Entrepreneurship’s ability to realize individual potential, spur the economy, and unify: A Q&A with Wendy Guillies

As Global Entrepreneurship Week kicked off around the world, in North Carolina, NC IDEA welcomed the week with their Virtual Ecosystem Summit including a Q&A with Kauffman President and CEO Wendy Guillies. During the session, “A United Force for Entrepreneurship,” Guillies sat down with Thom Ruhe, NC IDEA CEO and president – and former Kauffman associate – to discuss the current state of entrepreneurship, policy that supports new and small business, and the Foundation’s priorities for 2021.

Ruhe: What are you all focused on coming up in 2021?

Guillies: Well, we have a lot of exciting programs and grants, obviously, that are underway and planned, but if I have to add up all of the work that we do in education and entrepreneurship, it really comes down to three priorities and the sort of overarching priority for us is inclusive prosperity – that’s what Mr. Kauffman stood for. He believed that everyone deserves a shot at success regardless of their race, or their income, or where they live. He believed that education was, or could be, a ticket out of poverty. He believed that entrepreneurship was one of the best ways to realize individual potential and to spur the economy. For us, we get there through a prepared workforce and through entrepreneur-focused economic development, which is something I know that you all care very much about there at NC IDEA.

Ruhe: So, you’ve mentioned barriers in particular facing entrepreneurs of color, women, and rural entrepreneurs. I mean, I know Kauffman has a world-class research department, so with all that firepower, do you have some sense of what those barriers are and can you, for the audience, maybe even elucidate? Because I think so many people just kind of assume entrepreneurship is an easy path for anyone to take.

Guillies: We know that anyone who’s tried it knows that’s not the case, right? But I’d say a couple of the main ones that aren’t going to be a surprise to anyone is access to capital, access to networks. We have a set of indices that we look at, that look at startup activity by state, and then as the country, as a whole. We also just completed a general population survey of thousands of individuals, and the report is coming out soon, so I won’t share all of it, but I’ll share one really interesting statistic.

We looked at people that leave entrepreneurship, meaning they have an idea, but then they abandoned it. And they never quite take that step. And interestingly, or maybe not surprisingly, we saw that only 10% of those folks ever sought out professional advice from an attorney, or a consultant, or an accountant. The majority are just asking their friends or their colleagues. So, what that says to me is, we need to do a better job connecting entrepreneurial resources to the people who are trying to start something, especially at that very early critical stage. Obviously, happy to talk about access to capital too, I could talk about that all day long, but I’ll let you guide this conversation.

Ruhe: Well, I mean, it’s actually a good segue. Let’s dig a little deeper on access to capital. I mean, that invokes in most people’s brains, a certain trajectory. What are you seeing around that kind of the capital stack and what’s the Kauffman Foundation doing about it?

Guillies: Right. Well, I mean, venture capital is what you hear about, right? And it’s a critically important part of the sort of startup ecosystem and financing, but it’s a very tiny part. We did a study about a year and a half ago, and by our estimates and all the data out there, more than 83% of entrepreneurs don’t have access to either venture capital or bank loans. The majority of entrepreneurs don’t access those two ends of the financial spectrum. So, when you look at that missing middle, they have to rely on their own wealth, or family wealth, or personal credit cards, and et cetera. And that’s where we start seeing the breakdown, right? When you start thinking about women, start thinking about people of color, the barriers are so much higher when it comes to financing and growing their business.

Just a few stats to share with you … First of all, venture capital is just 1%. One percent of entrepreneurs ever access VC, but you hear so much about it, right? Of that, only 1% goes to Black-owned businesses. So, talk about inequity there. Black entrepreneurs are also three times more likely to be declined for bank loans, and the situation for women isn’t much better. When pitching the same business, men are 60% more likely to get funding than women pitching the same business. So, what we’re trying to do at the Foundation – we can’t solve for all this, we’re trying to do our part – we took the lessons from that study I just mentioned about the 83% of entrepreneurs that need something different between venture and bank loans, and we seeded an initiative called the Capital Access Lab. What the Capital Access Lab is doing is it’s providing funding to alternative fund managers that are doing something different. They’re not doing traditional VC; they’re not doing traditional loans. A lot of them are doing revenue-based financing. So, we’re trying to catalyze those funds so that they can serve a different kind of entrepreneur – the majority of entrepreneurs out there.

We’re using our convening power at the Foundation to bring these alternative fund managers together to create a community of practice. Because they’re all doing something different and they’re sort of kind of creating their own fire in their own corner of the world, and they’re not talking to each other. So, we bring them together to share lessons, to share ideas with each other. And what’s fascinating is that community that we brought together, 55% of those fund managers are women, 41% are people of color, and that is vastly different when you think about traditional fund managers out there.

We also, just recently in the last month or two, announced a really exciting partnership with Living Cities. And that partnership is going to involve the development of what we hope is a very large investment fund to capitalize fund managers of color. So those are a few things that we’re trying to do on the capital landscape, but it’s a critical issue, Thom.

