Obama Launches Startup America InitiativeFebruary 8, 2011
The administration of President Barack Obama last week announced the creation of Startup America, a new initiative that seeks to “celebrate, inspire, and accelerate high-growth entrepreneurship throughout the nation.”
According to the Obama Administration, the “core goals of Startup America are to increase the number and scale of new high-growth firms that are creating economic growth, innovation, and quality jobs; celebrate and honor entrepreneurship as a core American value and source of competitive advantage; and inspire and empower an ever-greater diversity of communities and individuals to build great American companies.”
Startup America seeks to improve access to capital for high-growth startups, expand mentoring programs and collaborations between large firms and startups, and strengthen the commercialization of federally-funded research and development (R&D).
As part of the initiative, the U.S. Small Business Administration (SBA) will commit $2 billion in matching funding through its Small Business Investment Company (SBIC) program. According to the administration, this effort rests on existing authority and an infrastructure already in place in the SBIC program. Through the SBIC program, SBA-guaranteed bonds “will match private capital raised by these privately-owned and managed investment funds and serve as a catalyst for accelerating capital support for startups and high-growth firms.”
An Impact Investment Fund, aimed at investments in underserved communities and emerging sectors, like clean energy, will be provided with up to $1 billion in a 2:1 match to private capital. The remaining $1 billion will be allocated—in a 1:1 match to private capital—to an Early-Stage Innovation Fund, aimed at addressing the “Valley of Death” for financing rounds between $1-4 million. The administration notes that over the last four years, only six percent of venture capital has been deployed in that stage—and that nearly 70 percent of that expenditure was focused in only three states: California, Massachusetts, and New York.
The SBA also will work with the U.S. Department of Energy (DOE) and Advanced Research Projects Agency-Energy (ARPA-E) on a Clean Tech Mentorship Program. This program will fund four private “business accelerators” to work with 100 clean-energy startups that previously were funded through the American Recovery and Reinvestment Act from the DOE and ARPA-E.
As part of the initiative, the U.S. Department of the Treasury will convene a Small Business and Entrepreneurs Access to Capital Conference in March 2011. More details about the conference are expected in the coming weeks.
Startup America Partnership
Part of the initiative is the Startup America Partnership, a public-private partnership that seeks to harness large firms for the benefit of smaller ones through investments, education, and mentoring. The partnership will be lead by AOL co-founder Steve Case.
With a vast array of additional goals and programs, the Startup America Partnership already has received significant financial commitments, including $200 million from Intel Capital for new investments in American companies; $150 million from IBM Corp. for U.S. entrepreneurship-promotion programs, and $4 million from Hewlett-Packard Co. Additionally, Facebook Inc. pledged to hold up to 15 “start-up days” around the country aimed at connecting small-business owners with experts who can help them.
The partnership also received funding from the Case Foundation and the Ewing Marion Kauffman Foundation.
Please click here to visit the Web site for Startup America.
Please click here for more details about the Startup America program.