An economic growth expert says 5% of government spending marked for large companies should be given to entrepreneurs to boost the economy

An economic growth expert says 5% of government spending marked for large companies should be given to entrepreneurs to boost the economy
Victor Hwang says giving entrepreneurs at least 5% of government spending can help boost the economy.Victor Hwang
  • Victor Hwang says spending on entrepreneurs can help boost the economy.
  • Entrepreneurs could use the funding to reopen, grow their businesses, and create jobs.
  • Every community in America will benefit from this initiative.

As America seeks to recover from the COVID-19 pandemic, it's time for a new public discussion of job growth - one that doesn't create a false choice between economic recovery and public health.

Many Americans can't just simply "go back to work" - too many businesses have struggled and changed. We have to empower Americans to create new jobs. After all, it's new businesses that create virtually all job growth in America.

However, spurring new businesses requires fresh thinking, as our nation was in a startup slump for decades before 2020, and an estimated 60% of business closures due to the pandemic appear to be permanent.

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More than ever since the Great Depression, America needs entrepreneurs to start, restart, and grow businesses.

Fortunately, there's a powerful public mechanism available to boost entrepreneurs - and, therefore, job growth. It requires zero additional government funding. It can work across federal, state, and local governments. And it can be done in addition to whatever other government stimulus might happen.


The idea is simple: we should designate just 5% of key government spending that typically bolsters large established companies to boost entrepreneurs instead.

Let's call the idea "5% to Start." Ensuring that entrepreneurs receive just 5% of government contracts, workforce development, and economic development would be a major boost to bring our economy back.

It would help reverse a current bias in government toward older entrenched businesses. Research suggests, for instance, that typical government procurement practices hinder new businesses - at precisely the time when we need new business growth.

5% of government contracts

A commitment of 5% of government contracts should go to "new entrant" businesses that have never won government contracts before. The focus should be on firms under $3 million in annual revenues, with a special interest in businesses in their first 5 years, especially in underserved communities.

A concierge service should be created to help new entrants navigate the procurement process, and a "fast track" process for certification should be developed. Government agencies should create a scorecard to track success by number of contracts and total dollars for entrepreneurs across their business life cycles.

5% of workforce development

Local Workforce Development Boards should diversify 5% of their spending into a range of entrepreneurial training and support programs - helping people make jobs, not just take jobs. This "modest" change could drive up to $1.7 billion to help entrepreneurs across the nation - but with zero new spending. It would enhance the environment for spawning new businesses, create job growth, and build economic resilience in communities across the nation.


In doing so, the Boards should give subcontracts to diverse innovative suppliers with specialized expertise in providing entrepreneurial support services. These include accelerators, incubators, mentoring programs, coworking spaces, entrepreneurial hubs, and ecosystem building programs.

5% of economic development

To help new businesses start, restart, and grow in their first five years, government agencies should allocate 5% of existing economic development programs (including Community Development Block Grants and other community redevelopment and assistance funds) to supporting entrepreneurs.

This, too, would energize our nation's startup economy, driving as much as $1 billion to help entrepreneurial businesses without any new spending required.

These agencies should likewise make grants to diverse innovative suppliers with specialized expertise in providing entrepreneurial support services. They can also increase capital for investing in promising underserved entrepreneurs, especially through vehicles using innovative structures (like revenue-based investing) and recyclable capital (like evergreen funds and sustainable Community Development Financial Institutions).

These three 5% initiatives are among a series of steps that all levels of government should take to advance entrepreneurship, and you can read more about them here.


Every community in America needs more entrepreneurship. Every community will benefit from entrepreneurs starting, restarting, and growing businesses.

It's time to make entrepreneurship a unifying element of America's economic recovery. It's time to commit 5% to benefit 100% of the nation.

Victor Hwang is an economic growth expert and founder and CEO of Right to Start, a campaign to rebuild the American economy by putting entrepreneurs first.