Entrepreneurship Reality - 6 Takeaways

What are the accomplishments of the widespread growth of entrepreneurship training?  Here are my takeaways:

  1. University training of entrepreneurs account for less than 1% of all startups.
  2. Graduate school training not yielding better results than undergraduate training.
  3. The Northeast Corridor dominates startups from the top 10 universities.
  4. Total entrepreneur activity (TEA) has not kept up with number of courses offered.
  5. Nascent entrepreneurial activity up, new business participation flat.
  6. Training is focused on the wrong age bracket.

What a great opportunity for University professors to prepare much needed in-depth, rigorous, peer-reviewed academic papers and research before the Kauffman’s budding crisis in entrepreneurship blooms!

For more explanation continue to read…….

(1) University training of entrepreneurs account for less than 1% of all startups. See ENTREPRENEUR TRAINING: MINIMAL STARTUP IMPACT

 

(2) Graduate School training not yielding better results than undergraduate training. One would think that graduate schools would yield more successful entrepreneurs as measured by company startups than undergraduate training due to greater student maturity, smaller class sizes, and more business focus.  When Princeton Review’s Top Entrepreneur Programs are compared for graduate versus undergraduate no improvement is seen when the difference in the length of time in the degree program for students is considered.  It could be argued that the success rate is actually lower (Figure 1).

 

 

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Figure 1

(3) The Northeast Corridor dominates startups from the top 10 universities as measured by their combined undergraduate and graduate standing in Princeton Review (Figure 2). Assuming no duplication of reporting of startups, the Northeast Corridor (Philadelphia to Boston) with four universities had 65% of the new companies started over five years and Utah with two universities had 30% of the new companies started leaving the remaining four universities creating only 5% of the new companies.

 

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Figure 2

(4) Total entrepreneur activity (TEA) has not kept up with number of courses offered. According to the Global Entrepreneurship Monitor (GEM), TEA in the U.S. adult population has grown from 11% in 2008 to 13% in 2016.  During the same period the number of courses has risen from 5,000 to 8,300 and the students trained per year rose from 400,000 to 500,000.   Therefore a 66% increase in courses resulted in an increased in TEA by only 18%.  Further demonstrating the ineffectiveness of entrepreneurial training, TEA has stagnated from 2011 in the 12% to 14% range back to the 2005 level of 12% after a dip during the great recession when TEA dropped to 8%.

(5) Nascent entrepreneurial activity up, new business participation flat. According to GEM, nascent entrepreneurial activity among the U.S. adult population has grown from 6% to 9%, a 50% increase, over the period 2008 thru 2016.  However, the participation in new business has dropped from 5% to 4% in the same period.  For all practical purposes it has been flat at 4% following the great depression after returning to the 2005 level in 2011.

(6) Training is focused on the wrong age bracket. Total entrepreneur activity (TEA) among men 25-44 averages 20% and among women averages 13%.  The 18-24 age bracket TEA is 11% men and 10% women.  Although the “fear of failure has increased steadily since the great recession, from 17% to 36% in women and from 17% to 31% in men, it is the highest in the 18-24 age bracket at 39% overall.  This drops to 34%-35% in the 25-44 age bracket and 23% by the 65-74 age bracket.  Factoring in the percent of people that see an opportunity, fear of failure, and TEA; the indicative probability of successful results in the 18-24 age bracket is 3.4%-3.8% compared to 5.6% to 8.6% in the 25-44 age bracket.  [Indicative success probability = (% seeing opportunity) x (% TEA) x (100% – % fear of failure)]

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