Building Blocks For Creating An Entrepreneurship Ecosystem

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Our nonprofit accelerator, StartX, which supports startup founders from Stanford, has teamed up with Nazarbayev University in Kazakhstan to support and grow its entrepreneurial ecosystem. Through this partnership, the top startups from Kazakhstan now get an opportunity to participate in our accelerator program in Silicon Valley. Nurturing this relationship and supporting the startups has given me a perspective on the building blocks of a strong entrepreneurial ecosystem at a country level.

Below is a list of factors that I believe support the building of a local entrepreneurship ecosystem for any developing nation that wants to see its entrepreneurs thrive.

Harness the demographic dividend

I've noticed that many developing countries have a much younger population, and it is really important for these countries to invest in education at the school and college levels, supported by an employment market to harness the workforce.

This means building a strong foundation for students in maths and sciences supported by world-class universities. As students graduate and have an interest in entrepreneurship, they also need access to resources like mentorship and grants, which are typically provided by university-affiliated incubators and accelerators. These resources can also bring in access to funding from venture capitalists and connect them to other ecosystems, like Silicon Valley.

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For example, Estonia is a developing country known for having the highest number of unicorns (startups with a billion dollars in either revenue and/or funds raised) per capita than any other country in Europe. With a population of 1.3 million, it has seen 10 unicorns to date come out of the country. And it's no wonder: Since its independence in 1991, Estonia has focused on developing entrepreneurship education in schools through programs like Entrum, which works with industry partners and focuses on 13-to-19-year-olds to support their entrepreneurship through education, mentorship and resources.

Build a local market of services for entrepreneurs

Developing countries today need to invest in modern digital infrastructure to enable local entrepreneurs and companies to build different offerings and businesses. This starts with deploying high-speed broadband internet connectivity supported by cloud infrastructure, digital identity authentication and payments infrastructure. This needs to be supported by last-mile connectivity through inexpensive internet services for consumers along with the penetration of smart mobile phones.

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Many developing countries have been able to leapfrog the deployment of digital services, led by governmental efforts to digitize government services through their e-governance initiatives. Most of these services are created and led by entrepreneurs who are building solutions in partnership with the government for local markets and then expanding into the wider region.

From the ease of registering a car in less than five minutes from one’s home to adopting cashless payments that reach an impressive 85% usage rate, Kazakhstan has achieved a significant milestone in digital services penetration and overall digital infrastructure competitiveness. In Kazakhstan, these digitization efforts are led by the Ministry of Digital Development, which has been working with local entrepreneurs and companies to develop many of these e-governance solutions. This highlights the role of government in creating markets and opportunities for local entrepreneurs.

As entrepreneurs build and fine-tune these solutions for one market, they are then able to expand the solutions to a wider reach. Many entrepreneurs from Kazakhstan, for example, have expanded to other countries in Central Asia and beyond, into the Middle East and Asia.

Create platforms and ecosystems to support entrepreneurship

Local entrepreneurs need funding, resources and a network as they continue to build their startups. While there is privately led accelerator and venture capital available in developed startup ecosystems like the U.S. and Europe, there is a role for the government in developing markets to create these resources. This means bringing investors into the local market, creating a regulatory environment and setting up local institutions focused on business incubation and acceleration.

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For example, the digital ministry of Kazakhstan has set up Astana Hub, an entity to promote entrepreneurship, innovation and economic development. This provides support to startups and small businesses through its incubation and acceleration programs. It organizes competitions and provides grant funding to promising startups and brings in partners like Google, which provides funding, mentors and access to broader global markets.

The role is also to organize events that bring together startups, corporations, investors and experts in different fields into a common platform. These events create opportunities for global investors, technology partners and large corporations to engage the entrepreneurs and support them through various resources.

In addition, the government must create a stable regulatory environment that includes respect for the rule of law, intellectual property rights, market competition, financial regulations and labor laws.

Sharing success stories of entrepreneurs through news channels is important to showcase the opportunity for global investors and partners to invest resources.

Connect with global ecosystems

There are entrepreneurial ecosystems in the U.S., like Silicon Valley, Boston and New York, with a wider pool of resources like experts, mentors, partners and investors. As new countries build their local ecosystems, it is important to find partners in these mature ecosystems and build relationships with them to create opportunities and exposure.

Programs like Silicon Valley boot camps for startups or expert sessions in the home country led by industry experts have been useful in creating exposure. Further beyond is for companies to join already established accelerator networks. This creates opportunities for startup founders to leverage the network of more experienced founders who have already built successful companies and understand the pitfalls of creating a startup. In addition, there is a strong need for entrepreneur-focused entities to create a base in places like Silicon Valley—with a physical infrastructure and network—to support entrepreneurs coming in from different regions. For example, our friends at Silkroad Innovation Hub, based in Palo Alto, are doing this very thing to support entrepreneurs coming out from Central Asia.

Building an entrepreneurial ecosystem is a journey that can span over decades. It requires a stable political and regulatory environment supported by investments and commitments in education, job opportunities and supporting infrastructure.