Entrepreneurship Opportunity in America: Insights from the U.S. GEM Report

Entrepreneurship Opportunity in America Insights from the U.S. Global Entrepreneurship Monitor Report

LETTER FROM THE EXECUTIVE DIRECTOR In 1999, the Global Entrepreneur Monitor was born as a joint venture of Babson College and the London Business School. The goal was to consider why some countries are more entrepreneurial than others.

Today, GEM, now a global consortium of over 500 researchers in its 20th year of operation, is the largest and most developed research program on entrepreneurship in the world, offering rich data from 100+ economies.

We are proud to say that Babson continues to contribute in significant ways to this tremendous resource. Associate Professor Julian Lange leads the multidisciplinary U.S. GEM team to collect comprehensive data. The results are meaningful insights into American entrepreneurship that help us to understand the entrepreneur and their context.

This year, The Arthur M. Blank Center of Entrepreneurship embarked on its own exploration of the data in the U.S. report. We found that an entrepreneurial spirit is thriving in the U.S. As a society, we have a passion for entrepreneurship and an optimism about achieving success via entrepreneurship.

But, there are nuances in the data. We considered the experience of entrepreneurship for different demographics and brought the data to life through interviews with Babson’s thought leaders, as well as through other real-world examples.

We hope you enjoy reading this series, and that it piques your interest in further exploring the Global Entrepreneurship Monitor’s many years of remarkable insights.

Best,

Debi Kleiman Executive Director, The Arthur M. Blank Center for Entrepreneurship

Table of Contents 3 4 6

Entrepreneurship: An American Obsession?

Thirty million Americans are starting new businesses, and the majority of U.S. adults see good entrepreneurial opportunities around them, according to the latest U.S. GEM Report.

How Can We Activate Entrepreneurs at Any Age? The report tells us that entrepreneurial activity is happening across the entire age spectrum. So, why is it lowest among youth and seniors?

Women Weigh Risks and Rewards When Faced with Entrepreneurial Opportunity The report finds that 59 percent of women entrepreneurs perceive opportunity, the highest rate ever recorded, but their entrepreneurial intentions are not trending upward—yet.

8 10

Starting but Not Scaling The report tells us that significant numbers of entrepreneurs are of diverse ethnicities, but that this isn’t the case for established business owners. Do these entrepreneurs have the resources they need during the critical intervening stages between startup to success?

Setting the Stage for Startup Success Now more than ever, American entrepreneurs see good business opportunities around them. So, what will it take for them to act on it—and to be successful?

ENTREPRENEURSHIP: AN AMERICAN OBSESSION? For nearly 10 years, 3 million people have watched a familiar scene play out from the comfort of their home.

An entrepreneur enters a brightly lit room, looks at the panel of well-known judges, pitches their product, and tells their story. Maybe the judges love it, maybe they don’t. Maybe they strike a deal, maybe they won’t.

As you likely guessed, this is “Shark Tank”—the critically acclaimed, Emmy Award-winning reality TV show that gives entrepreneurs the opportunity to pitch to prospective investors in the hopes of landing a deal.

Perhaps more importantly, it is an incredible marketing platform and an opportunity to get exposure, the kind of exposure that sends sales up and to the right, and sends them there fast.

Why? Because the same 3 million people who are tuning in on Sunday nights are then seeking out the entrepreneurs’ products and services, downloading Coffee Meets Bagel, choosing Lollacups for their toddlers, and cleaning their dirty dishes with Scrub Daddy sponges.

These products, along with Bombas Socks, Lord Nut Levington Gourmet Peanuts, and others created by Babson students and alumni, have become household names.

The Obsession “Shark Tank” says it has “reinvigorated entrepreneurship in America.” Whether it is responsible for new entrepreneurial activity is a hard question to answer.

What is clear is that the show has tapped into something in the American psyche and culture: We respect the entrepreneur and we are fascinated by the entrepreneurial journey. We celebrate both sweat equity, or “hustle” and “grind” in the new lexicon, and one-in-a-million success.

Consider the rise of the celebrity entrepreneur, whose face is recognizable, story is well-known, and success is applauded. We know that Elon Musk slept on the floor of the Tesla factory, and we recognize Jamie Siminoff ’99 from commercials for Ring, the product he sold to Amazon for a reputed $1 billion.

Just how far does this obsession go? Is our enthrallment with the entrepreneur endemic or an epidemic?

New Data from the Global Entrepreneurship Monitor (GEM) For insight, we turn to the 2017 Global Entrepreneurship Monitor (GEM) U.S. Report.

First launched in 1999 by Babson College and the London Business School, GEM is the only organization to measure the global entrepreneurial ecosystem annually, and its longitudinal data are instrumental in our ability to measure change in entrepreneurial attitudes, intentions, and activity.

