The design of start-up ecosystem

26 Nov, 2021 - 00:11 0 Views
The design of start-up ecosystem

eBusiness Weekly

Nokuthula G. Moyo-Muparuri

Zimbabwe’s vision of attaining an Upper Middle Income Economy Status by 2030, speaks of designing a system to co-ordinate all the different players so as to ensure the attainment of the vision.

The Ministry of Higher and Tertiary Education carried out a Critical Skills Audit which led to reforms which ushered in the Zimbabwe National Qualifications Framework.

The President in his Foreword to the Zimbabwe National Qualifications Framework stated that the purpose of reconfiguring the Higher and Tertiary Education system was to transform the graduate to leverage on their Heritage and Material Endowments to be able to design factories and industries thereby translating knowledge into tangible goods and services.

The President further stated that the new graduate must be an “entrepreneurial think-tank and employment creator.”

The focus of the article is on the development of “an entrepreneurial think-tank and employment creator.”

An entrepreneurial think-tank is an individual who is able to identify opportunities in the environment.

The entrepreneurial think-tank is unique in that, where others are seeing challenges in the environment, they on the other hand see opportunities disguised as challenges.

The individual develops a business concept and marshals resources which are required to take advantage of this opportunity. A business is then launched and in the process it creates employment.

In terms of mineral endowment, Zimbabwe holds world records of a number of minerals. To mention just a few, it is the world’s second largest producer of platinum and chrome, the world’s fifth largest producer of lithium and the world’s eighth largest producer of diamonds.

These minerals produce different types of products that we use on a daily basis. What is ironical is that the country holds world records of minerals but does not produce any products made out of these minerals.

The country actually exports minerals to other countries so that they manufacture products and then bring them in as finished goods. The entrepreneurial think-tanks must be able to solve this irony by ensuring that the nation becomes an exporter of finished products not just an exporter of minerals.

Developing an entrepreneurial think-tank requires a coordinated approach. Actors need to be interdependent and coordinated in such a way that they enable entrepreneurial activities within the nation.

There is need to create a rich tapestry of coordinated support so as to ignite and unleash the innovative entrepreneurial spirit of the nation. This development can be done by designing our own home grown start-up ecosystem.

A start-up ecosystem is an environment that is designed or built to enable start-ups to flourish in a country. The members of the ecosystem work together to foster innovation in their community.

One member of the ecosystem cannot function or exist without others, they are linked in a mutually beneficial relationship. So the ecosystem is made up of interdependent members. There are six main design issues to ensure the ecosystem is built. These are policy design, finance design, culture design, support design, human capital design and market access design.

Policy Design

The design issues a deal with developing laws that are friendly to business start-ups by making it easy to commence a business and incentives which encourage individuals to pay taxes. It covers Government regulations and these can either hinder the development of start-ups or accelerate them. At the centre of policy design is the start-up, to ensure that the environment is made conducive for them to operate.

Finance Design

This deals with ensuring that a range of financial services are available for start-ups. The environment should be designed to make it easy for investors to be willing to finance start-ups. Investors include financial institutions, venture capital firms and private equity or business angels.

In funding start-ups there are basically two types of funding, Debt and Equity. Debt is financing through the use of loans. Whereas Equity, is financing through purchasing of company shares such that the shareholder gets a percentage of the ownership of a company.

The shareholder will get a return on their investment when a dividend is declared.

Equity funding is the most preferred type of funding for start-ups. Hence it is called “patient capital.” Literary speaking it waits until a company starts making profit and then the investor can then make a demand on their investment. Whereas Debt is required even before the capital can be put to use. The finance design focuses on ensuring that the entrepreneur has the appropriate financial services at their disposal.

Culture Design

Culture covers societal norms and success stories that help to inspire people to become entrepreneurs. It can be argued that building cultural support is required for an enterprise to establish a start-up ecosystem. The tolerance of risk and failure within an enterprise, priority given to self-employment, innovation celebration, success stories, research cultures, and role models are the aspects that are always of huge importance in cultural support.

Designing the culture for start-ups requires them to be inspired by success stories which are celebrated, and an environment which celebrates innovation by awarding it.

Support Design

A variety of institutions, as well as organisations, assist the business to create and expand as well. Some actors include mentors, consultants, and professionals such as accounting, incubators, accelerators and human resources. The support design should ensure that the support institutions and organisations are created to ensure that the entrepreneur does not face any challenges when seeking assistance.

Human Capital Design

Human Capital includes education system and the skill level of the workforce. The quality and the quantity of the workforce are very important in the design of human capital. Based on the skills and abilities that people have, the working environment is created accordingly.

There are some elements of this design such as technical and management talent, the experience of an entrepreneurial company, immigrant workforce access, and the availability of outsourcing. The education system must also ensure specific entrepreneurship training programmes are available.

The quality of these programmes depend on the availability of entrepreneurs and organisations encouraging start-ups. The number of entrepreneurship educators can also assist in increasing human capital in the country.

Market Access Design

The availability of accessible market is important for the growth of companies in a country. A key aspect of the market access design is the number and category of potential customers. In addition to this, there is need to differentiate between domestic and foreign markets.

