Are we moving into a Startup Bubble?

Came across an article just now: US Entrepreneurs reduce startup activity. As the title suggest,

The United States has fewer entrepreneurs starting businesses and more closing their doors, according to the newest Global Entrepreneurship Monitor, an ongoing study of business startup activity in more than 80 nations.

The report was based on data from 2010 so it means that the actual data this year might be worse and there were even more startups closing their doors this year. Many felt that we are going into another Dotcom bubble because too many people striving to be the next Mark Zuckerberg, trying to run their own startups. Even Sean Parker, cofounder of Facebook felt that Silicon Valley is in trouble, because according to him, there are too many companies fighting for too few talents, and huge companies like Apple, Google and Facebook enter into a battle for talent through actual company acquisitions. Because out of 10 startups, there are only 1 successful one. So the talents and time building the other 9 startups are basically wasted.

Here’s another article on startup bubble by Techcrunch.

Personally, I feel that this is very true. Everyone is inspired to be entrepreneurial and to start their own company, and existing companies fight for more growth through talent acquisition, no wonder more and more venture capitalists are moving to the East for more talents and more startups to fund (hence the cycle repeats all over again).

So, are there any ways to stop this from happening? How do we inspire entrepreneurs who wants to start their own company and at the same time contribute their talent into the correct channels? What if Big companies such as Facebook, Google and Apple could create a startup department which allows aspiring entrepreneurs to work on their idea for full time for 2 years, and if it doesn’t work out, they are now part of the companies in return for the incubation and mentorship that is provided. For the entrepreneurs: this give them more access to a wider network, and a sense of security to take more risk since if the startup doesn’t work out, they have a job at the companies (could be small jobs). For the companies, this allows them to identify and grab hold of the talent, and could also identify future possible acquisitions of the startup into the company. Further arrangements such as outsourcing some part of the work on a part time basis could also be done from the companies to the entrepreneurs during the 2 year incubation period. Of course, the entrepreneurs’ selection process has to be done properly.

Might be a good idea.


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