A Business Plan for the Startup Economy Access to capital is key in helping high-growth startups get off the ground and running. Here are two ways to help get them there.

By Karen Mills

Opinions expressed by Entrepreneur contributors are their own.


Any small-business owner looking to start or grow will tell you that access to capital is the first thing they think about in the morning and the last thing on their mind before bed. Free-flowing capital allows small businesses to invest in the machinery, supplies, office space and people they need to turn a great idea into a job-creating enterprise. And, of course, the opposite is true: no matter how good an idea or how profitable a business, it's impossible to grow without steady and predictable sources of funding.

Before leading the U.S. Small Business Administration, I spent my entire career in the private sector. Investing in and growing companies with many of America's most successful entrepreneurs, I developed an appreciation for initiatives that leveraged public and private resources.

Related: Former SBA Chief on 3 Keys to a Better U.S. Entrepreneur Economy

One great example of this is the U.S. Small Business Administration's Small Business Investment Company (SBIC) program, a public-private partnership with no cost to taxpayers. With the vast majority of private investment capital tied up in just three states (California, New York and Massachusetts) and a fairly narrow group of industries, SBIC helped spread the wealth to a much broader portfolio of promising businesses. By expanding the focus of the SBIC program, the initiative encouraged investors to look at early stage companies and impact investing. In 2012, for example, nearly a third of all small businesses financed by SBIC were in low-income areas or run by female and/or minority entrepreneurs.

The federal government's SBIC Impact Investing initiative is a public-private model that can be further developed at the state level. The first Impact Investment fund under this initiative brought together the federal government, the state of Michigan, The Dow Chemical Company and Credit Suisse.

Related: Why Now Is the Time to Seek Startup Funding

Michigan is an area that was hard hit by both the recession and the collapse of the auto industry, but it has great potential with a skilled workforce and history of manufacturing. The fund focuses on making an impact on the Michigan economy by providing capital to businesses that are headquartered in Michigan, have a significant presence in Michigan or are in the process of expanding their operations in Michigan so they can grow and create jobs. Public-private investing partnerships like this will help spread capital to great innovative entrepreneurs not only on the coasts, but at all points in between.

Another promising development is the growth of peer-to-peer lending, or crowd-sourcing, such as Lending Club, Prosper and Kickstarter. What started as a niche concept just a few years ago has become a large-scale and viable way for people to invest directly in promising ideas, which creates a new pool of funding while allowing small investors to reap the financial rewards of contributing to successful ventures.

A big take-away from my time at SBA is that there's no one-size-fits-all solution. Government and private-sector solutions both have benefits and blind spots. But creative partnerships that leverage the benefits of each are proven to be enormously effective. They should be expanded. And new approaches that further broaden the pool of capital will continue to change the game for America's entrepreneurs.

Related: Successful Crowdfunding Is About More Than Money

Wavy Line
Karen Mills is a Resident Fellow at Harvard’s Institute of Politics. She served in President Barack Obama’s cabinet as the Administrator of the U.S. Small Business Administration and a member the National Economic Council from 2009 until August 2013. Previously, Mills held a variety of leadership positions in the private sector, including serving as a partner in several venture capital and private equity firms.

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