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Entrepreneurship, High-Potential Venture and Business Plans

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Entrepreneurship, High-Potential Venture and Business Plans
Chapter 1
3. From where do the new jobs in America derive? Why?
Smaller firms created 81.5 percent of the net new jobs in the economy from 1960 to 1976. These small businesses (those with less than 500 employees) represent more than 99 percent of all employers and provide 75 percent of all (net) new jobs. Small companies employ somewhat more than half of the U.S. workforce. Entrepreneurial firms account for a significant amount of employment growth. A handful of “gazelles,” those who grow by twenty percent a year for four years, added 5 million jobs from 1994 to 1998. Even in a tough economy, entrepreneurs continue to start businesses.
4. Explain the extent to which large versus new and emerging companies contribute to all innovations and to radical innovations.
Small firms have been responsible for half of all innovation and 95 percent of all radical innovation in the United States. Smaller firms generated twice as many innovations per R&D dollar spent as the giants and 24 times as many innovations per R&D dollar versus those mega-firms with more than 10,000 employees.
Moore’s law – the power of the computer chip will double every eighteen months at constant price – is actually being exceeded by modern chip technology. Peter Drucker’s Postulate states that a tenfold increase in the productivity of any technology results in economic discontinuity. Thus, every five years there will be a tenfold increase in productivity. These innovations have led to creation of major new inventions and technologies.
8. What role has venture capital played in this economic transformation?
Private risk capital has been the rocket fuel of America’s entrepreneurial engine. Classic venture capitalists work as coaches and partners with entrepreneurs and innovators at a very early stage. In 1957, General George Doriot, father of modern American venture capital, and his young associate Bill Congelton at American Research & Development (ARD) invested in a new company created by

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