments of our students.  We had a full house of students alumni, family, community supporters, faculty and staff join together for this wonderful event -- over 130 people attended.


Here are many of the members of the team we just took out to Anaheim.

Special honors were given to John Price and Sam Dryden and their venture Lifetime Reel, who were named our Student Entrepreneurs of the Year for 2009.



John and Sam's business is making family documentaries.  So as a special thank you to the Moench Family, who have endowed our entrepreneurship speakers series, we gave them a certificate to have a documentary done to commemorate their father who was a very successful entrepreneur here in Nashville.

Here are his two sons, Ernie and Lynn, who attend many of the events their family make possible through their give to our Center.

"Anyone serious about promoting wealth-creating entrepreneurship must at some point direct attention toward how the moral, legal and political environment aligns incentives. Entrepreneurship -- like everything else -- doesn't exist in a vacuum. It's long past the time we stopped pretending it does."

So says Samuel Gregg, research director at the Acton Institute, in an editorial in the Detroit News about a recent initiative to stimulate entrepreneurship up in Michigan.

It seems that the Kauffman Foundation folks are trying to lure venture capital up to Michigan.

As Mr. Gregg rightly points out -- the answer to spurring entrepreneurship is not throwing money or support bureaucracies at the problem.  From Gregg's editorial:

But in the midst of this enthusiasm about entrepreneurship, we risk forgetting that entrepreneurship's capacity to create wealth is heavily determined by the environments in which we live. In many business schools, it's possible to study entrepreneurship without any reference being made to the role played by factors such as rule of law, property rights and low taxes in stimulating wealth-creating entrepreneurship.

I could not agree more!  We need to educate entrepreneurs not only to be technically good at what they do, but informed citizens who can speak up about the issues that effect their business ventures.

My read of the entrepreneurs here in the Nashville area is that they are feeling a bit more optimistic.  Those who have weathered the storm seem to feel that the worst may soon be over.

The latest national survey from the NFIB seems to support my anecdotal observations, as their Index of Small Business Optimism rebounded in April.

This rebound was not due to hard evidence of economic improvement, but is tied to "soft indicators" -- the "feel good" portion of the survey.  Expectations for gains in real sales increased.  

While small business owners think future prospects are brighter, the daily realities show deep problems remain.  Actual employment, capital outlays, inventories, sales and earnings languish at historically low levels.

"At least we seem to be headed in the right direction," said NFIB Chief Economist William Dunkelberg. "Typically, optimism first returns, then spending follows as confidence builds.  But there are a lot of difficult days ahead, even if April's data represents a turnabout."

The Wall Street Journal offers five inspiring stories about accidental entrepreneurs:

With the economy tanking, lots of people are striking out on their own. Some never thought of starting a business until they got laid off. Others kicked around the idea but never found the time or the passion to pursue it. Now, launching a start-up seems like a better bet than taking on an endless job hunt.

Call them entrepreneurs by necessity. And while some of them have waited years preparing for just this moment, others may not be quite so ready or eager to make the move.

Read their profiles here.

The American government's takeover of the economy seems to be inspiring officials north of our border.  Listen to this rant from the blog Wolfville Watch:

Government as entrepreneur.  Isn't that an oxymoron? But that's next because the recession is giving government the excuse  -- as if they needed it -- to take more and more control .

They aren't keeping it a secret. Take for example the Liberal Minister of Economic Development for Ontario, Michael Bryant. His speech to a business audience at the Canadian Club was titled "Reverse Reaganism" . [You will remember that Reagan said  "Government is not the solution to our problem. Government is the problem." It seems Mr. Bryant doesn't agree.]

He calls the economic policy he promotes "Obamanomics",  a" Supra-ideological approach,"  "post Boomerism" with a focus "less on individual rights" , finding a "place between idealism and realism" [ Yet, elsewhere he says it is highly idealistic. Go figure].  He says it is not partisan, but pragmatic. Then he says it is about "individuals more sharing in the wealth of an economy." [sic]

From those of us south of your border let me say, "Sorry, Canada!"

Want to know what it will be like to be an entrepreneur in the U.S, once the government's economic power grab is complete?  Listen to the challenges now facing entrepreneurs in places like Scotland where higher taxes rates have already been put in place.  From the Sunday Herald:

Entrepreneurs are not known for their negativity, but even those of the most upbeat disposition must be struggling to find a positive angle to the chancellor Alistair Darling's latest wheeze - bringing in a 50% tax rate for those earning more than £150,000 a year. Although taxation is reserved to Westminster, the move is supported in principle by the Scottish government.

Like last year's changes to the capital gains tax rules, the Brown government's move seems to be yet another signal that although it claims to be pro-business, it is systematically dismantling all of its entrepreneur-friendly policies.

This is surely a backward step when it comes to pulling out of a recession, as it is then that the spirit of entrepreneurship comes into its own, with risk-takers leading the way back to a healthier economy.

The tax policies now stifling Scottish entrepreneurs are similar to those the Obama administration proposes to impose to pay for healthcare "reform."

In my latest column for the Tennessean, I examine the opportunities and risks of selling a business during this recession:

There appears to be an increase in the number of entrepreneurs selling their businesses over the past few months. Financially strong companies and cash-rich investors looking for good acquisitions are starting to move into the market.

Just having assets such as buildings, land, equipment and even inventory is not what creates value. Those assets must have the ability to continue to earn profits for a new owner. It is the prospect of those future profits that gives a business its real value.

The simplest way to think about business value is this: People are buying your business's ability to generate future profits. Typically, the value is based on a multiple of profits. Historically, valuations have been about three to eight times annual operating cash profits (ignoring things like depreciation, corporate taxes and interest expenses) with the most typical multiplier being about four.

