Many nations have vibrant start-up scenes, but they need our support
Now comes the hard part – freeing them from regulation, lack of finance, and skills gaps.
Meet Teck Geekman. Teck wears his Apple watch with pride, worships Steve Jobs and Jack Ma, and quotes regularly from his favorite TED talks. Teck’s meals, his cat Billy and the places he frequents are heavily featured (and filtered) on his Instagram feed. He attends technology conferences regularly and speaks almost entirely in start-up jargon.
But Teck Geekman is not based in Silicon Valley. He lives in Pakistan.
This is the world we live in today, a world where virtually every country has a growing start-up community containing successful, failed, failing or wannabe entrepreneurs. It is as likely that you will find a co-working space in Bali, Indonesia, as you would in Berlin, Germany. Universities everywhere are setting up entrepreneurship incubators, and national governments are launching policies to further spur entrepreneurship and innovation.
And as for Teck Geekman – he (or she) is an archetype for a generation fuelled by this increasingly interconnected world, in which Facebook has nearly 1.5 billion monthly active users, Twitter hashtags can mobilize a global movement, and education platforms like Khan Academy have delivered over 300 million lessons online. A person sitting in Pakistan can build and launch a technology product for an international market with little more than a computer and an internet connection. These young entrepreneurs can be tremendous engines for economic growth in their respective countries.
In July 2015, Compass released the 2015 Global Startup Ecosystem Ranking, an index that ranks the top 20 start-up ecosystems around the world based on five major components: performance, funding, talent, market reach and start-up experience. Not surprisingly, Silicon Valley, New York City and Tel Aviv were among those ranked highest in the index, though Singapore, Sao Paulo and Bangalore also made the top 20, indicating the rise of start-up ecosystems in more emerging markets. In the Bloomberg Global Innovation Index, published by Bloomberg News,South Korea was ranked first globally based on a number of indicators such as research-and-development capability, productivity, tech density and patent activity.
Many investors see tremendous opportunity not only in these markets, but also in the rising number of start-ups. Dave McClure, founding partner of 500 Startups, emphasizes that investors should be looking outside Silicon Valley and New York City for the next “unicorn” (billion-dollar idea), noting: “As smartphone penetration and credit card usage tips from 30% to 50% there is nowhere near as much capital as there is opportunity [outside the US]… Places like Beijing will be bigger than Silicon Valley, if it’s not already.” As a result, 500 Startups’ venture capital firm has begun investing in start-ups residing in newer markets, such as South-East Asia and the Middle East.
While this shift in investor attention to new markets is exciting and significant, it is even more important to not just look for the next “unicorn” (or “centaur”) but also be supporting and improving the enabling environments for such entrepreneurs. South Korea, for example, breeds exciting start-ups and innovations due to a confluence of factors that make a healthy entrepreneurial ecosystem. It has become the leader in patent activity, and boasts the highest broadband activity in the world. This strong infrastructure in South Korea has further enabled a wave of innovative entrepreneurs with products primed for an international market.
In Pakistan, where my company has operated since 2011 and where we run an annual start-up accelerator programme, the community is brimming with incubators, accelerators, start-up competitions and co-working spaces. However, lack of access to capital, the difficulty of finding and retaining quality human talent, and policies that disable entrepreneurship and innovation continue to plague businesses.
This is not unlike other countries in more frontier markets. And while unicorns will continue to exist despite these challenges, it is vital to develop and implement more holistic approaches to supporting entrepreneurship – from reducing risk for investors in more difficult markets, to promoting technology transfers and stronger intellectual property regimes. If we do so, we will not only see more entrepreneurial success stories emerge in these countries, but their subsequent rise will attract investor attention that will, in turn, fuel job creation and spur more start-ups and innovations.