The entrepreneurial ecosystem

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Was chatting with the head of Endeavor Chile the other night about the current state of the entrepreneurial environment in the country. Although he was too modest to attribute everything to Endeavor, he was confident that the environment had changed quite a bit in the last ten years. What he was describing was not simply the emergence of new entrepreneurs. He was describing the formation of entrepreneurial infrastructure — an ecosystem to support entrepreneurship.

Think about what’s required to start a successful company from nothing:

  • You need angel investors to put in the initial capital and a culture where wealthy investors want to take active investment roles
  • You need employees/lawyers willing to defer salary in exchange for equity (still very rare in Chile)
  • You need publicity. This includes journalists who write about start-ups and readers who want to read about start-ups .
  • You need VCs willing to provide capital in exchange for shares AND a sufficient number of start-ups that they can adequately diversify their risk

Silicon Valley has all of these and it is no wonder the place is the world’s entrepreneurial engine. Many emerging markets do not. We think of entrepreneurship as the solitary, unsupported work of individuals. The truth is there is a support apparatus that makes it all possible.

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