There seems to be this increasing stereotype of the entrepreneur. It’s been fostered by Hollywood and mainstream media, and it could be so far wrong that it slows down the economic recovery.
That image ranges from the romantic to the quirky. He’s the young, single wunderkind who is bucking all the odds to bring exciting new technology to market. He’s the socially inept geek laboring late at night at his computer to crunch some remarkable code for the next best thing. Frequently the image is of someone who never has or can’t work for anybody else.
Perhaps those kinds of entrepreneurs do exist, but the real story is a bit more mundane, according to a report at dailyfinance.com.
Research by Vivek Wadhwa, a visiting scholar at U.C.-Berkeley, a senior research associate at Harvard Law School, and director of research at the Center for Entrepreneurship and Research Commercialization at Duke University, paints an entirely different picture even for high-tech, technology-based entrepreneurs.
Wadhwa’s research shows the average entrepreneur is married, has children and spent a good deal of time working for others before launching their own company. About 71 percent of entrepreneurs came from middle class backgrounds.
OK, so without an affluent background, where did they get the money to get started? Did they parlay a hot shot venture capitalist or a big government grant to fund the future? Not in most cases. Most first startups (about 70 percent) were primarily funded by the entrepreneurs’ personal savings. Friends, family and bank loans contributed in up to 16 percent of the cases.
Only about a tenth of entrepreneurs received venture capital funding.
Wadhwa’s conclusion is interesting. “Look in the workforce, not in the university business-plan contest, for startup talent," says Wadhwa.
Compare that to the woodworking industry where the people starting small new businesses frequently are those who have been displaced from larger operations. Or they are veterans of other industries who want to bring their expertise to woodworking. And it’s businesses with fewer than 500 employees who account for most the economic growth in this country, according to a number of reports.
Too much focus has been put on giant banks and giant manufacturers as being at the center of the recovery. Real improvement will require more support for the kinds of family-minded mainstream entrepreneurs just like the ones who have made up the bulk of the woodworking industry for years. Once Washington, Wall Street, and Hollywood grasp that concept, the recovery could have some momentum.
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