The Entrepreneurial Lifecycle and the role of government at each stage
There is a popular misconception among the general public and startup aficionados alike that government programmes promoting entrepreneurship are nothing but words and empty gestures.
In reality, many of the people running such programmes walk the walk, and sincerely want to improve their country’s economy.
Why, then, so few make meaningful progress towards a vibrant and self-sustaining startup ecosystem?
I am a serial entrepreneur who has traveled to over 90 countries, formed close relationships with local businesses and government officials, learned from experienced founders, and mentored at startup events from San Francisco to Kathmandu.
What I found is:
The problem often lies not in bad intentions, lack of resources, or insufficient action, but in the lack of focus, and a misunderstanding of the entrepreneurial lifecycle.
Let me explain…
I believe the main problem to be that too many policy makers go directly to the what and how, and skip the why, when and who.
They begin by thinking ‘we need more startups’ and launch websites, bootcamps, university courses and other programmes that try to take people in, and output businesses a set interval later.
But this approach is ineffective at boosting entrepreneurship, which is not a skill, but a state — dependent on external factors, and sheer serendipity — timing, team, unique insights, investment climate, life situation, and so on.
There is a thousand and one reasons why participants don’t continue working on their projects after programmes such as the Startup Weekend, and most have nothing to do with the viability of the idea, the quality of the programme, or even the team.
The reasons tend to be much more personal.
Some of the participants have cushy jobs that they are not ready to give up; others live paycheck to paycheck and can’t afford to take the plunge. Some are students about to pursue a challenging degree, and yet others are following a loved one to another country.
They have the right mindset, a good idea, maybe even the financial means to go ahead with their project. But, when the rubber hits the road, they realize they cannot give it their all — not at the moment.
Not to mention that in some cultures, the prospect of a failed startup venture on a CV would be considered a disaster in terms of a professional narrative.
A more effective approach to develop entrepreneurship is the equivalent of lifecycle marketing.
It relies on the understanding that entrepreneurs are not made. They can only be nurtured, on their own terms and schedule.
All we can do is promote positive serendipity, and make sure that when all the stars align, the entrepreneur doesn’t crash into a wall because they lack some basic skills, meet an insurmountable bureaucratic obstacle, or miss basic infrastructure (e.g., a payment gateway).
Just as in lifecycle marketing, we must target people with different messaging and products over time, satisfy their pressing needs, and influence their behaviour at each stage.
We must first inform people unfamiliar with entrepreneurship that this path exists, show them that they can do it, and develop their skillset so they have a higher chance of success once they start a venture.
We must then increase the chances of external factors falling into place through networking opportunities, financial support, counselling (can’t expect people to risk and go out of their comfort zone when they lack that comfort zone in the first place), mentoring, and so on.
Early stages of the entrepreneurial lifecycle is where the government can make the biggest difference — later stages, closer to tangible returns on investment, tend to attract sufficient attention from the private sector already.
There is immense value in programmes such as the Startup Weekend, Asia Pacific Youth Exchange and Youth:Co Lab, and many of their participants go on to achieve great things two, five, or ten years down the line.
But in order for such programmes to succeed, the number of companies started after the programme cannot be one of their Key Performance Indicators.
The goal of early stage programmes is to create not companies, but entrepreneurs.
Their primary function is to move participants further in the lifecycle — teach them that entrepreneurship is a viable path, then build confidence that they can do it too, and finally nurture their basic skills such as public speaking and design thinking.
That said, the value of new connections and learnings can extend far into the future.
As such, early stage initiatives should not just think about the value they provide during the programme, but use it as leverage to generate value indefinitely into the future.
Their objective should be for participants to stay in touch after the programme, continue helping each other, and become lifelong friends and business partners.
Once their task is done, early stage programmes can and should provide optional continuous support, or feed participants to organizations operating in the later stages of the lifecycle. But they should refrain from urging participants to immediately start a venture.
Great ideas die because entrepreneurs are pushed to execute too early, while they are not at the right stage of their lives, when they don’t have the right team around them, or when the market isn’t ready for their idea.
Democracies of the world are shaped by election cycles, which inevitably leads to short-term orientation. Many initiatives thus want businesses to be the output of their programmes.
This is unfortunate, but also understandable, as thriving startups are an easier sell to taxpayers than a cohort of inspired young adults.
If the objective of a programme is to output successful projects, rather than future founders, it must target individuals who are in the latter substages of the lifecycle — helping them align the missing stars, and overcome specific logistical challenges.
Disclaimer: I have participated in and received investment from The Refiners.
The earlier the target participants are in the lifecycle, and the more stars there are to align, the longer the programme needs to be.
The earlier stages are where the public sector may be needed most, but there are always opportunities for local governments to boost startups in ways the private sector could only dream of.
This is particularly true for deep tech startups with long R&D timelines, or companies that integrate with the public infrastructure. When done well, government contracts can make or break projects of this kind.
Governments let go of companies too early.
The moment startups start making profit, and grow to a certain size, they’re left to fight it on their own, or get passed onto departments dealing with traditional big businesses and SMEs.
There is no question financial support must end at a certain point, and an abundance of ‘easy money’ through governmental grants and contracts can do tremendous harm. After all, what we want to nurture are robust businesses that can sustain their growth through sound management and a profitable business model.
But that does not mean all support should cease once a company becomes a scaleup.
Innovation-driven enterprises, to borrow Bill Aulet’s term, are fundamentally different from traditional companies with no aspirations for rapid, global growth.
As such, the kind of support they need, from timely changes of outdated laws, to infrastructural improvements, requires champions who have followed them over time, and understand their unique situation.
More importantly, it is crucial to keep entrepreneurs at this stage as active participants in the ecosystem.
Among others, scaleups are invaluable to:
Most companies will fail. Others will mature and grow beyond anyone’s imagination. Whatever the case, eventually, their early employees and founders will exit, and maybe even start new ventures.
This is a critical stage of the entrepreneurial lifecycle, and what differentiates mature ecosystems, such as the Silicon Valley, from their developing counterparts in other countries.
It is crucial any governmental startup initiative learns to close the loop, and capture the know-how of entrepreneurs it spent many years and tens of thousands of dollars to nurture.
At its most basic, this means events that give serial founders the opportunity to share their successes and failures.
At its best, this includes incentives for angel investors, a safety net for failed founders to get back on their feet without selling-out to the corporate world, progressive IP law reforms, and a culture that values failure for the learnings it brings to the ecosystem.
Just as thriving businesses, successful incubators, accelerators and other initiatives have first and foremost a clear idea of their target.
When starting any kind of programme in the startup ecosystem, you must understand the exact stage of the entrepreneurial lifecycle you’ll cater to, which in turn will define what constitutes a positive outcome of your initiative.
Do you inspire new entrepreneurs to someday do something impactful, once they are ready, or do you empower existing entrepreneurs to make impact right now? So many programmes attempt to do it all, yet these are distinct target groups that require different resources and approach.
Stay focused on your one, chosen stage of the entrepreneurial lifecycle, and you will no doubt make lasting impact your participants will remember far into the future!
The Entrepreneurial Lifecycle and the role of government at each stage
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