Ernst & Young released an entrepreneurship study titled “Avoiding a lost generation: Young entrepreneurs identify five imperatives for action.”
The five key imperatives for action in the study are:
- Expand the choice of funding alternatives
- Increase mentoring and broader support
- Change the culture to tolerate failure
- Target and speed up incentives
- Reduce red tape and excessive taxation
1. Expand the choice of funding alternatives.
Very few people view startups as an asset class to invest in. And by very few, I mean no one (other than a high-growth, high-risk venture capital firm who turns over a new fund every half-decade). I think this is largely an education issue. Many investors in the Midwest USA and southern Africa do not know how to work with or invest in startups. It’s a completely difference philosophy than a corporate or debt financing deal.
2. Increase mentoring and broader support.
Brad Feld talks a bit about this in his book Startup Communities. Universities, foundations, corporations have a large role to play in this segment. An important key here is having experienced entrepreneurs (most having more failures than successes) get involved in the ecosystem and take new and young entrepreneurs under their wings. Regular educational events help introduce mentor-types to newbies.
3. Change the culture to tolerate failure.
We’ve been writing quite a bit about this recently here, here, and here. We failed and it hurt. It’s important that ecosystems are non-judging, accepting, and encouraging to those that have put everything on the line, only to lose it all, and have nothing but the experience to show for it.
4. Target and speed up incentives.
Here’s where large institutions can get creative. I’d like to see more events like what Kansas City is doing called the “Reverse Pitch Day” where corporations come and present to the entrepreneurs ideas and problems they have, but don’t have the time or expertise to build out the solution.
Handing over these problems and ideas to the entrepreneur community, then incentivizing them to come up with a solid solution could be an incredible to spin off new startup companies. The team of entrepreneurs with the best solution receives the funding to launch the company. There might be something there.
Large corporations in Zimbabwe have the potential to radically impact and create new industries with this kind of thinking.
5. Reduce red tape and excessive taxation.
Please! Do we need to say more here? This is an area that CEO’s and powerful government ministers could directly take on, if they had the ecosystem support of points 1 & 2. They also need the education and understanding of the economic power that entrepreneurs can wield to kickstart industry.
Israel has grown leaps and bounds because the government viewed startups and entrepreneurs as a saving grace. They gave favorable tax laws, bent over backwards to connect their ideas to global players, and have quadrupled their GDP, as well as increased quality of life immensely by embracing entrepreneurship at a high level.
Imagine what a nation in Africa could do if the bottom-up mentality and the top-down mentality both supported entrepreneurship. It could be a revival of wildfire in economic proportions that could change the face of a nation completely.
Maybe that’s utopian for many of you out there, but it’s what we’re aiming for—empowering bright entrepreneurs to build their ideas into change agents that bring new life to their communities.
(photo via seongbin im)
Posted on July 24, 2014
by Tim & Tommy filed under