This is part of a continuing series of articles that will help towards my idea of jump-starting entrepreneurship in Nepal. (for those who don’t know what the word ‘start-up’ means, a start-up is a company with a limited operating history).
How to build an entrepreneurial culture in Nepal?
One part of the puzzle is to build a healthy eco-system for Start-ups in Nepal.
I have seen business incubators opened by the government, helped by donor agencies or international bilateral agencies. I realize that they have never understood what a startup does. All that money is going down the drain…
Why? because they simply didn’t know what entrepreneurs in Nepal now want! They never asked the questions,
- What’s a startup? scalable startup?
- Who’s an entrepreneur?
- How are platforms created?
- What kind of eco-system needs to be built?
- What motivates them?
- What’s the difference between governmental versus private investment?
Not understanding and agreeing what “Entrepreneur” and “Startup” mean can halt an entire country’s entrepreneurial ecosystem.
What kind of start-ups are there?
Below is an excerpt taken from Steve Blank’s excellent article on why Government’s don’t get Start-ups. I recommend reading it.
Steve writes, “There are six distinct organizational paths for entrepreneurs: lifestyle business, small business, scalable startup, buyable startup, large company, and social entrepreneur. All of the people who start these organizations are “entrepreneurs” yet not understanding their differences screws up public policy because the ecosystem in supporting each type is radically different.
- Each of these six very different startups requires very different ecosystems, unique educational tools, economic incentives (tax breaks, paperwork/regulation reduction, incentives), incubators and risk capital.
- Regions building a cluster around scalable startups fail to understand that a government agency simply giving money to entrepreneurs who want it is an exercise in failure. It is not a “jobs program” for the local populace. Any attempt to make it so dooms it to failure.
- A scalable startup ecosystems while it’s a meritocracy, it takes equal parts of risk, greed, vision and obscene financial returns. And those can only thrive in a regional or national culture that supports an equal mix of all those.
- Building a scalable startup innovation cluster requires an ecosystem of private not government-run incubators and venture capital firms, outward-facing universities, and a rigorous startup selection process.
- Any government that starts public financing entrepreneurship better have a plan to get out of it by building a private VC industry. If they’re still publicly funding startups after five to ten years they’ve failed.
- Unless the people who actually make policy understand the difference between the types of startups and the ecosystem necessary to support their growth, the chance that any government policies will have a substantive effect on innovation, jobs or the gross domestic product is low.”
Coming back to building an entrepreneurial eco-system for Nepal, here is a simple model of an entrepreneurial system you could improve upon.
- First raise a significant pool of money from taxes (Government provides the initial fund).
- Hand management of the fund over to an autonomous body of lets say 5 Nepalis of entrepreneurial background who understand entrepreneurial ecosystems and start-ups in Nepal. Realize that for every successful venture, ten others fail. Accept failures like this.
- Ask CEOs of successful venture funds, incubators, from Chile to Singapore, India to US to hire, train and mentor these 5 Nepalis persistently.
- Empower this body to incubate start-ups with the only restriction being, “you have to open the business in Nepal.” After this point, the government has to get out & say bye-bye.
- Business professionals who have managed companies, portfolios and entrepreneurial eco-systems before will run this incubator. They will mentor founders, organize boot-camps to train them on various facets of business, connect them actively within and outside. They will also incubate selected entrepreneurs as they build their ventures. Finally they will invest into some of these start-ups.
In the long run, Nepal government recovers its resources while entrepreneurs go on to create more opportunities through start-ups and create a culture of entrepreneurship within Nepalis. A virtuous platform of fostering ‘Start-ups’ in Nepal is created.