Step 7: Give Angel Investors a Tax Break
A number of states including Wisconsin, Minnesota, and Ohio, offer angel investors a tax credit for backing early-stage ventures. More states should follow their lead, and so should the federal government. As Stephen Spinelli, co-founder of Jiiffy Lube, observes: "If I get an immediate tax credit, I get an immediate return. I know I would increase my investing if there was a tax credit." Read more
Step 8: Reward Innovation Through Business-Plan Competitions
A revved-up contest economy will harness the competitive spirit to launch a wave of businesses. Programs such as New York City's NYCApps and the nonprofit X prize should be expanded and encouraged. Read more
Step 9: Cut the Incorporation Red Tape
In New Zealand, an entrepreneur can register a business with one filing and be legal and legit in one day; in the U.S., it takes about six steps and six days. We need to make it easier for founders to register their start-ups. Hawaii's approach, which involves an online step-by-step guide to registering a new business, should be adopted across the country. Read more
Step 10: Pass an Energy Bill, Already
Markets--and investors and entrepreneurs--abhor uncertainty. So let's get serious about the emerging energy economy by creating an actual energy policy. Only then will companies be able to make informed investment decisions. Read more
Step 11: Revamp the SBIR
The Small Business Innovaton Research Program is a good idea that unfortunately supports a small number of companies that seem to excel only at getting SBIR grant money. The government should revamp the agency's mission so that it provides seed capital and contracting opportunities to younger companies, and not just small companies. While we're at it, let's rename it the New Business Innovation Research Program. Read more
Step 12: Grow Local Investment Communities at the State Level
It's foolish to try to duplicate Silicon Valley, but smart governments can do a lot to lure investors to their states. Since 1993, for example, New Mexico has committed funds to venture-capital firms with the requirement that they open an office in New Mexico and pledge that investments equaling the amount provided by the state were made in state. The results have been encouraging, and suggest that other states should nurture local VCs. Read more
Step 13: Bring Government into the 21st Century
Government entities have more resources--generally in the form of data--than officials realize. They need to follow San Francisco mayor Gavin Newsom's lead and hand that raw material over to entrepreneurs. Read more
Step 14: Fund Big Science
As a percentage of gross domestic product, funding for scientific research has dropped from 2003 levels. What's more, the federal contribution to R&D is now below 1 percent of GDP, a commonly accepted minimum goal for economically developed countries. Meanwhile, our global economic competitors are seizing the opportunity. We should reverse course, and fast. Read more
Step 15: Stop Enforcing Noncompetes
Midcareer executives are a rich source of entrepreneurial talent. But studies indicate that in states and in industries where noncompete agreements are commonly enforced, workers are forced to make career detours, finding their next positions outside the industry in which they had expertise. Noncompetes make it hard for people to start companies, and hard for start-ups to attract seasoned talent. Let's follow California's lead and stop enforcing noncompetes nationwide. Read more
Step 16: Bank the Unbankable With Microfinancing
Over the past few years, many mainstream banks have beefed up loan requirements or significantly cut back on small-business lending. Nonprofit microfinance lenders have come to play an ever more important role in bridging the funding gap. Cities and states should embrace these kinds of programs. Businesses that seem unbankable are often anything but--if you know what to look for. Read more
It's difficult, if not impossible, to say how many new companies Inc.'s 16-point plan would help create. We went over our proposals and performed some back-of-the-envelope calculations and estimate that implementing these ideas would spur the formation of at least 300,000 additional start-ups over the next decade or so. The number, we admit, is speculative. But blue-sky thinking is fine with us. The point is that the old models are no longer working. We need bold thinking about how a new wave of entrepreneurship can transform the American economy, spark innovation, and provide new jobs, new vibrancy, and new opportunities.
That's where you come in. What do you think of our plan? Is there anything missing? What do you think needs to happen to make this country more start-up friendly? We want to hear from you. Please post a comment below.
