Summary - Fertile Ground for Startups

The article, Fertile Ground for Startups by Spencer E. Ante discusses why the current economic climate is a good time for entrepreneurs to create their own business. Some new businesses will succeed and many more will fail. According to the Center for Venture Research, angel investors financed 24,500 new ventures, a 6% increase over the same period last year. A look back at history reveals that great companies are often built during bad times. The year 1939 and the end of the Great Depression saw the creation of Hewlett-Packard. The Silicon-Valley based technology companies were created during the recession of the 1970s. During a recession, everything needed to start a business is cheaper including labor costs, material, and office space. There is less competition because established businesses are trying to survive themselves and other start-ups are unable to raise the money needed. These tough times force entrepreneurs to begin working on their business ideas earlier enabling them to reap profits more quickly than when money comes cheap. Jim Breyer, general partner of Accel Partners, a venture capital firm that has invested in Facebook, believes that 2010 and 2011 should be good years for innovative small companies. However, recessions do present a potential problem for entrepreneurs in that harder to drum up business, take a company public, or raise money than during good times.