The number of young entrepreneurs, particularly those in college, has seen a significant increase over the last five years, but beyond the raw numbers there has emerged a burgeoning culture founded on the desire to be independent, to be innovative, and to give back to the community—the principles of entrepreneurship.
Anecdotally, Inc.com has released its annual report on this fresh-faced group of business owners since 2009 and this was the first year that we had over 200 nominations. In the past, we were lucky to get a few dozen. This speaks volumes to the gains this group has made in just one year. However, in the scheme of things, although young entrepreneurs are increasing as a group, the numbers are still quite low, says Michael Simmons, co-founder and CEO at Extreme Entrepreneurship Education Corp.
The Global Entrepreneurship Monitor, which actually tracks early-stage entrepreneurial activity found that in 2010 about 5.5 percent of Americans ages 18 to 24 were actually helming an early-stage start-up (compared with 11 percent of 25 to 34 year olds, which is the most entrepreneurial cohort)—while Census data showed that in 2007, only 2.2 percent of business owners were under 25 years old. A survey by the Kauffman Foundation also found that the desire to start a business over other careers has risen for young adults ages 18 to 21 from 19 percent in 2007 to 25 percent in 2010.
One can ask when this surge in entrepreneurship at earlier stages in life and the growth in the entrepreneurial spirits amongst college students began, but it is hard to pinpoint the trigger as numerous factors have contributed to the shift.
“If you think about it analytically, the economy has to have played some role in this,” says Jeremy Shepherd, Entrepreneurs’ Organization ambassador to the Network for Teaching Entrepreneurship (NFTE) in Los Angeles. “Not just because people are hesitant to work in corporate America, and because it is simply more difficult to get a job than in 2006.”
The dip in the economy in recent years has been one identified factor, and it has undeniably played some role—a survey by the Young Entrepreneur Council of over 1,600 American males and females ages 16 to 39, found that in 2011 alone 23 percent of those surveyed started a business as a result of being unemployed.
Sarah Schupp, who was named one of BusinessWeek’s Top 25 Entrepreneurs Under 25, agrees with Shepherd. “One thing I really see amongst these young entrepreneurs is a major feeling of fearlessness, in such tough economic times, we just want to take things into our own hands,” she says.
People also point to advances in technology as one of the major factors behind this entrepreneurial movement—citing lower barriers to entry and accessibility provided by new advances as triggers.
“Technology today has been transformative—completely changing the way people did business 10 years ago,” says Schrupp, who experienced first hand the ease and accessibility of new technology in launching her company University Parent Media.
The ability now to use social media and internet marketing has drastically decreased initial company costs, while at the same time providing outlets to collaborate with others, consult and research information at little or no cost, stresses Schrupp.
“Due to advances in technology, the barriers to entry are much lower, which encourages people—even on a small scale—to get out there and take it as it comes,” says Katie Sowa, assistant director of the Collegiate Entrepreneurs’ Organization.
But to Dylan Reid, CEO of the Kairos Society, a non-profit organization focused on fostering entrepreneurship amongst college-age students, the growth in entrepreneurship goes beyond the economy and lower costs of starting a business.
“The decision to pursue entrepreneurship is not a rational, economic one so trying to appeal to it as one is not sensible,” says Reid. “It’s a sizable risk, so what gets you to do it is cultural.”
Reid iterates that groups such as Kairos and the hundreds of other that have emerged are what really have been fueling this entrepreneurial movement—providing young people with support systems and collaborative outlets for ideas.
“Entrepreneurship doesn’t need an infrastructure, but it does need a cultural backbone,” says Reid. “What these groups do better than anything else is create that culture.”
Data shows that entrepreneurship is a self-perpetuating phenomenon. The Kauffman Foundation found that youth who personally know another entrepreneur have the strongest interest in starting their own business. Among youth who know an entrepreneur, 46 percent would like to start or have already started businesses compared to 31 percent of young people who don’t know a business owner.
“These things build on themselves. Today you have more success stories to model—from those iconic models in the news to colleagues and fellow students who have found success in entrepreneurship,” says Doug Rand, senior policy advisor of the White House Office of Science and Technology, in the Executive Office of the President.
The community around entrepreneurs has proven to be crucial—in Carl Schramm’s “The Entrepreneurial Imperative” he cites that “studies show that the rate of success of a new business start-up can be improved by a factor of at least three if the entrepreneur has a mentor.”
With the jump in the number of entrepreneurial programs and organizations at the university level, schools have become breeding grounds for entrepreneurial pursuits says Susan Amat, executive director of The Launch Pad at Toppel, at the University of Miami.
“I think so many universities now embrace cross-campus, interdisciplinary collaboration and entrepreneurship is a natural outlet for the kinds of conversations that exist when you have people from different areas of study sharing ideas, problems and solutions,” says Amat.
The YEC study found that amongst those ages 16 to 39 years, 88 percent believe that entrepreneurship education is important, especially given the new economy. Still, it is not all universities that have such programs, and not all are as helpful as others—within this same group only 26 percent were offered classes on entrepreneurship, and 72 percent who did take entrepreneurship courses found the education provided insufficient to start a business.
Regardless, however, awareness of entrepreneurship through the media and success stories has helped to change the way it is viewed, says Sowa.
“Nowadays, it is so much easier for people to accept the status of being an entrepreneur,” says Sowa.
Amat and Reid further her point, stressing that particularly the credibility of young entrepreneurs has been improved in recent years—they are now viewed as much more legitimate and see greater respect from the business community.
“One of the biggest trends is how there is this shift away from ‘student companies’ to ‘companies run by students’,” says Reid. “There used to be a limitation on the scope of what students were doing and that was a limitation on entrepreneurship. The ventures out there today are real, competitive viable companies—and that’s new. This makes entrepreneurship a more compelling alternative.”
But this entrepreneurial spirit seems to have impacted levels of society beyond just college students—even amongst those ages 8 to 17 years, 39 percent have an interest in starting a business someday, according to the Kauffman study. Nearly eight in ten students in grades 5 to 12 say they want to be their own boss, and 42 percent say they will invent something that changes the world, according to a Gallup poll.
To Cem Erdem, founder of Project Skyway and an entrepreneur himself, entrepreneurship in America extends beyond a certain age group or sect.
“I think it is the American dream to make it big. Nobody dreams about having a standard salary for a lifetime. Its in our DNA—we are an entrepreneurial nation,” says Erdem. “America breeds free thinking and free spirits, and that’s the foundation of being an entrepreneur.”