Government can create companies (if it wants)

There are thousands of Venture Capital, Angel Investment, Private Equity and other funds who seek to build stronger companies by investing money in the companies. In the past decade, several accelerators have popped whose main goal is to assist aspiring entrepreneurs.  There are several arguments for and against whether the accelerators add any value to a company but that’s a whole different topic.

Guy Kawasaki says that you should be able to build a product and test the market with a mere $25K. Of course there are exceptions to it such as the biotech companies where would you need to spend considerable amount in R&D.

We give billions of dollars in foreign aid to several nations.  Dr. Ron Paul once said that the foreign aid usually goes into the pocket of rich people of poor nations. Instead of giving this money to foreign nations, we can create thousands of companies and millions of jobs.  Most recently $1B of aid to a foreign nation was announced. In $1B, we can create 40,000 startups.  Let’s apply the rule of thumb now.  Fail 50% of the startups. Still 20,000 companies will sustain for 5-10 years. Apply a more conservative approach and fail 50% more. Still, we are left with 10,000 sustainable growing companies. In sum, we can create 10,000 companies with a mere $1B. Even if $25K is given as grants or prizes for competing in a business plan challenges, it will help the struggling entrepreneurs who have an idea but lack the very little capital that could create next Apple or Google. If $1B has to be spent on startups in a given year, 40,000 startups can participate in the program.  Better yet, reward every startup with $25K so that a fair chance is given to each of the startups.

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