 Fostering entrepreneurship has become a core component

of economic development in cities and countries around the

world.
• The predominant metaphor for fostering entrepreneurship as an
economic development strategy is the “entrepreneurship
ecosystem.”
• It should come as no surprise, however, that as any innovative
idea spreads, so do the misconceptions and mythology.
 Definition
 The term ecosystem was introduced by Tansley (1935) in a biological context.

 He describes it as the whole of living and nonliving organisms interacting with

one other.

 The entrepreneurial ecosystem is a relatively new perspective within the field

of entrepreneurship but is now one of the most discussed topics in that field.

 Of course, this biological interpretation should not be taken too literally.

Nonetheless, it has some similarities when comparing it with its economic

counterpart.

Dr. Buzeye Zegeye

 An entrepreneurial ecosystem or entrepreneurship ecosystem is the social and economic

environment affecting the local or regional entrepreneurship.

 Entrepreneurial ecosystems are defined as a set of interdependent actors and factors

coordinated in such a way that they enable productive entrepreneurship within a

particular territory.
 The entrepreneurial ecosystem often narrows entrepreneurship down to high-growth

startups or scaleups, claiming that this type of entrepreneurship is an important source of

innovation, productivity growth, and employment.

 Moore (1993) was the first one to use it in an economic context. He

argued that entrepreneurship does not exist in a vacuum, hereby

emphasizing the importance of its environment.

 An ecosystem should create a flow of talent, information, and

resources to address each stage from ideation and launch to growth

and scaling.
 This modern systematic view of entrepreneurship has been termed the

entrepreneurial ecosystem by Daniel Isenberg.

The entrepreneurial A set of interconnected
An entrepreneurial
ecosystem is a complex entrepreneurial actors
ecosystem contains a set of

set of elements aimed at (both potential and individual elements within

existing),Entrepreneuria a region —such as human

making the environment
capital, an
conducive for entry, l organization,
entrepreneurial
survival and growth Institutions, and
culture and supportive

of entrepreneurship in a Entrepreneurial process organizations that

entrepreneurial interact in complex ways.

region.
organizations
It emphasizes self-organizing and self-regularizing
mechanisms for competitive market policies.
The combination of formal institutions (government
regulations and taxation system), informal institutions
(corruption perception) and physical conditions (access to
finance, supportive infrastructure, a stable political
environment, a skilled labor force and a formal economy)
are expected to create an entrepreneurial ecosystem where the
entry, survival and growth of firms will be at its highest rate.
 It includes

1. Leadership
• Unequivocal support
• Social legitimacy
• Open door for advocate
• Entrepreneurship strategy

2. Government
• Institutions support such as investment support
• Financial support .e.g. For R &D Start up funds
• Regulatory framework and incentives e.g tax benefits
Enabling Policies
and Leadership
 The focus should not be mainly the
provision of capital but creating the
conducive environment for businesses
by providing key policy which will
resonate well with the diverse group
of stakeholders who symbiotically
drive the growth of the
Enabling Policies entrepreneurial ecosystem.
and Leadership
This is also where the buzz for economic development can
first be created with how governments provide leadership through
policy direction and create some kind of legitimacy for the general
population to want to try their entrepreneurial skills

