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  1. 1. BABSON Entrepreneurship Ecosystem ProjectEconomic Development through Cultivating Entrepreneurship Ecosystems U.S. Saudi Business Opportunities Forum Entrepreneurship and the Development of SMEs Len Schlesinger December 7, 2011
  2. 2. BABSON Our “E-Prize” Entrepreneurship Ecosystem Project An innovative new project with a Big Mission: “To demonstrate that we can impactsocieties (regions) to foster high growth entrepreneurial ventures on a self-sustaining basis using a codifiable and replicable methodology” Mission of the Babson Entrepreneurship Ecosystem Project 2
  3. 3. BABSON What Doesn’t Work Entrepreneurship Ecosystem Project• Attempts to copy Silicon Valley – Russia’s Skolkovo; Singapore’s Biopolis• Piecemeal (“silver bullet”) policies and programs – Incubators, angel networks, venture capital, education, microfinance, tax credits, tech transfer (universities)• Top-down winner-selection (sectors, companies) – Sector-based clusters, direct investment• Broad national policies – Competitiveness, national innovation systems• Government-giveaways – Indiscriminate funding programs 3
  4. 4. Significant problems BABSON Entrepreneurship Ecosystem with Project• Angel networks• Government supported venture capital• Incubators, innovation centers• Comparative advantage strategies (Clusters, Competitiveness)• University technology transfer• Financial incentives to debt providers 4
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  6. 6. BABSON Summary Entrepreneurship Ecosystem Project• Target high potential entrepreneurship• Target very specific geographies• Impact the entire ecosystem with independent, temporary organization• Work against specific objectives 1/100K• Stop when you reach them• Avoid mistakes of government over- involvement (e.g. cluster strategies)• Experiment, learn, try again 6
  7. 7. BABSON The Policy Paradox Entrepreneurship Ecosystem Project “The capable can “We cannot create High manage wealthy elites or help for themselves” the rich get richer”Quality ofventure Low “We cannot let the “We need to distribute disadvantaged fail” resources equally” No Yes Do they get resources? 7
  8. 8. Healthy BABSON entrepreneurship ecosystems Entrepreneurship Ecosystem Project Venture death generates information and “learning” about what works High …as it is for the good ones to get Quality supported ofventures It is as Low important Venture death frees up that bad resources (people, money, IP) ventures that can be useful “die”… No Yes Do they get resources? 8
  9. 9. So the “system” gets BABSON Entrepreneurship Ecosystem it backwards…. Project Bad outcome: High Lost opportunity No growth Entrepreneurship discouragedQuality ofventure Bad outcome: Wasted resources Low Life style SMEs, Micro-ventures No Yes Do they get resources? 9
  10. 10. Principles for government support of venture finance: (based on everything we know collectively) Government should Incentivize providers of capital to invest directly Have a “sell-by date” for programs Cultivate deal flow (ecosystem) simultaneously Encourage financial innovation and allow for quick learning Always require some matching funds and require payback (not debt) Pay attention to the entire financing chain, from pre-seed to public (beware angel networks) 10
  11. 11. BABSON Entrepreneurship Ecosystem ProjectThere is no force as powerful as an idea whose time has come. Victor HugoToday entrepreneurship is such an idea. 11