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With the rise in the number of startups, it always makes for an interesting discussion when one begins to look at entrepreneurship trends in the Ecosystem. What is making some businesses survive and thrive? And what makes others get choked out of the space?
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The Global Startup Ecosystem Report compiled by Startup Genome ranks various ecosystems to see their trends and changes year on year. The yearly report shows that the top five ecosystems have remained the same for the last few years, even though a couple of them swapped positions. One interesting data to consider is that while the top five ecosystems accounted for an Ecosystem Value of $3.8 trillion as of 2022, the next 25 (being #6 to #30) were worth $2.3 trillion in Ecosystem Value.
India’s ecosystem continued to show significant growth, with Delhi, Mumbai, Bangalore-Karnataka, and Pune collectively generating 25 unicorns between 2019 H2 and the end of 2021. Another remarkable finding is that while Silicon Valley remained the world’s leading ecosystem, its share of early-stage investment by dollar amount has declined in the last decade from 25% to 13%.
The implication of this trend in the early stage funding is that the rest of the world is catching up in terms of tech growth, and this would likely continue, going forward. One region continues to dominate the Global Rankings, with about 47% of the top 30 ecosystems in North America. Then, there’s Asia with 30%.
The big question now is – how can Africa join in the catching up and improve her numbers beyond what we have already?
Let’s look at the Global Entrepreneurship Index for some insights. The Global entrepreneurship monitor ranks countries by seeking answers to the questions below.
These questions basically seek to find out how easy it is for a business or startup to start, survive and thrive in a country. The more positive answers a country can provide to these questions, the better the ranking. More Yeses would mean that there are modalities in place to ease the startup journey overall. No wonder high-income economies perform better than middle and low-income economies on the scores.
The United Arab Emirates (UAE), with the highest score and a wide margin, emerged as the best place to start a new business in 2022, followed by the Netherlands, Finland, Saudi Arabia, and Lithuania. Keep in mind, that the UAE took intentional steps to improve in 11 of the 13 framework conditions since 2020.
And this is why I think Africa can step up.
Entrepreneurial funding
The governments of African countries need to start making more funds available, and easily accessible to startup founders.
Government Policy
By reducing the burdens of new businesses through tax reliefs and holidays, and providing them with adequate support and education, Africa could speed up the growth of its startup ecosystems.
Government Entrepreneurial Programs & Education
We need to put in place adequate entrepreneurial training and support programs in Africa. Introducing entrepreneurial education in schools at different levels can also help to start the transformation from a very young age. Entrepreneurship education and support programs will play a huge role in nurturing the next generation of global entrepreneurs.
Research and development transfers
Isn’t it high time we move the research findings from the library shelves in our institutions, and translate them into real-time businesses?
Ease of Entry
How easy is it to start a business? Are there regulations to encourage entry? Or are the regulations restricting entry? Is it possible to make it easier on new businesses, by having markets that are open and growing across the continent?
Infrastructure
Compared to other continents, Africa has to establish more infrastructures to be able to catch up. Importantly too, such infrastructure should be affordable to startup founders and entrepreneurs who need them to further their business. Even infrastructure such as stable power supply and internet penetration would make a major difference for entrepreneurship on the continent.
In conclusion
If Africa does not rise to the challenge, the continent will be playing catchup for a long time coming. A look at India and the United Arab Emirates shows that truly if the government pays the right kind of attention to these issues, the results can become visible within the next decade.
Some may argue that these challenges are in themselves, opportunities for entrepreneurs to jump on. However, there are limits to what entrepreneurs and investors can do, without the right regulatory environment.
What other issues do you think Africa can fix to improve its ranking on the Global Entrepreneurship Index?
Samuel Ajiboyede
AI expert | Fintech | Real estate | Venture Capital | Branding | Building Unicorns