Isenberg affirmed that government cannot do it alone and that they

must engage the private sector early as it is the private sector best
advantage to develop a self-sustaining and profit driven
market which are outcomes of a successful entrepreneurial
ecosystem
Appropriate
Financing
Financing Includes
1. Micro loans
2. Angel investors, friends and families
3. Zero stage venture capitals
4. Venture capital funds
5. Private equity
6. Public capital market
7. debt
Zero stage venture capital: founded in 1981, by Paul
Kelley
Zero Stage Capital is a venture capital firm that
invests in emerging growth companies in the following
technology sectors: information technology,
communications, life sciences, and energy technology
An angel investor: Angel investing is when a high net-worth
individual (angel investor) invests in a growing business. Angel
investing happens when an investor invests a large amount of
money, or capital, into a business during its early stages. This capital
injection is typically paid back through equity in the venture or
convertible debt.
What is venture capital?: Venture capital is a form of equity
financing where a VC firm—or group of investors—invests in an
early stage or emerging company in exchange for an equity stake in
the company. The drawback of working with VC is firms often
require a controlling stake in your company, meaning that you lose
full control of the business you’ve built. This can result in you no
longer being in the driver’s seat of your company, opening you up to
the opinions and decisions of the venture capitalists with whom
you’re working.
Appropriate
Financing This is directly related to the policy
issues as it can influence the outcome
of how venture financing is
done, the regulation and
strengthening of the financial
institutions, the presence of early
stage funding in forms of micro-
loans, angel investors and rich
family are key to raising the number
of start-ups.
Appropriate financing can be greatly influenced after the
initial government contributions to early stages start-ups
who go on to scaled up through venture capital funding
and end up going public or the owners sell the venture
(“cash-out”),

Need for is only important in the beginning of an ecosystem

formation because this can be imported from outside the ecosystem
once there start to emanate success stories of entrepreneurial
achievement that have scaled up and gone global.
 Societal norms to pursuing
entrepreneurship as against taking up
paid employment.

The general disposition towards such

things as failure or huge economic
Conducive Culture
mistakes resulting in loss of investments is
a very important factor that will influence
entrepreneurial mindsets.
 Societal norms to pursuing
entrepreneurship as against taking up
paid employment.

The general disposition towards such

things as failure or huge economic
Conducive Culture
mistakes resulting in loss of investments is
a very important factor that will influence
entrepreneurial mindsets.
 Society reaction towards massive wealth creation and what
status entrepreneurs command can be a driving force compelling
many people to start their own venture and try to be creative, should
society encourage these, there is high tendencies for innovation,
creativity and experimentation to become a norm which can
contribute in no small means to the evolution of an entrepreneurial
ecosystem

Enlightenment program can be driven by government and business

development organizations to raise the level of public awareness and
propagate the importance of entrepreneurship.
 The entrepreneurial community also has to
create its own culture as soon as the
ecosystem takes form and actors are
identified, this will enhance the sharing of
experience and expertise.

Also, the entrepreneurial community can

quickly absorb failed entrepreneurs
and learn from their failure.
An entrepreneurial ecosystem will obviously
not evolve in a vacuum, it does not revolve
around financial incentives alone, there are
certain basic economic and social factors
that need to be present.
 The need for ancillary infrastructures and
other support cannot be over emphasized in the
budding stage of an individual entrepreneur as
well as for the evolution of an ecosystem.

Entrepreneurs spend nearly half of their time during making contacts and networks
with other entrepreneurs and related agencies.

Silicon Valley’s economic success was attributed to its

Dr. Buzeye
relatively open, non-hierarchically ‘regional network-
based industrial system’ with porous boundaries.
 Quality Human
Capital

Large numbers of start-ups is encouraging, meaning even with a

high rate of start-up failures we can still have substantial
contribution to the ecosystem, coupled with the existence of
educational institutions offering not necessarily
entrepreneurship or technological specific academic and
professional degrees can make significant contributions to the
human capital base of an entrepreneurial ecosystem.
Human Capital in the form of experienced
managerial and technical talent is required to
ensure entrepreneurial success. Training
institutions and outsourcing support should
respond to growing needs for skills in the
marketplace.
 Venture Friendly
Markets

Developing the market in an evolving entrepreneurial ecosystem can be

challenging when introducing innovative products, this can be due to
the need to generate a reasonable number of early adopters, the need to
make product licensing less cumbersome, good and credible experts in
productizing and a good channel of innovation exportation to a global
market
Wider global linkages beyond those That as well as engaging in localized
connecting firms to product markets play learning, firms also seek to build channels
an important role in the development of of communication with selected external
entrepreneurial ecosystems. partners to access more specialized
knowledge and assets not available locally”