Wednesday, January 13, 2010

Business Formation Drops 10% in Wealthiest Countries

The number of entrepreneurs starting new businesses dropped 10% in the wealthiest nations last year and fell 24% in the U.S., according to a report released Wednesday.

“Throughout the world, would-be entrepreneurs reported greater difficulty in obtaining financial backing for their start-up activities, especially from informal investors– families, friends, and strangers,” says Bill Bygrave of Babson College, one of the founders of the Global Entrepreneurship Monitor, which issued the report.

Two things are going on here. The Fed tight money situation and the fear from the crisis, itself, has made funds less available for investment. Further, the threat of new regulations and taxes, worldwide, creates uncertainty that makes it difficult to properly analyze many investment situations.

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