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Accessing The Expanded Money Bag for African SMEs, Scaling Business Through Ecosystems

Wilmot Allen who is the director of East Africa at CrossBoundary was speaking during the first Entrepreneurs Forum session this year at the iHub. This is from a series of sessions on entrepreneurship facilitated by Prof Ndemo that came about as a result of one of his weekly articles in the Daily Nation. The topic this time was about accessing the expanded moneybag for African SMEs and scaling businesses through ecosystems.

He started by shedding some light on how investors view entrepreneurs as they develop their businesses. He explained that there are three profiles of entrepreneurs that have been successful in growing businesses all the way to accessing finances and scaling. These profiles are highlighted in this discourse.

The notably successful model for many is the approach where the entrepreneur will work for an organization for sometime before venturing out to create their own. It has benefits in that when one is working for either big or small enterprises, one is able to develop professional expertise, experience, track record of milestones and accomplishments and relationships since business is about people: partners who can work with you or invest in your company.

The more traditional one is the 'trained entrepreneur' who decides to pursue entrepreneurship path and founds a startup immediately after college. It's most commonplace. There's a degree of socialization that's necessary for entrepreneurs and they are able to acquire this while in college. Still they have the required risk taking predisposition and are entrepreneurial. Such entrepreneur often will need to rely professional relationships of family and friends.

There is also the Flexi-model, where entrepreneurs forsake university education and start businesses. They have special personality, are smart enough, resourceful enough and so they take a pludge. However these tend to have most failures. The success stories we hear – the dropping out of college narrative - are only in part; you would never hear there other side, for instance some who took this path already knew they had a fall-back plan.

Whichever profile one would be, there are benefits of being part of an organized institutional network.

However, Flexi-approach will need ecosystem approach most and is most successful at exploring it. There are multiple institutions that are helping in building and growing businesses. Entrepreneurs then in return invest their knowledge and resources for the help businesses that are part of that ecosystem.

On the contrary, the lone-ranger know it all top executive who knows what to be done, is not the best model. Reason is because there's too much need, and too much talent. Putting these two together gives grand opportunity for partnerships and pulling together.

A case study of textile and apparel industry in Ethiopia, where there are many exhibitors - designers, textile company owners. You would find a lot of people producing talented clothings, while others are struggling to make it on their own. The ideal approach would be to partner around different concepts of their space and try build companies together.

On a prudent note, partnerships can be overrated and not as rewarding sometimes.

However with scarce capital, mis-education and lack of knowledge on how markets work and be accessed, partnerships can be very relevant. This would require a different approach, balanced egos, change perception on what success is, choosing winning together that winning alone.

Our region has opportunities and there is a tipping point not only from the perspective on how we develop our business models, but there's a grand opportunity to change the game on how entrepreneurship is viewed.

Ecosystems: The Quad Approach

Wilmot Allen then took sometime to enlighten on the paradigm of Ecosystems. He gave a reference on an article by his respected mentor, Ernest J. Wilson, titled, How to Make a Region Innovative. This is the link:

This is based on what Ernest J Wilson calls the Quad approach.

It explores the four pillars of different stakeholders that work together that entrepreneurs can strategically position themselves to benefit from, which include the following:

1. Government agencies
2. Universities
3. NGO's
4. Businesses

It might help to know that the creation of Silicon Valley was created driven by geopolitical reasons, and US was trying to become better internationally. That's an example of just how governments impact entrepreneurship.

When we talk to each other about what is happening, and hear from peers, it's important to know that it will be impacted by what government is planning. It helps to understand regulations and to become a student of it, listen to what legislatures are saying. Politics influence for business is heavier in our region.

Universities have research budgets. You can align what you're interested in with what a department in a university is doing. There are opportunities for partnerships, funding and greater platforms.

There is need to tear the wall between not-for-profit and private sector, and increase the collaboration. NGO's can be a source of invaluable information for businesses, for instance about customer market, demand, demographic dividend and so on. They understand what challenges and problems are there which in turn are opportunities for business. A company while helping NGO get finance can get it's own enterprise funding.

Many big companies like GE, IBM are spending a lot of money on different things. It would help to pay attention to what their doing. They have partners which one could find partnerships with.

He also briefly talked about cross-boundary ecosystems, where we could form links with other ecosystems in other regions of the world. Different organizations say churches are doing different things around the world. This is one avenue where cross boundary ecosystems can be explored.


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