Perspectives
Jonathan Ortmans: Making Sense of the World of Entrepreneurship
There’s no shortage of support programs for entrepreneurs. We need to make sure they’re effective in creating a global ecosystem that accelerates the next generation of scalable new business creation.
Continuous innovation transforms the way we do things, constantly creating or reforming industries and renewing economies. Entrepreneurs act on disruptive ideas together with co-founders who have unique knowledge of an industry to bring innovation to life. Yes, they are often found in home garages or co-working spaces — but increasingly, entrepreneurs can be found inside corporations and even government.
The opportunity to lead the Global Entrepreneurship Network (GEN) has given me a front row seat to observe entrepreneurs and the communities and ecosystems that support them in over 150 countries. The exuberance displayed around the world during Global Entrepreneurship Week, the root movement that created GEN, is evidence of their endless drive and belief in the possibility of human endeavor.
At the same time, however, the explosion of support programs for entrepreneurs — alongside declining rates of new firm formation — should give us reason for concern. While the notion of ideas and talent colliding to create new businesses is inherently “messy,” GEN has sought to bring some discipline to efforts afoot to develop a global entrepreneurship ecosystem that accelerates a new generation of scalable new business creation. Here are five priorities.
1. Understand: Increasing the quality and quantity of entrepreneurship data and research
First, we need to better understand the economic and social potential of a more global entrepreneurial ecosystem. We should better define what we are trying to achieve and examine what evidence there is on the most effective means of getting there.
The current data chest already includes rigorous analysis showing that young firms have historically been responsible for nearly all net new job creation. Many governments and philanthropies have therefore begun developing a distinct track for fostering new firms separate from their traditional SME support. Naturally, this has brought increased demand for more robust data to guide which policy levers to pull — or leave alone — and where to direct new investments in entrepreneurship promotion.
The good news is that in the era of Big Data, there is an ever-growing amount of untapped information to analyze. When entrepreneurs form teams, relocate to the most conducive location to create a business, raise funds and engage in all the exciting cacophony of entrepreneurial dynamics, they shed a mountain of data.
We need to make sense of this pile of unorganized data — which is the mission of the Global Entrepreneurship Research Network (GERN). Canada-based MaRS Data Catalyst, an original member of GERN, is looking into ways that entrepreneur support organizations can apply market-segmentation methods to better design support and target scarce resources where they are most effective. The Kauffman Foundation, a founding member of the network that has a track record of dispelling myths about entrepreneurship, has a wide array of fresh scholarship around startup data that sheds new insight on these questions.
2. Compete: Enabling talent and idea collisions
Business plans have largely gone out of fashion, due to the perverse incentives they create that force entrepreneurs to guess — rather than validate — their models with customers. Yet today’s business plan competitions have kept pace with the global startup revolution, now combing the globe for the founder teams that use continuous innovation models, iterative testing and validation — while giving up little equity. The successful teams are offered entry into a global network of peers, mentors and relevant programs to help fast track their ventures.
Take the “Get in the Ring” pitch competition, founded in 2009 by the Erasmus Centre for Entrepreneurship in the Netherlands to bring the world’s most promising entrepreneurs together to inspire others to start their entrepreneurial journeys. In just five years, the competition has grown to include more than 60 countries, with a global worth its weight in entertainment alone — pitting entrepreneurs against each other in a boxing ring while pitching potential angel investors.
The winner of the Startup Open, the Israeli startup BreezoMeter has since appeared on the main stage of the Global Entrepreneurship Congress, presented to United Nations delegates in Geneva and was invited to the White House to help promote entrepreneurial growth around the world.
The exposure, mentorship and networking connections these competitions provide are invaluable to young startups looking to make their mark — most with little to no outside funding. Even for those not fortunate enough to emerge victorious, competitions provide excellent exercises for founder teams to test their ideas and for the startup support community to discover viable startups to help.
3. Celebrate: Lift up your champions and inspire the next generation
The world needs more entrepreneurs. Despite all the fanfare around entrepreneurship and startups, cultural barriers remain. By celebrating the impact of entrepreneurs, we can reach new audiences inspire the next generation of job creators.
Moreover, as with any socialization process, interactions help define a community culture. As Brad Feld and Steve Blank note, some key cultural attributes of Silicon Valley are “pay it forward” and “embrace weirdness” (i.e. diversity), as well as the “failure equals experience” cultural meme.
4. Support: Programs and resources to help smooth the path to market
There is now a wide variety of support programs for entrepreneurs multiplying everywhere. Incubators provide physical space, infrastructure and advice in exchange for a fee or equity. Accelerators work with selected cohorts that go through a program, usually with a funding incentive. There aim of these — as well as a variety of educational programming and membership-based organizations — is one and the same: provide entrepreneurs with the support necessary to reach the next level.
The proliferation of such programs, however, has caused a lot of debate — ranging from the narrow focus on tech startups to the lack of evidence showing that they actually help entrepreneurs. An OECD analysis of accelerators across six countries found that none had set specific quantitative targets for benchmarking their performance, while there was little entrepreneurial experience among accelerator management.
Dash Dhakshinamoorthy, co-founder of StartupMalaysia, expressed another common challenge: ecosystem players who compete instead of collaborate. “We need to improve recipes, rather than multiply existing strategies”, he says. We need educational support programs, but we need a more ruthless filter for sharpening performance if we are to justify the energy and expense that goes into creating firms that can scale.
5. Connect: Horizontally, vertically and in all directions
Finally, despite the expanding number of web-based platforms to connect entrepreneurs, investors, policymakers, corporates and other leaders and feeders across the globe, we still need live community building.
These connections help break down siloes, whether within a part of the ecosystem — such as angel networks collaborating with crowdfunding sites — or between investors, founders, industry captains and customers.
The number of events may appear excessive at times, but we should not underestimate their power to help intersect disciplines and cultures. As chair of the Global Entrepreneurship Congress, I may be biased, but I believe these venues are where best examples of innovation are forged.
It is a common refrain that creative startup and scale-up communities that pull, push and prod our human capacity for innovation cannot be organized along linear lines or tidied up in a framework. However, as that imperative becomes more universally accepted and the amount of resources invested in enabling more entrepreneurs explodes, disciplined, evidence-based methodological processes will be required if we are to rebalance the ratio between effort and results and make sense of the ever-expanding world of entrepreneurship.
(Top image: Get in the Ring’s 2013 winner, EyeVerify. Courtesy of Get in the Ring.)
Jonathan Ortmans is President of the Global Entrepreneurship Network.