The Building Blocks of the Ecosystem

There are 10 components of the start-up ecosystem. These have to work in coordination to create and scale new start-ups. There is need to ensure that all components are in place in the design of a start-up ecosystem. If a component is missing, it has to be developed to ensure that each part is able to play its role effectively.

The building blocks of a start-up ecosystem are; start-ups, talent, funding providers, incubators and accelerators, co-working spaces, service providers, supportive government agencies, corporations, media and events.

Start-Ups

The first building block is the start-up or prospective entrepreneur. The start-up is an indispensable part as the nucleus of innovation, disruption and local progress. Start-ups determine the face of the local ecosystem and play an important role in economic growth too.

They create more jobs than large corporations’ thereby boosting local economic development.

Talent

Talent is one of the most important resources for start-up ecosystems around the world and colleges and universities provide it. Colleges and universities play a fundamental role in nurturing talent and setting the next generation of entrepreneurs on their parts.

The best and brightest business minds, developers, designers and investors are attracted to colleges which develop the ecosystem. The colleges then benefit enormously from this influx as highly skilled workers soon take charge of projects, cross pollinate organisations and start-up their own companies. It becomes a virtuous circle of innovation and the economy booms.

Funding Providers

The absence of investors makes it difficult for start-ups to survive. Investors provide capital to start the business. They also assist in the business plan for start-pp. So funding providers are an essential pillar of every start-up ecosystem.

Angel investors, venture capital firms, crowd funding websites, loans and grants, and other funding providers all have their place within the ecosystem. Investors play a major role in the success and growth of start-ups.

Incubators and Accelerators

A business incubator may be defined as an organisation which offers a range of business development services and access to small space on flexible terms, to meet the needs of new firms.

The package of services offered by a business incubator is designed to enhance the success and growth of new enterprises thus maximising their impact on economic development.

Accelerators are organisations that offer a range of support services to funding opportunities for start-ups. They tend to work by enrolling start-ups in months long programmes that offer mentorship, office space and supply chain resources.

Incubators and accelerators offer similar services but they differ slightly in that incubators are mainly focused on stimulating start-ups innovation by incubating disruptive ideas while accelerators on the other hand focus on accelerating the growth and scaling of a business.

Incubator and accelerator programmes help start-ups succeed by providing mentorship, guidance, training, strategy, and partnerships, research and development and funding. They are instrumental in getting start-ups especially early stage ones, off the ground. Having access to accelerators/incubators resources and networks is necessary for the start-up to take off.

Co-working Spaces

Co-working is an arrangement in which workers of different companies share office space, allowing cost savings and convenience through the use of common infrastructure such as equipment, utilities and receptionist. Co-working space provides start-ups and small businesses a space to get work done, network and participate in their local business community.

Start-ups often don’t often have the funds to afford their own space. Co-working spaces are shared offices where start-ups can rent hot desks or private offices for a fraction of the price and with no long term commitment.

Service Providers

Consultants, advisory organisations and mentors can help founders during their entrepreneurial journeys in many ways. All start-ups need at least a bookkeeper and a banking provider. These service providers bring invaluable knowledge and experience to the table helping early stage start-up teams get ahead. By getting these services, start-ups can cut costs and get high quality work with outstanding professionals.

Supportive Government Agencies

Government agencies regulate business commerce. Industry and Trade Departments all have a say in how start-ups can operate. In some jurisdictions, Government policies are favourable for start-ups, new businesses can take advantage of tax incentives, grants and awards and seek help of Government organisations that support entrepreneurs.

Corporations

They play a role of supporting start-ups. Knowledge exchange between start-ups and corporations is part of a powerful relationship which strengthens the ecosystem.

Media

People know when a start-up is starting to take off when journalists pick up the scent and its name starts turning up in the press. Public Relations can be an excellent way for start-ups to raise awareness about their brand and their latest projects.

Events

The heart and soul of every start-up ecosystem is its community of people. People have to be brought together to form a community. Conferences, workshops, meet-ups, networking events are all key to building and maintaining a start-up ecosystem. Without events, no ecosystem can survive for long.

Attributes of a Vibrant Ecosystem

A vibrant start-up ecosystem must be tailored to suite its own environment. It must not try to copy “Silicon Valley” but be unique. It must be an environment which has minimum obstacles to starting a business.

The Government policies must be supportive of the needs of entrepreneurs and be tolerant of failure. Financiers must be actively encouraged and invited to participate in start-ups. A vibrant ecosystem should be supported by dialogue among the variety of start-up stakeholders.

Nokuthula G Moyo-Muparuri is the Founder of the Institute of Applied Entrepreneurship. The Mission of the institute is developing a vibrant start-up ecosystem in Zimbabwe. This is being done by engaging with all the players of the ecosystem through capacity building and developing partnerships. The purpose being to develop the “Entrepreneurial Think-Tank and Employment Creator” in Zimbabwe. She is an author, and an entrepreneur. She is also a lecturer at the Midlands State University in the Faculty of Business Sciences. You can contact her on +263718747621.

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