Earlier this month the Foundation attended the Aspen Network of Development Entrepreneurs (ANDE) Annual Conference. There were over 200 participants from 47 countries representing the global ecosystem that seeks to support small and growing businesses (SGBs).
The conference saw the likes of USAID and IFC, corporate heavyweights such as the Citibank and Mastercard Foundations, academic institutions and well-known nonprofits, such as Endeavor and Acumen, being joined by a small army of organisations that are working at the coal face to support emerging entrepreneurs. All of the participants share the belief that SGBs, enterprises that have strong potential for growth, can change our world. This ambition to grow is key to the definition.
Support for SGBs is based on the understanding that they will create jobs and foster long-term economic growth. This explains the defining principle behind the work of ANDE – that in the long run SGBs can help lift developing countries out of poverty.
The conference started with an overview, particularly the level of financial resources that are currently invested in the sector. It was surprising to discover that over the last five years, while $1.3 trillion has been invested in global private equity, only $10bn has been invested in the SGB sector – demonstrating significant under-investment in SGBs. But as we were to discover later, things are not so cut-and-dried.
There were some recurring themes during the three days of the conference.
Theme 1: Talent
The initial introduction concerning the lack of financial capital was better understood as a consequence of a lack of human capital. There is an undeniable link between the financial capital invested and the level of human capital able to absorb that finance. A growing recognition emerged that despite the lack of financial capital deployed, in reality the binding constraint is actually human capital.
Theme 2: Mentoring
We simply have to find more creative ways of transferring knowledge as a key response to the existing “talent gap”. Youth Business International, for example, was clear that of all their interventions to support emerging entrepreneurs, the one that had the most impact was mentoring.
Theme 3: No silver bullets
Every second talk or discussion ended up dismissing the notion that there can be a single easy solution to the complexities of this sector. The closest we came was the suggestion that instead of a sliver bullet we should try silver buckshot – where a number of different low cost interventions are tried concurrently, to see which has the most traction.
A main focus of ANDE is on research conducted around entrepreneurship. Included in the numerous sessions was feedback on three particularly interesting research initiatives:
1. The Global Accelerator Learning Initiative evaluates the effectiveness of accelerators globally and has tracked over 3 000 ventures in 38 different participating programmes so far. Initial findings have shown some interesting patterns relating to gender. The first being that roughly half the ventures have female participation, which is higher than would have been expected generally. Sadly, this positive outcome is undermined by the reality that despite ventures having generally higher revenues when associated with female participation, this does not translate into higher valuations for the same ventures.
2. Endeavor Insights provided an update on their mapping of city ecosystems. After starting with New York and Cairo, they now have a list of 14 cities that will be mapped in the near future. Sadly this list does not include either Johannesburg or Cape Town. One intriguing finding from the New York mapping was that the strongest predictor of success for companies, was where the company founder was mentored by a top performing entrepreneur. This led to a company being three times more likely to be a top performer – another example of the importance of mentorship.
3. The final interesting research reported on was Acumen’s exploration into lean data. Part of this opportunity is made possible by the remarkable and sustained growth of smart phones. There are currently 72m smartphones in Africa and this number will grow to 525m by 2020. The opportunities this opens up for low cost data collection are truly extraordinary. A good example of this is the startup Premise which indexes and analyses millions of observations captured daily by a global network of contributors who are paid to record local information on their cell phone. Premise’s 25 000 contributors are now in nearly 200 towns and cities, urban and rural, spanning 32 countries. This allows them to provide a range of data and insights like mapping financial access in emerging markets to ensuring the sustainable funding of healthcare systems.
After the conference, one could not help but reflect that it is a new and exciting world into which entrepreneurs are entering. Yet as much as things change, so they remain the same. For as new opportunities, finance and technology open up so the underlying need for talent remains unchanged.