Edits on a Kurzweil prediction about European entrepreneurship
Editorial notes sent to Amara Angelica at KurzweilAI.net in December 2010, on a passage being prepared for one of Kurzweil’s book updates. The original prediction, made years earlier, claimed that Europe had been quicker than Japan and Korea to adopt the American venture-capital / stock-options / pro-entrepreneurship model. Alyssa pulls each sentence apart, flags what should be cut as unsupported or off-topic, and supplies harder numbers — including the fact that, by the time of the update, European VC had not just “caught up” to the US but briefly pulled ahead. She also fills in what little can be found on Korean and Japanese stock-option law and points out that Chinese entrepreneurship deserves its own treatment because of how much of recent business and economic history it accounts for.
OK, first comments on this. Prediction: Europe has been somewhat quicker than Japan and Korea in adopting the American emphasis on venture capital, employee stock options, and tax policies that encourage entrepreneurship, although these practices have become popular throughout the world.
I suggest we approach this by (a) getting data on venture capital, stock options, and favorable tax policies if we can, and (b) also discussing entrepreneurship generally, since the whole point of each of those three things is to encourage entrepreneurship.
Over the past ten years, it has become increasingly easy to start a business in both the United States and most European countries (see: Entrepreneurship: U.S. and Europe).
This isn’t directly relevant and the source isn’t well-defined, so we should cut.
Although the European entrepreneurship sector still lags behind that of the U.S. as a percentage of the economy (see above citation), it is growing, with employment in venture-capital-backed enterprises growing an average of 30% per year from 1997 to 2004.
This refers to venture-capital-backed enterprises rather than venture capital directly, which is an indirect measurement. We can also add a direct measurement, something like: The European VC market has since “caught up” to the US market. In 1998, venture investments in Europe were well under half of what they were in the US. However, in 2002 Europe reached parity with the US, at $25B in annual investments each, and in 2004 Europe actually pulled ahead, with $35B in VC investments compared to the US’s $25B. (Cite: Greg N. Gregoriou, Maher Kooli, and Roman Kräussl, Venture Capital in Europe .)
Over in Asia, China has experienced a remarkable boom in entrepreneurship since the loosening of government restrictions in the 1980s under Deng Xiaoping. Surveys show that more Chinese people have experience in starting a business than Americans, who in turn have more experience than the Japanese and South Koreans.
I would keep this, as it’s highly relevant to the “although these practices have become popular throughout the world” part. We should add something explicitly mentioning the connection, e.g. “The most spectacular example of the success of these policies has been in China.” We can also include info directly on the VC industry, e.g.: Chinese law first started to encourage the development of venture capital in 1996 . Since then, China’s VC industry has experienced rapid growth and has been supported with funding from the Chinese government . China has also become more favorable to stock options than it was under the old Communist system.
In fact, the proportion of Chinese who have entrepreneurship experience is twice as large as the proportion of Japanese.
Would cut this sentence.
This boom has greatly helped the Chinese economy, which has sustained an average growth rate of 9 percent since 1978.
I think we absolutely have to include this in the Business and Economics section, if not here then somewhere else. It’s one of the most important business and economic facts of the last decade.
By comparison, the Japanese have been sluggish in creating a startup sector, with most Japanese workers remaining employed in large companies. Although the U.S. economy is only twice the size of Japan’s, U.S. startups receive ten times as much venture funding…
This is good data re: venture funding. Could also include something on stock options, e.g.: Stock options are also uncommon in Japan. They were effectively illegal until 1998, and even after legalization, in 2006 the Japanese government passed a law making issuing options less favorable from an accounting perspective. ( Pacific Bridge .)
…and only 12% of Japanese people believe that it is possible to become your own boss.
Would cut this.
We need to include something on the Korean VC industry. This info is hard to find, but here’s something: South Korea, despite its high level of technology friendliness, has been described as “probably the least serviced” of emerging markets by the Western VC industry. As of 2005, South Korea only had $3 billion under management by VC firms, as compared to $180 billion in the US .
I haven’t been able to find anything useful on foreign tax policies so far. Tax codes are very complicated and boring and don’t get written about in the media much, especially foreign media.