New entrepreneur advocacy group marries heavy hitters with grassroots activism
July 19-25, 2021
By Dwain Hebda
Looking to accelerate and amplify the plight of America’s entrepreneurs is the goal of Kansas City-based Right to Start. The non-profit, which recently established operations in Arkansas, seeks to bring issues facing entrepreneurs top-of-mind among legislators and other community stakeholders.
“Entrepreneurship is the lifeblood of prosperity and it is in a crisis right now,” said Victor Hwang, founder and CEO of Right to Start. “Almost all vet job growth comes from [entrepreneurship]; it’s a source of jobs, it’s a source of GDP, it’s the source of how you fight inequality and poverty. And it’s the source of wealth, as more entrepreneurs equals more wealth across a community.”
“Right to Start was really built out of this idea that we need to promote this issue and it needs to become a public priority, a civic priority. To do that, we elevate what we call changing minds, changing policy and changing communities.”
Looking at current statistics, it is initially difficult to understand Hwang’s concern. Statistica reported after a three-year plateau from 2016 to 2018, the number of businesses one year old or less in the United States rose modestly in 2019 then spiked in 2020, to more than 804,000.
In fact, per the U.S. Census, the third quarter of last year saw an all-time record in the number of new business applications, 1.6 million, which was a 60 percent quarterly increase and 70 percent growth year over year. And while some of that could have been backlog from Q1-20 and Q2-20 due to application processing complications brought on by covid-19, each of the following two quarters also saw in excess of 1 million applications each, 1.12 million in Q4-20 and 1.4 million in Q1-21.
However, these numbers are misleading. The Statistica numbers count companies within their first 12 months, not by calendar year, and applications don’t necessarily materialize as a business’s Day One in the same year, either. In fact, as Inc. Magazine reported in 2012, entrepreneurship has actually been on the wane for decades.
Citing the Kaufmann Foundation’s and Brookings Institution’s statistics, the magazine reported startups have been in steep decline as a percentage of total American businesses. Between 1978 when half a million new firms represented 15 percent of all companies and 2012 when a little more than 400,000 new ventures represented about 8 percent of all companies, entrepreneurship has plunged 44 percent over 30-plus years.
More recently, the New York Times reported in 2017 that the trend has continued even as the stock market steamed to unprecedented heights. The culprit behind this “startup slump”, the paper reported, is a hydra of generational differences, the decline of community banks which are often the capital lifeblood of mom-and-pop entrepreneurs and, most significantly, the riptide of big business.
“Many economists say the answer could lie in the rising power of the biggest corporations, which they argue is stifling entrepreneurship by making it easier for incumbent businesses to swat away challengers — or else to swallow them before they become a serious threat,” wrote the Times’ Ben Casselman.
Precisely, said Hwang, who said the issues today go a step further to governing bodies from Washington to city councils who fail to effectively advocate for entrepreneurs.
“If you think about the elections we just went through, entrepreneurship wasn’t even a discussion,” he said. “The talk was around propping up ailing small businesses which is, of course, very important, but there was no talk around how you help people adapt and grow and build their own livelihoods around new businesses. There should be an emphasis on how to live during the early days of starting a business, but we hardly hear about it in public discourse.”
Hwang, an economic growth expert who’s consulted organizations from the World Bank and Ford Foundation to corporate clients Accenture, IBM and Microsoft, launched Right to Start as a counterbalance to policymakers’ steady tamping down of entrepreneurs’ needs as a legislative priority.
“The truth is, we created Right to Start because we haven’t seen entrepreneur-friendly environments,” he said. “The way we’ve tackled entrepreneurship as a policy issue is a series of band-aids. A lot of times a policymaker will say ‘We love entrepreneurs, here’s a program,’ and they’ll give a little program to train up entrepreneurs or give a little tax credit for angel investing or support for mentoring or building accelerators in a specific region. You see a lot of these patchwork solutions; what we have not seen is a 360-degree approach.”
“Entrepreneurship issues are not solved by a program. It’s a tax issue, a workforce issue; it’s a K-12 issue, a policy issue, a community college issue; it’s government contracting, it’s R&D, it’s community development, it’s banking. Entrepreneurs experience all of that. You’ve got to think about all of these in every aspect and the way you govern a society should be put through that lens.”
Right to Start’s message has struck a chord within the business community; in a very short time the group has established activities on the ground in 15 states, including Arkansas. Here, it has already engaged local advocates and built relationships with pro-business heavy hitters such as the Walton Family Foundation. Through that relationship, it was announced June 9, will come an entrepreneurial model in Northwest Arkansas that, once implemented, can be replicated elsewhere.
“I would say fundamentally, we believe strongly in collaboration and rising tides lifting all the boats,” said Kim Lane of Conway, who was named Right to Start’s Chief Operating Officer in June. “Our work is unique in that we are entrepreneurial policy-focused, building these connections between the grass tops and the grass roots. Now, there are several entrepreneurial support organizations nationwide – I think one time I read that there are hundreds in D.C. alone. What we’re doing is leveraging that work to connect that with policy.”
“For instance, the advocates we have hired in Northwest Arkansas are doing a lot of work with local partners – the Northwest Arkansas Council, the city of Fayetteville and policy makers there locally – as well as working with the local entrepreneurs. They’re not doing business coaching, they are hearing the stories of entrepreneurs and elevating those stories. We do fill that unique gap, leveraging the work that others are already doing in the community.”
Lane, who’s built her reputation for small business advocacy through a variety of roles within Arkansas and beyond, said the state provides a sound template for potential improvements that could be a beacon to new business growth as well as a model for the rest of the country.
“Specifically for Arkansas, we’re doing some things really, really well, but we don’t need to take focus off of other issues in doing so,” she said. “There’s a lot of general support here for those starting a business and that is great. But general support is not the same as intentional support. I think that’s why it’s so important Right to Start is working intentionally with the Latinex and Marshallese communities, for instance, because that is different than just saying ‘This is free support for anybody.’ This is support intentionally for these under-represented communities.”
“One of the things that we do recommend as part of our pro-entrepreneurial policies is creating an Office of Entrepreneurship at the state level so that you have somebody in the government who understands entrepreneurship and can advocate for entrepreneurs within the system. I think that’s something we can really benefit from in Arkansas, if the governor’s office had somebody who was keenly focused on entrepreneurship, was really intentional about various support and not just doing a one-size-fits-all approach.”
“The reason this work is exciting to me is this is actually moving the needle for people. If we’re able to actually pass policy or actually make these connections, this is life-changing for entrepreneurs.”