The Bias Against Small Business

The Entrepreneurial Mind:

Academic types, and I’m talking about the purists among my colleagues, have long been enamored with high growth companies (they call them gazelles, always with a whimsical tone in their voices) rather than small businesses (which they call life-style businesses, always with bit of a condescending tone). And if you read their text books and research articles on entrepreneurial finance, you would think that all entrepreneurs are funded through venture capital. The facts are that VCs have always played a very small part in entrepreneurial financing.

In a report in Inc.com on Kauffman’s GEM (Global Entrepreneurship Monitor) study, this bias comes through loud and clear. The article sounds alarm bells even in its headline “VC Money for Start-ups Continues to Dry Up: Report shows amount of investments in early-stage companies hit lowest level since 1980.” Is this evidence that our entrepreneurial economy is collapsing? The shrill tone of Inc.com’s report leads one to conclude that it may be true (I won’t go so far as to claim this is politically motivated by journalists or academics�I’ll leave that to the reader to decide).

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