House Small Business Committee Examines Role of Business Incubators on Job Creation
The House Small Business Committee held a hearing today to examine the role that business incubators can play in creating jobs and growing our economy.
Business incubators are facilities that serve small businesses by providing below-market office space, management advice on operating a business, and various type of clerical assistance. Provision of these services, shared among a variety of small businesses, lower operating costs and reduce start-up times by eliminating many of the logistical barriers associated with the opening of a business. Frequently, incubators are established in abandoned buildings, thereby promoting development in economically depressed areas. After receiving assistance from an incubator, a small business can often stand on its own, healthy and self-sufficient.
Ranking Member Sam Graves (R-MO) said, “Now more than ever, Americans need the services offered by small business incubators. The economic downturn has shuttered many businesses, leaving once bustling communities with empty storefronts and warehouses. Employers are hesitant, if not completely unable, to expand their operations or hire new workers, and would-be entrepreneurs are putting future initiatives on hold. Small business incubators can help provide stability in an unstable environment, encouraging growth and development.”
During the hearing, Committee Members heard testimony from Dr. Robert Strom, Director of Research and Policy at the Ewing Marion Kauffman Foundation, a nonpartisan, nonprofit organization dedicated to entrepreneurship. In his testimony, Dr. Strom cited recent Kauffman Foundation research that found that young firms (less than five years old) are responsible for virtually all net new jobs in the United States. Without these businesses, job creation would have been negative for 22 years from 1977 through 2005. It is clear that small firms will continue to play a critical role in America’s economic recovery.
Mr. Peter Linder, Chair of the Mid-Atlantic Angel Group Fund, testified at the hearing about the important assistance that angel investors can offer developing businesses. Ranking Member Graves believes that particular attention should be paid to the role that such private-sector investors can play with respect to incubators in an effort to lessen dependency on federal funding.
For video of the hearing, click here.