Updates from Previous Volumes of the Kauffman Fellows Report

Kate Mitchell and the Future of Venture1

In 2011, I wrote in the Kauffman Fellows Report comparing the current environment to that of 1994, the year the Kauffman Fellows Program was founded. Today, the spirit of entrepreneurship remains vibrant, and the global market for innovative technologies remains strong.One of the concerns highlighted in my article was the secular decline in the IPOs that represent an important step in the growth continuum for transformative companies. At that time, there was active dialogue within the entrepreneurial ecosystem and with policymakers about what to do to reverse this trend. I was proud to lead an IPO Task Force2 focused on developing a pathway for "emerging growth companies" to go public despite the many IPO regulations implemented since 1994—without taking on undue risk in the markets.The resulting report3 called for changes that were meaningful but tailored. It provided a short term "on-ramp" to the full regulatory scheme with which the very largest companies must comply. The plan phased in a small number of expensive regulations that were acceptable to the buyers of IPO stocks. Emerging growth companies still have to comply with most regulations right away, but should expect to see a 30-50% drop in the $2.5 million average cost of an IPO.4These recommendations evolved into the Jumpstart Our Business Startups Act or JOBS Act,5 signed into law in April 2012, making it more feasible for entrepreneurs to build a company and take it public. At the same time, the JOBS Act allows public investors to achieve the investment returns they earned when companies such as Apple, Cisco, and Intel went public.Will there be a tripling of IPOs next year? No, and that is probably a good thing. Will these developments mean that more entrepreneurs with good ideas decide to "go for it," and try to build the next Google or Starbucks? Definitely.

Victor Hwang and the Evolution of a VC Practice6

My article in the first Kauffman Fellows Report was a liberation for me! I had proposed an idea—a Venture Corps (like a "Peace Corps" for venturing)—in order to bridge the gap between practice and policy, so that leaders in emerging markets could grow their innovation economies more effectively. The Venture Corps idea spread, and it has since helped inspire various startup mentoring and acceleration programs globally.7On a more immediate and personal level, the idea was the catalyst for transforming my firm, T2 Venture Capital, from a conventional VC firm into a new type of hybrid VC firm that specializes in the intersection of private venture and public policy. We are now advising numerous governments and organizations, including helping them structure, create, and manage new forms of venture capital that are designed with the specialized purpose of catalyzing the growth of sustainable innovation economies. In February, Greg Horowitt and I published a book on how to build innovation ecosystems, called The Rainforest: The Secret to Building the Next Silicon Valley,8 which has received great reviews and distribution and is being translated into Arabic and Russian. We launched a major conference—the Global Innovation Summit—which was cosponsored by institutions like the World Bank and attended by 400 people from 49 countries in its first year.It has been a fun (and crazy) journey over the last few years, and I expect that the most interesting part is yet to come! I want to express deep gratitude to the numerous Kauffman Fellows who have contributed in so many ways to this adventure thus far.

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1 Kate Mitchell, "Venture Capital 2011: How the Past Informs the Future...Today," Kauffman Fellows Report 2(2011): 10–14, http://www.kauffmanfellows.org/images/documents/Journal_Vol2/KateMitchell_Vol2.pdf.2 See Tenor Partners, "Rebuilding the IPO On-Ramp: Putting Emerging Companies, Investors and the Job Market Back on the Road to Growth" (presentation slides), n.d. but posted 20 October 2011.3 IPO Task Force, "Rebuilding the IPO On-Ramp: Putting Emerging Companies and the Job Market Back on the Road to Growth," TENOR Partners, 2011.4 IPO Task Force, "Sentiments of Pre- and Post-IPO CEOs Regarding the U.S. IPO Market," TenorPR, August 2011, p. 9.5 For a summary of the act, see Latham & Watkins, "JOBS Act Establishes IPO On-Ramp," Client Alert 1308, 27 March 2012; full text of the act.6 Victor Hwang, "The Mystery of Venture Capital: A Mission to Connect Entrepreneurial Capital and Economic Development," Kauffman Fellows Report 1(2010): 26–30, http://www.kauffmanfellows.org/images/documents/Journal10/Journal10_Hwang.pdf.7 I prefer not to list specific programs, so as not to take credit for what others have worked so hard to build.8 Victor W. Hwang and Greg Horowitt, The Rainforest: The Secret to Building the Next Silicon Valley, Los Altos Hills, CA: Regenwald, 2012.

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