Seven Reasons Why Startups Won't Save The Economy

by  Krisztina "Z" Holly, Contributor

A 2010 study from the Kauffman Foundation demonstrated that all net new jobs in the US have been created by new firms less than a year old.

Statistics like those can get policymakers very excited about supporting startups. In fact, last week, the World Economic Forum’s “Summer Davos” conference in Dalian, China focused a great deal on entrepreneurial ecosystems and increasing the startup rate worldwide.

Five years ago, entrepreneurs garnered little attention with policymakers. So this new trend should be music to my ears, given I’m the chair for the Forum’s Global Agenda Council for Fostering Entrepreneurship and I’ve been part of the club banging the drum about entrepreneurship over a decade.

But it’s not. So why am I cautious about this newfound fervor around startups? Well, for a lot of reasons.

The numbers can be misleading. While it is true that new companies create jobs – there is no way to go from zero but up –job creation can quickly turn to job loss as startups enter their third and fourth years and on average contract or go out of business. Further, more recent employment data have found that startup rates have been declining and new firms are no longer contributing the way they used to. This doesn’t mean that young companies should be shunned or ignored. But we need to accept that entrepreneurship is a high-risk game and set expectations accordingly.

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Continua qui: www.forbes.com/sites/krisztinaholly/2013/09/20/seven-reasons-why-startups-wont-save-the-economy/