MSS Aug 22 Editorial: Founder Cohorts, resource hiding in plain sight
Social Capital amongst entrepreneurs is a critical element in an innovative ecosystem. Entrepreneurs arrive at missing resources through the relationships and interactions of their networks. These interactions create an environment in which they not only could learn from their peers, but also support each other emotionally through the rough and uncertain journey they, as entrepreneurs, are facing.
An entrepreneurship ecosystem should present a mixture of nascent and experienced entrepreneurs. Secondly, it must foster interaction between the cohort of entrepreneurs. Entrepreneurs learn from other entrepreneurs, and from mentors who have entrepreneurial experience.
The key is having great challenges to solve. Underdeveloped or expanding economic regions present great challenges when it comes to education, health, finances, agriculture and environment. These challenges, rather than problems, are opportunities for entrepreneurs. Technology adoption provides the natural habitat for tech companies to emerge, finding their way by providing access to convenience or better services in core economy sectors. No one is better qualified to find a solution than the individuals who live amongst the problems.
From the entrepreneurial “supply side,” there are large numbers of talented people eager, in principle, to try out interesting ideas in the marketplace, but who don’t have the resources or knowledge base. When you dig deeper, they invariably complain that they need seed financing (or human resources, or customers) and no one is willing to give them time, let alone finance them.
Public venture funds or startup competitions such as Pitchora intentionally distribute smaller prizes, so that a group of entrepreneurs can become a cohort and learn from one another. This should then be supported by a host of activities, meetups, fairs and conferences, focussed on entrepreneurial events to encourage cohort interaction.
Quality resources will then tend to become concentrated locally and attract each other: human, capital, information, and markets will begin to gravitate to one another. In addition, the signal effects are more potent when they are proximal, and the spillovers into the wider economy are stronger as well. At the seed stage, investors would increase their expected return by broadly indexing into every credible deal within a cohort.
Creating an ecosystem means constantly talking to new people about your project, making them understand your ambition well before needing their help or services.
This article was an editorial for the Malta Startup Space August 2022, newsletter