Ruhe: What’s the Foundation doing to prepare today’s students for tomorrow’s needs?

Guillies: Well, this is one of my favorite things to talk about. At the end of the day, a high school diploma, while important, doesn’t really mean that much. It doesn’t really mean that you’re prepared for the next step in education. It doesn’t really mean that you’re prepared for the workforce. So, what we’re doing in Kansas City – which we hope can be a model for the whole country – is we’re working with about 30 superintendents. We have a lot of school districts, as our metro area straddles a state line – Kansas and Missouri – and we’re bringing them together with business leaders, other educators, to define a set of what we’re calling market value assets.

These market value assets are things like internships; they are client projects that students might do with a company. They are entrepreneurial experiences, things like Ice House. They are getting college credit while in high school or getting an industry recognized credential. When students get these kinds of real-world experiences, they just do better in the real world. They are more prepared for college or whatever their next education step will be. And they’re more prepared ultimately for the workforce.

Our dream is that in the next 10 years, every single student in Kansas City, every single one, will graduate with a high school diploma and at least one or more of these market value assets, because we think that’ll put them ahead in the long run. It’s when students are doing these real-world things, they learn how to solve problems, they think creatively, they have to collaborate with others, they have to have good communication skills, they have to learn how to network, they have to learn how to present an idea to someone. We just think this is really important. And in terms of developing the human capital, it’s going to be needed for people who are starting something or going to work at an existing company.

Ruhe: I know the Foundation has been really active in the last couple of years with policy promoting advocacy for entrepreneurs. What do you see as the policy priorities in 2021?

Guillies: I think there are organizations out there that know policy is important. Entrepreneurs know it’s important too, but they’re too busy running their businesses and they don’t really have anyone supporting them. Policy is a really important part of the work we do. Last year, we launched a set of policy ideas for local, state, and federal policymakers to help kickstart the economy – we called it America’s New Business Plan. We are going to be doing a refresh of that when the new Congress comes in and it really is aimed at trying to help us climb out of this pandemic.

And, so, we’re not doing it ourselves. We have a whole coalition; it’s called the Start Us Up coalition. There are dozens of organizations out there that are helping carry this message because we absolutely can’t do this ourselves, and we need people in every state in this country to be advocating on behalf of entrepreneurs.

America’s New Business Plan has four key pillars. One is in the category of opportunity. You look at the complex regulations that have to be navigated. Big companies have the resources to do this, but the small startups don’t. We want to level the playing field there. Another pillar is funding. We need to have better access to capital for every entrepreneur and not just a few. Knowledge is another. The things like Real World Learning, and Ice House, and all the entrepreneurship support resources that are out there, we need to better connect those to the people that I just mentioned that have an idea, but don’t feel like they have the knowledge or the skill sets or the connections to make it happen.

And the fourth pillar is around support. Being an entrepreneur is an act of bravery, that’s courage, and it feels out of reach for too many. We need a stronger support net and safety net for those who take those risks. We’d love to have everyone join us in this effort. You can go to startusupnow.org and be part of our coalition.

Ruhe: What is your perception, Wendy … what do our policymakers not understand, and what should they understand better about the economic upside of entrepreneurship?

Guillies: I don’t think it’s that policymakers don’t like entrepreneurs, don’t care about entrepreneurs, I think they just don’t understand. I think they get big business, and I think they understand small business, but I don’t know if they understand the new business. And that’s really what we’re talking about here – those years, when it’s critical that you have the right kind of networks and support and funding. And I think that’s where things fall down. They just, generally speaking, don’t encounter a lot of startup entrepreneurs. This is why we have funded dozens of organizations to help carry this water, to help get the message out there and put entrepreneurs in front of policymakers – the more they see and hear from new businesses, the more they’re going to understand it.

Every year we have Entrepreneur Day on the Hill, and we take entrepreneurs from all over the country. We get them to D.C. – of course, we did that virtually this year – and we have them meet with their congressional representatives. Sometimes it’s the first time they’ve ever, ever met with someone in Congress, but for a lot of these congressional folks, it’s the first time they’ve really talked to a new entrepreneur. So, I think it’s bridging that gap and understanding.

The last thing, and you didn’t ask this, but I know before this event we talked about it a bit. Since you’ve talked about how long I’ve been at the Foundation and made me feel really old, this will be my fifth president in office since I’ve been at the Foundation. And in different congresses, and different priorities, and different personalities, the one thing that has really been unifying has been entrepreneurship. I mean, it’s like apple pie. I mean, there are so few things in this world that still can bring people together. And I’ve found over the years, that entrepreneurship is one of those things. We see every new president, every new congress, as an opportunity, and we think we’ve got some good momentum with America’s New Business Plan. Like I said, we just need more people to try to get in front of their policymakers, whether that’s local, state, or federal and tell their story.