Emerging Markets Have a Lot to Teach Us About Entrepreneurship
Government support of small business and investments in women-owned startups could do much to keep America on the forefront.
Bill Gates, Steve Jobs and Mark Zuckerberg are legendary American entrepreneurs. These giants' success stories might make it seem as if the United States owns the market when it comes to the secrets of commercial success.
I would argue the opposite is true: Developing nations and emerging markets have important entrepreneurship lessons to teach more affluent counties. Programs within Chile, India and Brazil, for example, have encouraged economic growth and entrepreneurship. These same efforts and principles could be applied to advance the United States even further.
Government initiatives in emerging markets have played a crucial role in allowing entrepreneurs to flourish, whether those innovative risk-takers are home-grown or lured from abroad. This state assistance has taken various forms. In 2010, Chile created the first publicly funded startup accelerator in the world. Start-Up Chile attracts budding business innovators by offering $30,000 USD in equity-free funding and a one-year temporary visa along with opportunities for mentoring and coaching. To date, the project has assisted more than 1,400 startups and 4,000 entrepreneurs from 79 different countries -- earning Santiago the moniker “Chilecon Valley.”
Other South American countries have duly taken note. Start-up Brasil echoes the Chilean model. It offers a government investment of as much as 200,000 Brazilian real (roughly $60,000 USD) as well as mentoring for fledgling firms selected to participate. Perhaps U.S. agencies could consider an incentive of this kind to support Silicon Valley’s world-renowned tech ecosystem and keep it on top.
Governments in the developing world also have recognized the need to support small-scale entrepreneurship to combat social deprivation. India is using digital technology to tackle rural poverty by promoting agro-industry startups. The government launched ASPIRE, a network of tech centers and incubators to accelerate entrepreneurship in rural areas. American politicians long have extolled the virtues of tech entrepreneurship as an economic development tool in blighted urban areas. Perhaps a similar model could be applied to America’s underserved rural regions, too.
Although more than nine million U.S. firms are female-owned, American women entrepreneurs still face many obstacles, including securing investments and finding mentorship. According to a 2016 report from Deloitte, NextGen female entrepreneurs begin their fledgling ventures with 50 percent less capital than their male peers. In addition, a source at Morgan Stanley reports that only 10 percent of venture capital is currently granted to women or people of color. Such statistics represent missed opportunities. These negatively impact individuals, society and the economy as a whole.
Given the more traditional attitudes towards gender in the developing world, it's easy to imagine women trying to launch businesses there would come up against even greater challenges than their American peers. The statistics present a more nuanced picture. In Turkey, where 29.5 percent of employees are women, females still hold 12 percent of executive positions. That's three times the percentage of those running the top 500 companies in the U.S.
In certain emerging markets -- including Vietnam, Indonesia and Peru -- women entrepreneurs already equal or outnumber their male counterparts. Less well-off countries such as Bangladesh and Uganda have some of the highest rates of female entrepreneurship worldwide because women start their own business ventures out of necessity. Surprisingly, cultural acceptance in several of these countries is high, according to MasterCard's 2017 Index of Women Entrepreneurs Report. Strong support from organizations such as Enterprise Uganda and Uganda Women Entrepreneurs Association includes business-advisory and credit-facilitation services. These, too, play crucial roles in closing the gender gap.
In the U.S., African-American women are the fastest-growing group of entrepreneurs. The number of black female business owners has grown by an astounding 322 percent since 1997. To get their dreams off the ground, these women need support that's tailored toward community enterprises as well as shiny tech startups.
The Build Institute in Detroit serves as an example. The tiny nonprofit runs eight-week-long business courses aimed at minorities. One graduate, Danielle Smith, launched the cleaning service Detroit Maid. After receiving advice on marketing and branding, Smith scored her first big client in Paramount Pictures. Targeted assistance of this kind need not break the federal bank. If the U.S. government was prepared to provide such programs rather than relying on nonprofits to do so, the overall economic benefits could be substantial.
While government support for economic initiatives through targeted funding, favorable legislation and infrastructure development all are key to creating a startup-friendly environment, people still remain a business' most important resource. Actively encouraging those from nontraditional backgrounds will accomplish more than boost economic growth -- it will create a stronger, more diverse society as a whole.
Dr. Ping Jiang is one of the world’s foremost macro traders, due to his successful track record of investing in emerging markets and undervalued investment vehicles. Dr. Jiang currently serves as cofounder and Chief Executive Officer of Ping Capital Management, Ltd., an investment management firm focused on investing in undervalued macro asset classes, including local and external bonds, currencies, equities, commodities, and derivatives. Connect with him on LinkedIn, or follow him on Twitter.