Access to Capital for Entrepreneurs: Removing Barriers

Abstract

Entrepreneurship plays an important role in economic dynamism in the United States. Entrepreneurial ventures serve as the workhorse for the economy by contributing jobs, fueling innovation, and adding productivity. Startups in the United States less than one year old are especially important for net new job creation. Yet as the rate of startups in the United States has declined, so too has the share of jobs they add to the national economy: Per capita startup job creation in the first year declined from 7.52 jobs in 1998 to 5.27 jobs by 2017.

The Kauffman Foundation recognizes the importance of entrepreneurship in the United States and seeks to understand and reduce barriers to entrepreneurship. Entrepreneurs and researchers often cite lack of access to capital as a significant barrier faced by many entrepreneurs. In order to understand the role of access to capital in entrepreneurship, identify gaps in this access, and determine possible solutions to these gaps, the Kauffman Foundation conducted extensive research on this topic in 2017 and 2018. The effort included:

• A literature review on access to capital, including an analysis of previous attempts to improve access to capital;

• Conversations with more than 500 financial asset owners, investors, and entrepreneurs;

• Regular discussion with a working group of preeminent scholars, entrepreneurs, and investors across the U.S.

This report presents the results of the research, surveying the knowledge landscape on access to capital with an eye toward mechanisms to support systemic improvements in capital access for entrepreneurs in the United States. The report concludes with five key questions to shape a call for action and to guide future thinking.

Keywords: entrepreneurship, barriers, research, United States, economic dynamism, new businesses, access to capital, entrepreneurs