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Summary:

The White House today announced The Startup America Partnership, an effort to boost innovation and entrepreneurship in the U.S. through a private program that encourages companies to offer mentorship and resources, but looks like an opportunity to get press with low returns for startups.

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The White House today announced The Startup America Partnership, an effort to boost innovation and entrepreneurship in the U.S. through a program that encourages private companies to offer mentorship and possibly funding for entrepreneurs — but it mostly looks like an opportunity to get a lot of press, with low returns for actual startups. The goal of the program is to “continue to marshal private-sector resources to spur entrepreneurship in the U.S.,” something I’d argue is already happening at most of the levels the program plans to concern itself with. It will focus on replicating successful accelerator programs such as Denver’s TechStars, expand entrepreneurship education and boost the commercialization of new technologies out of colleges.

The program has $200 million in funding from Intel, $150 million from IBM and at least $4 million from Hewlett-Packard, as well as partnerships with organizations such as The Kaufmann Foundation and existing accelerators such as TechStars. Facebook plans to help too, by launching Startup Days: a series of 12 to 15 events around the country to provide entrepreneurs with access to expertise, resources and engineers to build their businesses. Steve Case, co-founder of AOL, CEO of Revolution LLC and chairman of the Case Foundation will chair the initiative.

When done well, the things the program will focus on can help boost the number of startups in a region, but building a startup-centric culture is like cultivating a healthy garden: There are a lot of different things to get right, and those things will vary based on where you live and what you have to work with. It’s not enough to try to build a TechStars program in San Antonio, Texas, because the potential employee base there might not have the skills or the interest in that type of program. With commercialization, there are already plenty of universities that have spent years boosting their success rates for commercializing technology by streamlining IP licensing documents, changing the incentives for professors from a focus on publishing to a focus on entrepreneurial endeavors, and even partnering with some of the same companies participating in this program that help fund technologies through the valley of death from lab to product. In some places, these attempts work and in others, they don’t. Another effort (and one where government can help) highlighted today is a faster patent application process, limiting it to one year for companies that have received venture funding and want to eliminate patent-related uncertainty quickly.

One area where such a partnership might help, however, is education. Entrepreneurs may be born rather than made, but many of them have much of their entrepreneurial spirit pummeled out of them by the U.S. education system, which can reward keeping your head down and sticking with the tried and true — not exactly what entrepreneurs are good at. I’m curious to see how the education component of this works, especially at the early grade levels, as opposed to starting in colleges or high schools.

Any government-encouraged startup program also has to deal with a fundamental divide: Governments have very different agendas than the typical startup generators, which are made up of entrepreneurs and venture capitalists. At their best, governments want to boost the overall economies of their constituent base and want to spread diversity and other warm and fuzzy ideals. For example, the program will offer roundtable discussions in cities to teach people about building businesses and there will be an incubator created to help veterans build companies. At their worst, governments can be a source of patronage, and have a tendency to fund people or businesses that aren’t the best. On the flip side, both entrepreneurs and VCs are pretty Darwinian and ruthless when it comes to allocating their time and resources; their goal is to make money.

So other than some good publicity and a friendly program that will point back to everything President Barack Obama is doing for entrepreneurs, I’m not sure this effort will make that big a dent. Sure, it helps get a bunch of names together to push entrepreneurialism, but most forward-thinking regions and universities are already working on building programs for better commercialization and many incubators are providing mentorship where there’s interest. Perhaps we’re beginning to see the creation and solidification of an “innovation” lobby that will push for issues close to startups’ hearts such as more H-1b visas, the slow patent application process or opening up monopoly markets.

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  1. Geoffrey, the SIX STRING cpa™ Monday, January 31, 2011

    Very nice article. I was thinking along some similar lines this morning when I was reading the news, from about the 20K outlets covering – good PR by the way.

    I tend to agree with your educational based slant in your article/post. I also agree this may be a platform on which to build awareness and meaningful discussion about H-1b visas. I am not really opposed to those providing the funding getting some press. If these companies are footing the entire bill ( no, or limited, public dollars spent) then some great exposure and press is OK by me.

    However, as a citizen I am concerned about the potential for a concentration of power/influence/etc. on the start-up scene. If this initiative does nothing more than allow the fingerprint of a few to make a giant mark on the start-up culture and environment of the U.S. then I think a great disservice may be done. When I read all of the information releases this morning my mind began to wander. In my Mind’s Eye I saw round table discussions around the U.S. (a great thing). Unfortunately, the discussion panels were filled (i.e. controlled) by the same select few.

