Last Friday, the Global Entrepreneurship Congress adjourned in Rio de Janeiro, ending a week of intense sessions that engaged over two thousand people from 130 countries in discussions around building stronger entrepreneurship ecosystems back home. While the Congress included Global Entrepreneurship Week host country delegations, investors and entrepreneurs, it opened last Monday with a new session for policymakers and researchers. The experiment was a success and ended with a commitment by organizers to make government policy a mainstay of the annual Congress in the future.
The “GEC Policy Summit: Start-up to Scale-up” on the opening day of the 2013 Global Entrepreneurship Congress was an unusual opening for a gathering that started as a grassroots movement. However, government sets the rules and incentives, and both top down policies and bottom up movements and networks are vital for entrepreneurs to flourish. A dominant theme of the GEC in Rio has been how they communicate and leverage each other’s strengths and create synergies.
Smart policies to promote start-ups
The Policy Summit started with a focus on smart policies to promote more and better start-ups. Alessandro Fusacchia, Chief Counselor to the Italian Minister for Economic Development, for example, explained how Italy recently changed its legislative framework for entrepreneurs. The Italian government, he said, recognized that the country has very few first-generation entrepreneurs, and is therefore aiming for a cultural revolution to defy the stigma of failure. Recognizing that Italy has a bureaucracy problem, Fusacchia explained that Italy could not just reduce red tape. Rather, the Startup Italy legislative framework aims to build an ecosystem.
This package approach resembles the approach of the Startup Act proposed by the Kauffman Foundation in the United States. Within that package of policies, however, immigration is a top priority as Lesa Mitchell, Vice-President for Innovation at the Kauffman Foundation, stressed. Studies have demonstrated that foreign-born people in the United States have in recent years accounted for a quarter of all successful high-tech startups in the country. However, current immigration policies for the highly skilled have created a bottleneck in startup creation, such that entrepreneurial talent is going elsewhere to pursue new ventures. After all, more and more countries are eager to welcome them, including Singapore, as Patrick Lim, Head for New Business Support at SPRING Singapore explained. The benefits of changing immigration policies for entrepreneurs in the U.S. are clear. A new Kauffman Foundation report showed that the Startup Act 3.0, by making 75,000 Startup Visas available for current holders of H-1B and F-1 visas who start companies, could create as much as 1.6 million U.S. jobs in the next 10 years.
As clear as the benefits might be, immigration measures always require great political will. This is why the case of Chile is so interesting. Another GEC Policy Summit panelist, Conrad von Ingel, Executive Director at InnovaChile, explained Chile’s vision of importing talent implemented through the Startup Chile program, which even attracted Silicon Valley investors’ attention. Chile is now applying the same concept to R&D commercialization by importing foreign capacity to create bridges between universities and industry.
All panelists seemed to be struggling with smart ways of addressing R&D commercialization challenges, including the U.S., where government-funded research punches well below its weight in terms of startup and job creation. Yet change is possible. As Esperanza Lasagabaster from the World Bank explained, Scandinavian countries did not always have a tradition of communication between research labs and industry. Creating a language that both worlds can understand was a result of purposeful efforts in Israel as well. Ayla Matalon, Executive Director at the MIT Enterprise Forum of Israel, explained the hard work in this regard by the visionaries behind the BIRD Foundation, which by the 90s had achieved a very strong basis for entrepreneurial collaboration and attracted investors to Israel.
Where governments have most mistakes despite good intentions is in entrepreneurial finance. In this regard, the Policy Summit provided a glimpse into new, smart efforts, particularly enabling crowdfunding, which the U.S. and Italy are working to do. Panelists agreed that crowdfunding opens the door for involvement in startups for many people, and this, in Italy’s perspective, leverages the social capital already available in favor of entrepreneurship.
A new focus on scale-up
A second panel of the Policy Summit focused on policies for scaling-up entrepreneurial ventures. Fiorina Mugione, Chief of the Entrepreneurship Section at UNCTAD, highlighted the role of the following policy areas when it comes to improving the success of entrepreneurial scale-up: labor laws, facilitating networking, and access to finance. This last policy area was a point of heated debate. For example, according to Daniel Isenberg, Executive Director of the Babson Entrepreneurship Ecosystem Project (BEEP), financing should always be a policy area of last resort because entrepreneurship is a natural phenomenon and as such, it leads entrepreneurs and investors to inevitably find each other.
Perhaps ironically, but making complete sense, regulations governing business closures were raised in the Scale-up panel. All panellists agreed that entrepreneurs should be allowed to fail fast, such that they can leverage the gained experience to start their next venture, this time with more chances of getting to the scale-up phase. Humberto Riberto, Brazil’s Secretary of Trade and Services, recognized bankruptcy procedures are a major entrepreneurial roadblock in the 2013 GEC host country, reflected both in Brazil’s laws and in the people’s negative concept of failure.
Randall Kempner, Executive Director at the Aspen Network of Development Entrepreneurs, brought up another interesting measure in the context of enabling more scale-ups: the involvement of large companies in government efforts. As Ricardo Michel, Deputy Director of the Office of Innovation and Development Alliances at USAID, explained, government can facilitate the process of larger companies teaming up with smaller companies. Daniel Isenberg agreed, stating that big companies are an essential part of any entrepreneurship ecosystem.
The array of talent, large audience and limited time convinced organizers to ensure comparing smart policies to aid new and young firms should become a core part of the GEC in future years. For more information, visit gec2013.com.