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Thursday, February 25, 2021
Entrepreneurism will be the “shot in the arm” the economy so desperately needs to recover.
The coronavirus pandemic plunged the world into a deep health and economic crisis. The rollout of the COVID-19 vaccine points to a “light at the end of the tunnel” for the country’s physical health, but as we collectively take stock for ways to rebuild our economy stronger and more resilient than before, we need to remember what works. Entrepreneurism has been, and will continue to be, a driver of long-term economic growth.
The economic free fall brought about by the coronavirus was unexpected and unprecedented. Experts are still attempting to fully understand, quantify and predict the full extent of the fallout. We do know that the U.S. hit its deepest recession since the Second World War, and while states like Michigan are faring better than expected, it serves as a reminder that we must be intentional in our efforts to help our economy recover and grow once more.
Small businesses and startups have always been important drivers of our economy. But in a post-COVID era, they will become even more important than ever before. Entrepreneurism will be the “shot in the arm” the economy so desperately needs to recover.
According to the U.S. Small Business Administration (SBA), small businesses accounted for nearly 60 million jobs and employed 47% of all U.S. employees in the pre-pandemic economy. In addition to job creation, small businesses also fuel innovation and productivity on a local level that feed other businesses in the community. And while minorities are still under-represented in the leadership ranks of large companies, small businesses allow people to become their own boss.
Given the important role entrepreneurism will play in a post-COVID world, we need to do all we can to support their formation and success. Comprehensive and innovative support ecosystems will be necessary to take ideas from conception to commercialization.
In Michigan, for example, the state provides a full suite of services from funding and mentoring programs to supporting early-stage technologies coming out of the state’s award-winning universities. To build on this ecosystem of support for entrepreneurs, Michigan Governor Gretchen Whitmer also proposed creating a Business Accelerator and Resiliency Initiative to provide grants to high-tech startups that can help communities thrive, as part of her Michigan COVID Recovery Plan. It is programs and proposals like these that will ensure that ideas with potential can ultimately evolve into companies that create jobs, pay taxes and grow our economy.
The tremendous potential for entrepreneurism to contribute to recovery can be seen in the success of Duo Security, an Ann Arbor-based startup, which developed a two-factor authentication system to protect the security of its users in the modern era. The company was founded in 2009 with two full-time employees and as Duo considered going public in 2018, the industry titan Cisco bought out the company for $2.35 billion. Today, the company employs more than 800 people serving more than 20,000 customers around the globe by delivering trusted cloud-based security systems.
Ideas don’t move from a thought to a company without support. Duo Security received assistance early-on through venture funding from the Michigan Economic Development Corporation’s (MEDC) Entrepreneurship and Innovation initiative, which in turn helped attract follow-on investments with a significant increase in valuation over time. Later, Duo Security worked with state partners at Ann Arbor SPARK to recruit and attract talent as it continued to expand. Support through venture capital and seed funding, license negotiations, research commercialization and more are necessary to help fledgling businesses thrive.
This is not the first time entrepreneurism will play a critical role in supporting Michigan’s economic recovery, however. Following the recession in 2009, Michigan strengthened its investment in the state’s entrepreneurial ecosystem to help spur its efforts toward recovery, supporting its partners statewide and creating programming through the MEDC’s Entrepreneurship and Innovation initiative. In the years since, these efforts have led to the formation of more than 1,300 companies while creating more than 20,200 jobs and retaining over 39,800 more, demonstrating the positive economic impact that entrepreneurs have on the health of Michigan’s economy.
Even during the COVID-19 pandemic, the entrepreneurial ecosystem in Michigan has already demonstrated its ability to kickstart economic growth and activity, having supported more than 400 startups and small businesses during the outbreak to not only survive but succeed and grow long after the outbreak is over.
In 2021 and beyond, high-tech startups and small businesses will be a critical piece of the recovery puzzle. We must do all we can to support their success, as they will help rebuild the foundation of our economy.
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