Essential of the week: questioning the best way to help startups

Dear friends, there has been a lot of debate these last weeks among the entrepreneurial community about how to help startups TO take off, and foster the best environment for them. The Obama administration took one option by signing the JOBS Act legalizing crowdfunding and simplifying IPO regulations  for young tech companies. Entrepreneurs will yet have to be carefull because:

  • the SEC hasn’t provided clear regulations about crowdfunding yet, and may take up to 270 days to do so
  • they will only be able to spread the word about their startup’s funding goal on accredited websites

Some experts are even already trashing the new law, saying that the bill passed by the government is a big mistake both for entrepreneurs and people who intend to fund the projects via crowdfunding. The main point of experts is that startup funding is made for professional investors, and that the risks will be underestimated by regular people. More arguments are developed by Daniel Isenberg in his HBR post.

And as if that wasn’t enough, there’s more and more questioning about whether we are in a startup bubble or not. Niche markets are not anymore easy to reach, competitiveness growS significantly in every industry, as the cost of cerating a startup is getting lower every year, especially in IT-related domains. In addition, inspiring stories such as Facebook, Groupon or Zipcar tend to attract more and more aspiring entrepreneurs in the arena, as entrepreneurship is more and more defined as a great career path, as opposed to classic career moves. An excellent article of Venture Beat elaborates on the TOPIC here.

It seems to us that we are more in a classic extension & contraction phase of the number of startups popping in the United States. Small Businesses are the basis of economic growth and job creation, so an increase in the number is a good sign. What matters, though, is the ideas. Entrepreneurs have to focus on projects that bring social and human value to their customers and to the world, in addition to economic prosperity. If this is their goal, then there will never be enough startups in the world !

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