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Clarifying entrepreneurship eco-system myths

January 29, 2016 12:01 pm

StartupEcosystemThere are a number of myths surrounding entrepreneurship. Most of them are on the ‘entrepreneurship eco-system’. At Makamba Online we have some questions and answers gathered from reputable business people and entrepreneurs in Africa and we thought we should share them with you.

In preparation to the African Entrepreneurship Breakfast, we saw it fitting to break some entrepreneurship myths. At the meeting respectable speakers and popular panelists will help you understand well.

Q: Is it true that there exists a strong entrepreneurship eco-system when there are more and more start-ups?

A: False. There is no evidence that increasing the number of start-ups per se or new businesses formation stimulates economic development. There is some evidence that it goes the other way around, that is, economic growth stimulates new business creation and start-ups.

Q: In order to strengthen your regional entrepreneurship ecosystem, it is necessary to establish co-working spaces, incubators and the like?

A: No. There is no systematic evidence that co-working spaces contribute significantly to growing ventures. There are many stories of high-growth ventures in all segments which got their starts in incubators, but there are also many more examples, less visible perhaps, of very success ventures that made no use of co-working space.

Q: If we want strong entrepreneurship eco-systems, is it true that we need strong entrepreneurial education?

A: False. Surprisingly, there is no reason to believe that formal education in entrepreneurship leads to more, or more successful, entrepreneurship; there is, however, some evidence that it is irrelevant. Well-known entrepreneurial hotspots such as Israel, Route 128, Silicon Valley, Austin, Iceland and others, had significant entrepreneurship long before there were courses in it.

Q: Do entrepreneurs drive the entrepreneurship eco-system?

A: No. There is a critical difference between being one essential element out of many – which entrepreneurs clearly are – and being the driver. There is no one driver of an entrepreneurship eco-system because by definition an eco-system is a dynamic, self-regulating network of many different types of actors.

Q: Do large corporations stultify entrepreneurship eco-systems because they prey on entrepreneurs and their ventures?
A: Entrepreneurs and entrepreneurship definitely do not occur in a business vacuum. corporations are important customers and market channels for entrepreneurs, not just competitors, and flows of talented executives to and from larger corporations feed entrepreneurial success.

Q: Banks are irrelevant for the entrepreneurship eco-system because they don’t lend to startups?

A: No. Yes, it is true that banks often don’t lend to startups. Yet banks, even if they never directly engage or interact with entrepreneurs, help financial markets mature and indirectly impact the entire value chain of investing.

Q: Family businesses squash entrepreneurial initiative in order to protect their “franchise?”

A: False. It has been said by well-known promoters of entrepreneurship that family businesses achieve scale or maximise their contribution to open markets while remaining family businesses because they, for the most part, achieve their growth through special connections and protections. Yet experience in even the most advanced economies such as Denmark suggests that corporations with ownership structures from family to public to cooperative are essential to, and highly facilitative of, the entrepreneurship eco-system.

Q: Nature or nurture? Are entrepreneurs are born or made? The same question can be applied to entrepreneurship eco-systems: Do they evolve naturally, or can we intelligently design them?

A: A proper understanding of the nature of the entrepreneurship eco-system gives us a clue: they are usually the result of intelligent evolution, a process that blends the invisible hand of markets and deliberate helping hand of public leadership that is enlightened enough to know when and how to lead as well as let go the grip in order to cultivate and ensure (relative) self-sustainability.

Do you have your own questions on the entrepreneurship eco-system? We are counting down to the African Entrepreneurship Exchange Breakfast. Stay connected for details on how to get involved and have your questions answered.

For more on the entrepreneurial eco-system, read: The Entrepreneurial Eco-system

Author: Gesture Chidhanguro

Clarifying entrepreneurship eco-system myths Reviewed by on . There are a number of myths surrounding entrepreneurship. Most of them are on the ‘entrepreneurship eco-system’. At Makamba Online we have some questions and an There are a number of myths surrounding entrepreneurship. Most of them are on the ‘entrepreneurship eco-system’. At Makamba Online we have some questions and an Rating: 0
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