5 Hacks to Boost Any Entrepreneurship Ecosystem: Part 1

January 14, 2016

In 2010, I was appointed as USAID’s first-ever Entrepreneur-in-Residence. As a part of the State Department’s Global Entrepreneurship Program (GEP), I focused on supporting Egypt’s entrepreneurship ecosystem. At the time, practitioners had little sense of how governments and donors could best support high-growth entrepreneurs. But after two and a half years in Egypt, clear lessons emerged about the strategies that best responded to the Egyptian ecosystem’s needs.

Indeed, GEP efforts helped Egypt create one of most vibrant entrepreneurship ecosystems in the world. J.E. Austin Associates (JAA) is currently helping apply these lessons in entrepreneurship ecosystems across thirteen countries. While certain aspects of context differ, JAA has identified some effective approaches that can help any entrepreneurship ecosystem thrive. What follows are five hacks for donors and governments that want to support high-growth firms with the most job-creation potential:

Use the Data, Luke

When GEP started, deciding on an approach to supporting entrepreneurs seemed mostly a matter of faith. But now, the data about effective programming are much more clear. In recent years, organizations like the Kauffman Foundation, Global Entrepreneurship Monitor (GEM), Endeavor Insight and Startup Genome have provided substantial evidence about where high-growth entrepreneurs come from, what their needs are, and the type of programs that are most effective to support them. For example, the traditional models of incubators or government-managed venture funds have been shown to have little impact on growth entrepreneurs.  

Mentorship from successful entrepreneurs, on the other hand, has been proven highly effective in meeting their needs. Further – though it is commonly perceived that young people are the best target entrepreneurs – the data now show that the most successful growth entrepreneurs tend to be more educated and have years of experience working for businesses in their sector.

Any government or donor program to support entrepreneurship ecosystems must apply these lessons from the outset, and rigorously evaluate the success of its programming as it goes along. Tracking the success of entrepreneurs who participate in the program, for example, is a must. How many survive?  How many receive investments and grow their sales?  Data, not guesswork, should guide your program. 

Power to the People

Behind any successful entrepreneurship ecosystem, you will find incredible people who are making it happen: champions, mentors, volunteers, organizers, angel investors and others. Targeting these people is as important (if not more important) than targeting particular organizations. 

In Egypt, for example, I could count at least 5 incredible individuals who championed activities like accelerators, Angel Groups, VC funds and other startup programs that have since become the bedrocks of the ecosystem. I was shocked by how many successful businesspeople in Egypt wanted to support the next generation of entrepreneurs as mentors or even angels. (I have not seen any country like it.) It was also incredible to see how many Egyptians wanted to volunteer their time and organize different events and activities. 

Now, as I visit different countries and try to find ways to help their local ecosystems, I don’t begin by looking for trendy or youthful entrepreneurial institutions. Rather, I look for highly motivated counterparts – those that remind me of impactful Egyptians like Alfi, Khaled, Hossam, Abo and Waleed – and ways to empower them to support entrepreneurs.

Changing Mindsets – Just Do It

When USAID first asked J.E. Austin Associates to analyze Egypt’s entrepreneurship ecosystem in 2010, it was apparent that one of the key challenges would be changing how entrepreneurship was perceived.  Egypt’s brightest and most passionate workers were rarely interested in entrepreneurship, and few successful entrepreneurs took the time to mentor the next generation of entrepreneurs or invest in their companies.

Moreover, most ecosystem organizations focused on young, inexperienced tech entrepreneurs rather than targeting frustrated professionals who were stuck in a career track. Startup programs focused primarily on providing capital, without addressing startups’ more basic needs like developing a team or understanding how to develop products that solve market problems. 

Though it doesn’t happen overnight, these mindsets can change.  With a few successful examples, new approaches can be infectious. In Egypt, Flat6Labs was able to serve as one such example by finding the best people to start up businesses, pushing them to succeed and creating a community to support them.  The best way to change minds about entrepreneurship is to just do it. When others are able to see and feel the new way of doing things, these approaches spread quickly.

The GEP program implemented a number of media activities to help change the mindset also.  We focused early on helping the media understand why new entrepreneurs were important to job growth and how that differs from corporate executives utilizing entrepreneurial journalists like Bo Burlingham to do this. The program then became a resource for the local media. With the help of the U.S. Embassy’s public relations team, we produced interesting stories on entrepreneurs, mentor-entrepreneur relationships and investors that were published both in print and TV media. The program also leveraged social media, not by creating competing social media channels but utilizing the ones that were already in existence. 

I’ll dig into two more hacks in my next post. Stay tuned! If you can’t wait, check out this video on opportunities for young entrepreneurs in Egypt.