If a buyer offers a multiple of profits of four, and your business has operating cash profits of $100,000, you can expect a valuation of about $400,000.

Since it is a buyer's market right now, you need to set realistic expectations going into any discussions about a sale of your business. I am hearing that there has been about a one-point drop to a multiple of three times profits.

What does that mean? Just like home values, your business's value has dropped by about 25 percent, all things being equal.

But remember: The other part of the valuation equation is the profitability of the business.

How to prepare

Most entrepreneurs have reported a significant drop in their profit margins over the past year. So, that means that the drop in values could become much greater than 20 percent or 25 percent if profits are also down. My advice is as follows:

Understand what drives the value of a business. What multiple you are likely to get is based on your projected growth, the health of your industry, the strength of your customer base projected into the future, and specific strategic advantages that you may be able to offer the buyer.

Know your number. If you need a certain amount of money from your business to retire, have that number in mind going in. If the market is not supporting that value right now, you might want to wait until a later time. Use that time to improve your profitability so that when the economy picks up your operation will have an even greater value.

Seek expert advice. Work with your certified public accountant and an attorney who specializes in mergers and acquisitions to understand the process and to help set realistic expectations. This will be money well spent.

Realize that deals change. Once the buyer gets into due diligence, the price may drop. Once they learn more about the business, they may lower their projections for what they believe your business can earn for them in the future.

Be prepared for this, and know how much you are willing to go down ahead of time. Be ready to walk away if the price they are willing to pay drops too much.

Don't let your emotions lead you to take an overly discounted price -- buyers can smell desperation and will use that to their advantage by trying to drive down the price during due diligence.

The odds are that about one out of 50 inquiries about buying a business will lead to an actual sale. Keep a level head and don't even dream about how you'll spend all of that money until you get it in the bank.

Are markets getting out ahead of government intervention when it comes to small business lending?  It seems that small business lending is starting to heat up, but the SBA is mired in the complexity of trying implement their part of the "stimulus." 

From the Wall Street Journal:

The increased activity comes despite the fact that the SBA has been slow to implement some measures aimed at stimulating lending and loan sales on the secondary market. The agency missed a March 4 deadline to create a secondary market specifically for 504 loans, capped at $3 billion. The government hopes this will facilitate the buying of bundled 504 loans....

The SBA had said it plans to finalize the regulations by June, but an announcement may come this month. The agency says the delay is the result of sophisticated financial modeling and complicated legal-documentation changes that need to be made in order for these new programs to work.

I see two possible outcomes once the SBA gets its act together.  Neither are particularly encouraging and they are not mutually exclusive.

One outcome would be the flood of small business lending that the administration wants.  That will inevitably lead to a small business loan bubble that will surely pop sometime in the not too distant future.  Too many small businesses will be given loans that they cannot afford.  The SBA programs often put social agendas ahead of economic ones, just as we saw with the home loan disaster fueled by government meddling in those markets.

The other possible outcome is that the bureaucratic complexity will bog down SBA programs,adding nonproductive costs to the lending process.

Since the markets are working on their own, why not step out of the way?  After all, as blogger Matthew Bandyk from US News points out, 58% of small business owners have no interest in SBA loans.

According to the latest annual Kauffman Index of Entrepreneurial Activity, although entrepreneurial activity was slightly up in 2008 when compared to their 2007 report, there were some worrisome signs about the economic engine of the US economy. 

While low and moderate income potential businesses were up, high income potenial businesses decreased from 2007 to 2008.

Specific increases in entrepreneurial activity were identified among the following groups:

• People between the ages 55 to 64
• Immigrants
• Latinos
• Asian Americans

People in the Midwest had a decrease in entrepreneurial activity. 

Specific states with the highest entrepreneurial activity were Georgia, New Mexico, Montana, Arizona, Alaska and California.  While states with the lowest entrepreneurial activity rates were Pennsylvania, Missouri, Wisconsin, West Virginia, Iowa and Ohio.

Among the fifteen largest metropolitan statistical areas, Atlanta had the highest entrepreneurial rate, while Philadelphia had the lowest rate.

Unlike other studies that capture young businesses that are more than a year old, the Kauffman Index captures all adults ages 20 to 64 when they first create their businesses, including both incorporated and unincorporated businesses, and those who are employers and non-employers. The Kauffman Index defines entrepreneurial activity as the percent of the adult population who start a business as their main job each month.

There is a discussion going on regarding how to fix the so-called venture capital "crisis."

The National Venture Capital Association (NVCA) is advocating a four pillar approach:

1. The VC industry should support the use of smaller investment banks and accounting firms as partners with the traditional players in the equity distribution system to facilitate smaller IPOs that are now not being adequately served.
2. Create a new market for exits through public offerings for small companies seeking IPOs.
3. Lower capital gains taxes for small IPO investors and certain technologies.
4. Ease Sarbanes-Oxley requirements as they relate to smaller IPOs.
   

You can find their full report through a link at their website). 

Claire Miller at the New York Times summarizes additional recommendtions from a couple of Harvard professors who advocate reform of patent and immigration law and giving bail-out money to certain start-ups to stimulate venture capital markets.

While some of these ideas may offer some limited help, we need to stop thinking about this economic crisis as being one that can be cured simply by financing reform, or worse, financing stimulation. 

VC financing is in a mess because the economy is in a mess.  Fix the entrepreneurial economy and deals will again begin to look attractive enough to secure venture capital financing.  We do not have a supply of capital problem, we have a supply of attractive deals problem. 

Ken Leiser of CB Richard Ellis made a presentation before a seminar I taught this past Friday.  He presented two graphs using data from the Bureau of Labor Statistics that really put this recession in its proper perspective.

The first shows employment change during the last four recessions.