Entrepreneurship Promotion Project

Best Growth Stock – The enterprise requires an ecosystem of support to realize their potential.

The growth of our economy is still heavily dependent on the growth of basic production factors: capital and labor. It does not mean that still we are not able to growth our economy here in the United States based on innovation. Less than half of the economic growth in our country is explained by increases in the labor force and capital formation.

To generate more innovation takes many elements, including increased competition in the markets, increased foreign direct investment, closer alliances between academia and the private sector as well as more researchers trained in new technologies.

It is also necessary to have a larger number of entrepreneurs willing to risk their future for a new idea that excites. Indeed, we are very entrepreneurial. Business surveys show that we have hundreds of thousands of micro and small enterprises. However, most new ventures in the country are of low added value, based on the immediate need to generate income. There are many small shops, small restaurants and garment factories that are created each year as a solution to the lack of formal employment.

What is needed is more high value-added venture. Arising in the new era of information technology we are having more and new enterprises in sectors such as software, services, information technology, biotechnology, health, environmental care, among many others.

However, it is not easy being an entrepreneur in these sectors. There is an established ecosystem that supports them, especially in terms of their capital needs. Today our entrepreneurs typically get their initial funding from family and friends. Once you manage to get your business to charge, are funded by retained earnings and, eventually, through bank loans. This financing scheme limits the rate of new business development.

A new and very complete ecosystem for enhancing access to capital, which helps speed up the development of new business is being developed. Start with angel investors who are willing to provide capital in very early stages in the life of a new company.

Then come the venture capital funds that are willing to provide capital once the business begins to take shape. After funds are private equity, which invest once the company has a proven business model and revenue levels of a medium sized company. Finally, come the stock exchanges where the company can issue shares to finance growth and provide liquidity to its shareholders. Indeed, this ecosystem is not only available in Silicon Valley, but in all major metropolitan areas of the country.

This ecosystem is larger investors serve as a way out to smaller investors. For example, initial placements of shares (IPOs) in the bag serves as a mechanism to exit private equity funds. In turn, private equity funds serve as an outlet for venture capital funds.

Finally, private equity funds and venture capital to allow the output of angel investors. This makes the different types of capital providers specialize in creating value in specific phases of the life of the company.