Week of January 3 - January 7, 2005

Welcome to the National Dialogue on Entrepreneurship, an initiative of the Public Forum Institute made possible by a grant from the Kauffman Foundation of Kansas City. Through NDE-news, we bring you short summaries and analyses of various trends driving the innovation economy. Subscribe now to receive your weekly copy. Archived issues are available online. Links to the day's entrepreneurship stories from across the nation and around the world are posted each weekday on the NDE main page - bookmark it and stay informed about the latest entrepreneurship news. 

As 2005 commences, NDE-news has decided to take a look into the coming year. Here are a few trends that are likely to affect the entrepreneurial economy in the months ahead.

New Congressional Leaders

The Republican victory in last year’s election allowed the majority party to slightly widen its control in both the House and the Senate. Very few incumbents were defeated. Indeed, Senator Tom Daschle (D-SD) was the only incumbent Senator to lose his seat. Senator Harry Reid (D-NV) has now assumed the post of Senate Minority Leader. 

While few incumbents were defeated, major Congressional committees will be witnessing leadership changes. House and Senate Republicans both have internal rules that limit Committee chairs to six years. As a result of this rule, many Committee chair positions will change when Congress returns for the 109th Congress in early 2005. Both the House and Senate Appropriations Committees will have new Chairs in the coming year. In the House, Rep. Bill Young (R-FL) will step down and three current Committee members—Jerry Lewis (R-CA), Ralph Regula (R-OH), and Harold Rogers (R-KY)—are vying to replace him. In the Senate, former Chairman Ted Stevens (R-AK) is likely to be replaced by Sen. Thad Cochran (R-MS). The Senate Commerce and Senate Budget Committees will also elect new Chairmen. As these higher level positions change, we can expect to see a trickle down effect with other changes in subcommittee chairs and other positions. 

Economic Development Becomes More Entrepreneurial

More and more economic developers are beginning to recognize that entrepreneurial development should be a key part of their programs and initiatives. Dozens of states are unveiling new programs, and the federal government is also offering its support. On January 18, the Economic Development Administration is holding a national telecast symposium on the topic of “The Marriage of Innovation and Entrepreneurship: A New Model for High-Growth Economic Development.” In March, SBA’s Office of Advocacy is sponsoring a major national conference on the topic. Finally, the W.K. Kellogg Foundation will soon announce the winners of its new Rural Entrepreneurship Partnerships Program. Under this initiative, four regions will each receive $2 million to assist in the development of innovative programs that help spur entrepreneurship in distressed rural communities. 

Good News and Bad News for Entrepreneurs

For entrepreneurs, 2005 will likely offer both good news and bad news. On the good news front, the supply of equity capital appears to be growing. Angel investing is on the rise, and established venture capital (VC) firms are doing well. The VC business has stabilized, the initial public offering (IPO) market has rebounded, and firms are aggressively searching for new investment opportunities. Many industry watchers have predicted that early stage investing will likely grow. As always, VC investing will focus heavily on new technology sectors, with software (especially security and storage), and life sciences (especially health care services) garnering much attention. 

The flip side of this good news is that entrepreneurs will continue to face heavy pressure from the growing cost of employee benefits. A continued rise in health care costs will continue to dominate the attention of entrepreneurs, and should remain atop the agenda of small business advocates. But, health care will not be the only concern. As baby boomers age, retirement benefits and other forms of flexible employment packages will also be generating great interest. 

Social Entrepreneurship Stays Hot

One prediction for 2005 doesn’t really signal much change from 2004: social entrepreneurship will stay hot. More schools are offering classes and degrees in the field, and more students and entrepreneurs are starting new social ventures. This encouraging trend will simply deepen and broaden in 2005. If you’re interested in learning a little bit about “the best in class” of America’s social entrepreneurs, check out the 2nd annual Fast Company/Monitor Group Social Capitalist Award winners. These 25 innovators are reviewed in the January 2005 edition of Fast Company and on line at http://www.fastcompany.com/social/2005/ 

Immigration Debates

Immigration is likely to be a front burner political issue in the coming year. On the one hand, many are concerned that America’s immigration laws are too lax, and that illegal immigrants create a significant economic burden for American taxpayers. President Bush has vowed to push immigration reform this year, but his plan, which includes the provision of temporary visas to guest workers, faces significant Congressional opposition. Meanwhile, many others fear that tightened immigration rules are deterring the worlds best and brightest from coming to America. In the past year, overseas applications to American graduate schools have declined by 28% and foreign enrollment in US colleges and universities dropped (by 6%) for the first time in three decades.

Kauffman Launches Newsletter, Website

The Kauffman Foundation of Kansas City recently launched its first electronic newsletter and unveiled a website that has been redesigned and rebuilt from the ground up to make it easier to find information and resources on entrepreneurship. The first edition of "Ideas at Work" was distributed in early December to a wide audience of subscribers, highlighting the Foundation's involvement in the Urban Entrepreneurship Program, Opportunity City at Epcot, CEO Carl Schramm's keynote speech at Enterprise Week in London, and the first recipients of local grants coming from the Kauffman Legacy Fund. Kauffman will issue the newsletter every six weeks to highlight a variety of Foundation news and take readers to its website at kauffman.org to learn more.

Kauffman Foundation    The Public Forum Institute

National Dialogue on Entrepreneurship
2300 M Street, NW; Suite 900
Washington, DC 20037
Mark Marich, Editor

All stories © 2005 The Public Forum Institute
Content from this newsletter may be reproduced for non-commercial purposes with proper attribution to the National Dialogue on Entrepreneurship and a link to www.publicforuminstitute.org/nde. 

Subscribe: 
 To sign up to receive NDE-news, visit www.publicforuminstitute.org/nde/join/

Unsubscribe:
Please send an e-mail to nde-out@nde-news.org with the word UNSUBSCRIBE in the subject line. If you have difficulties with the automated process, please e-mail Mark Marich with your email address in the body and your unsubscribe request will be handled promptly.

Privacy Statement: 
 The Public Forum Institute recognizes and respects the importance of protecting the privacy of all information provided by recipients of our e-mail newsletter. We use a variety of security technologies and procedures to help protect your personal information from unauthorized access, use, or disclosure and will not share personally identifiable information with other companies or organizations.