    I am VERY pleased about this program! However, as in business the devil is in the details and the results will be in the execution – not in the announcement. My hope is that the execution of this program is well thought out and implemented. If so, then it may reach its goals and objectives and create a new vibrant culture, not just opportunities for a few to gain an inside track or influence the process for their own current (and future) objectives.

  2. Why so negative? Gee!

  3. One would be hard pressed to name *any* successful US industry that could not trace its beginning to the US govt OR to large govt money and resource investment.

    1. Agriculture (pre-dated US government)
      Firearms (ditto)
      Mining
      Iron / Steel
      Machine Tool
      Early manufacturing

      Almost all american industry thrived with a very limited central government for the first 150 years of the republic. Only in the so-called “progressive” era has the government controlled and influenced the private sector. The power elite realized they could control industry much easier via the federal government.

      1. Most of these received incredible amounts of money (firearms? please) or international protectionist regulation (agriculture, steel) and then domestic regulation (subsidies, etc.) One man’s “strategic initiative” is another mans socialist intrustion.

    2. Sure and all that happened without the government backing a private program such as this one. And many of those successes come from more strategic initiatives such as DARPA or NIST money as opposed to feel-good messages about incubators and mentoring.

  4. Where to begin?

    “Government and startups don’t mix” is an unsupported assertion. Even if it is generally true, it is easy to refute as a generalization. No startup has ever been the beneficiary of government spending or investment? Please.

    Worse, this program isn’t a government program. It is a private sector program, funded by people and companies with too much money. “Foundations and startups don’t mix” or “Corporate Venture and startups don’ mix” would have also been dumb headlines — but at least accurate with respect to the current story.

    At the end of the day, will this initiative create more value than it invests? Hard to say — but it might. Startup investing is a hit-driven portfolio business not unlike books, movies, games, apps, or music. Most fail. A few break even. A tiny number succeed wildly and pay for all the rest if you happen to get in on it.

    The problem is adverse selection. The very best companies want the very best, most demanding, investors. The weaker ones will settle for foundation capital (who will often value non-economic, ie. “social”, returns). At the end of the day, foundations will massively underperform venture funds as startup investors. But they might break even and they might even help start some cool companies.

    Delighted that Obama got in front of this thing to take some credit. His administration, which I loudly and passionately support, has not appointed or engaged entrepreneurs very well to date.

  5. Marcelo Calbucci Monday, January 31, 2011

    Stacey, I think you are a good writer/blogger, but as an Analyst you did an awful job with this piece. Not only contains factually incorrect information, but your understanding of entrepreneurship and business is not showing through, and then your conclusions become completely wrong.

    I suggest you think harder and maybe call a few people who actually have expertise about this and ask them their opinion, like journalism used to be done. You are definitely entitled to your own opinion and blogging is an “opinion” medium, but if you don’t do the home work or understand the space, you look naïve.

    (full disclosure: I’m a TechStars mentor).

    1. Marcelo, I’m happy to engage with you on any point in the article here or via email if you’ll provide some specifics. I’ve covered a lot of these efforts from commercialization to incubators and have seen some win and some lose. Most that did either didn’t do so as a result of government intervention or programs. I think the disconnect between the goals of politicians (especially at the national level) and those of entrepreneurs are too great.

    2. Wow. What a whiny and baseless statement to make in a public forum using your real identity. Stacey handled herself quite professionally with her reply, and I’m very curious to see if you can refute specific statements in her article. Agree or disagree, she makes some very valid points. This is a PR opportunity more than a real program, and we’ll probably never hear of this group again in 2 months.

      1. If Marcelo wanted to be nasty, he would have said something like: “You’re just trashing this program because Aneesh blogged it for TechCrunch.” But he didn’t.

  6. inccome tax calculator guy Monday, January 31, 2011

    Great article. I have to say that if government would get out of the way then we entrepreneurs could flourish. Everything the government touches fails.

  7. income tax calculator guy Monday, January 31, 2011

    Great article. Keep up the good work

  8. You are spot on what I think about the involvement of government in start ups. Very well done.

  9. Check What GigaOm is saying on startupamericapartnership | startup america partnership Monday, January 31, 2011

    [...] http://gigaom.com/2011/01/31/governments-and-startups-just-dont-mix/ This entry was posted in Uncategorized. Bookmark the permalink. ← Hello world! LikeBe the first to like this post. [...]

  10. Considering around 90% of startups fail within the first year, it is not in the best interest of the public that the federal government picks and chooses risky startups to fund. The federal government has a bit of a spending problem and should refocus its goals by tackling its debt and letting startups battle equally in the private sector.

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