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Learning From Other Entrepreneurship Ecosystems

Kauffman Senior Scholar Amisha Miller explores the notion that entrepreneurship ecosystems can learn from each other, but highlights certain caveats

Can entrepreneurship organizations around the world learn from each other?

That’s the main question I asked myself before attending the Global Entrepreneurship Congress in Milan last week, which brought together entrepreneurs, their support organizations, researchers and policymakers from roughly 175 countries.

Overall, entrepreneurship ecosystems and programs can learn from each other, but the broad lessons we can draw need to be adapted to our own ecosystems.

Since every entrepreneur is different, every program is different, and every place is different, it seems logical that the only way we can learn from each other is to have something in common.

Photo credit to unleashingideas on Flickr

Identifying Our Main Challenges

Feedback from attendees at the Congress and members of Startup Nations, a group of grass-roots organizations that share ideas about how to help new firms form and scale around the world, suggests entrepreneurship ecosystems around the world do face some broad common challenges, but that these wide areas can more usefully be broken down into more specific shared problems.

For example, every Startup Nations organization commented that access to finance was a problem for entrepreneurs in their regions. However, digging below the surface, different ecosystems have slightly different variations on the same problem.

In both Lithuania and Ecuador, support organizations pinpointed a lack of “smart money,” where investors may invest in a firm, but they don’t help to structure deals or their partnerships in a way that is conducive to further business growth.

Organizations in Romania pointed to a lack of foreign investors as a key problem while South Korean representatives had not seen enough exits. Each of these more specific challenges drew nods of agreement from certain members and organizations, but certainly not from everyone.

Countries also tended to have similar overarching concerns with regards to better government support, but as with finance issues, each nation had smaller, more unique concerns within the wider umbrella.

For example, in South Korea, the government is putting $2.9 billion into entrepreneurship funds; the question that remains in South Korea, and any country that has a high level of government intervention, is whether this can be sustainable, or create sustainable growth.

In countries including the Ukraine, Greece and Romania (where policymakers have other priorities), startup ecosystems are trying to attract more attention from the public sector, so questions of sustainability are a long way off.

Understanding Programs

Given the beneath-the-surface differences seen in each ecosystem, we might expect to see different types of program designs to tackle each ecosystem’s specific challenges. However, program implementation looks similar across borders with a consistent focus on providing entrepreneurship education, mentoring, and increasing access to global markets.

Unfortunately, most entrepreneurship support organizations do not publicly share details of their program implementation, nor evaluate the impact of their work (the latter being due to reasons such as a lack of interest, knowledge, skills, or resources).

Consequently it’s difficult to ascertain whether or how these three intervention types are adapted for their specific ecosystem and whether or not they are successful.

Start-Up Chile is an example of a well-known program that has added much to our collective knowledge by actively sharing best practice. The program contains elements of providing entrepreneurship education, mentoring and access to global markets for the entrepreneurs it directly supports, as well as providing the first two program implementation types for their wider community.

At founding, Start-Up Chile had two stated aims: to create cultural change and foster entrepreneurial spirit in the country, and to increase the probability of success of the companies they supported.

Other countries rushed to replicate the program even before it shared much about its program or showed any results. Many copycat national startup movements often aimed to create a slew of innovative, high-growth businesses, closer to Start-Up Chile’s second aim.

Unfortunately, a later evaluation of Start-Up Chile’s programs suggests that the program has not achieved this second aim, and therefore, was not a good model for replication.

Start-Up Chile was successful in fostering an entrepreneurial spirit in the country. One measure of this work can be seen in the percentage of Chilean applicants to Start-Up Chile, which has doubled since the program started.

However, strengthening entrepreneurship culture in this way wasn’t the aim of many copycat national startup movements, and many of these movements have not received much support within their countries since they started; misalignment between aims of a given program and what it can realistically achieve may be the culprit.

Unlike many other movements, Start-Up Brazil deliberately changed the focus of their copycat movement, focusing from the start of the program on encouraging entrepreneurs to start and then grow their businesses in Brazil, where longer-term and second-stage investment can be accessed locally. This quasi-copycat movement could prove to be more successful.

Learning From Others

Overall, to answer my original question, entrepreneurship ecosystems can learn from each other, but with certain caveats. We need to better understand what our own ecosystem needs, and we all have to share more information on our own programs to help others better evaluate their potential for scale.

As seen from the Start-Up Chile and Brazil example, we need to pinpoint our ecosystem’s strengths and necessary areas for improvement, before attempting to learn from others.

Tools that can help with ecosystem mapping abound. The Kauffman Foundation has recently released its recommendation for measuring an entrepreneurial ecosystem, the Aspen Network for Development Entrepreneurs has pulled together a questionnaire for local entrepreneurs to help to identify perceived gaps in the ecosystem, and the Babson Entrepreneurship Ecosystem Project has implemented its methodology for identifying and working with key stakeholders in a local ecosystem.

We also need to identify whether and how programs can fit in to our local ecosystems. To successfully import or scale a program to new geographies, we’ll first need to understand more about the program itself: its aim; the audience reached; resources needed; and the context the program was operating in.

Organizations like the newly formed Global Entrepreneurship Research Network, which aims to link programs and researchers to develop more information on what is working, can help us to better understand the impact of programs.

Only armed with more information can we really hope to understand what is likely to work in our own local ecosystems, and what we can learn from others.