The recently released U.S. GEM report opens with two staggering figures: 75 percent of U.S. adults believe that entrepreneurs receive high status in society, and 75 percent believe media attention for entrepreneurs is positive.

This is especially notable when you consider that both figures are higher than those for the average of the 23 other innovation-driven economies that comprise its U.S. peer group. These measures together suggest high visibility for and regard of entrepreneurs.

What Does This Mean for Entrepreneurs?

The data paints an optimistic picture.

Sixty-four percent of U.S. entrepreneurs believe there are good opportunities for starting a business near where they live. Not only is this a 7 percent increase from the prior year, this is the highest level reported since the first GEM survey in 1999 and is nearly twice the percentage in 2001.

This validation of entrepreneurship as a career choice, along with personal access to entrepreneurs and relatively low fear of failure, might suggest we are on the cusp of a great era of entrepreneurship.

Do All Americans Share This Same Experience?

In a five-part series, Babson will explore the theme of opportunity as it runs through the U.S. GEM report.

While broad societal attitudes in the United States uphold and enable entrepreneurship, the data surrounding the specific entrepreneurial perceptions and participation of the youngest and oldest entrepreneurs, women, and people of different ethnicities suggests a more complex story when it comes to entrepreneurial opportunity in America.

We’ll consider insights from the GEM report in the context of research from Babson entrepreneurship centers and thought leaders, as well as real-world examples from organizations and experts. All are working to understand and address the obstacles and opportunities that these demographics encounter when embarking on the journey of entrepreneurship.

ENTREPRENEURSHIP: AN AMERICAN OBSESSION? 3

HOW CAN WE ACTIVATE ENTREPRENEURS AT ANY AGE? Entrepreneurship is humming along in the United States, with stable rates of Total Entrepreneurial Activity (TEA) in the last seven years, according to the 2017 Babson-sponsored U.S. Global Entrepreneurship Monitor (GEM) report.

Digging in by age group, we see variations. The GEM report indicates that TEA is lowest among people ages 18–24, 55–64, and 65–74. What accounts for these rates?

How Do Entrepreneurs View Opportunities—and Themselves?

Seventy-eight percent of entrepreneurs around the world pursue entrepreneurship because they identify an opportunity, or the “potential to create economic value through something new or innovative.”* According to the latest GEM report, this number is even higher in the United States, at 86 percent. The problem is not in the perception of opportunity. The problem evidently lies in the quantum leap between recognizing opportunity and actually taking action.

4 HOW CAN WE ACTIVATE ENTREPRENEURS AT ANY AGE?

So, do entrepreneurs across all age groups believe they have what it takes?

It turns out that perception of skill level follows a bell curve. It is lowest among the 18–24 age group (32 percent) and the 65–74 age group (49 percent), and it peaks in the 35–44 age group (65 percent).

As noted in the report, young entrepreneurs may experience “lack of suitable employment opportunities because of lack of credentials or experience.” At the same time, older entrepreneurs may experience “a lack of up-to-date skills, particularly because of expanding technology expertise needed across industries.”

Instilling an Entrepreneurial Mindset in Youth Entrepreneurship itself has stepped up to empower these two bookend age groups and to champion their strengths and aspirations. University-based entrepreneurship programs are embracing the opportunity to develop young entrepreneurs.

“Their beginner’s mind allows them to see all of the opportunities,” said Janai Mungalsingh ’08, manager of program strategy and curriculum design for youth programs at Babson’s Youth Impact Lab, part of The Lewis Institute for Social Innovation at Babson. The Youth Impact Lab activates young changemakers to move from thinking to acting, work through the entrepreneurial process, and arrive at solutions.

Through a range of curricular and cocurricular programs, the team delivers experiential learning opportunities to high school students from around the world. Ultimately, the Youth Impact Lab emphasizes not the outcome but the process. As executive director of The Lewis Institute, Cheryl Kiser explains, “There’s a lot of people who define entrepreneurship as an outcome. We don’t.

We define it as a habit and a practice.”

You have to take the time to go back into their experience to draw out how they’ve been thinking entrepreneurially all along.

– ELIZABETH ISELE, SENIOR FELLOW IN SOCIAL INNOVATION AT THE LEWIS INSTITUTE, BABSON COLLEGE

Entrepreneurship education, especially with youth, has been shown to yield results.

The national nonprofit BUILD is bringing together entrepreneurship and experiential learning in a program to decrease high school drop-out rates and to prepare students for academic and professional success. The outcomes are compelling: the average on-time graduation rate for students who finish the BUILD program is 97 percent, versus the 81 percent national average and the 73 percent national average for low-income students—and the takeaways are even more inspiring.

Edward Wilson, director of philanthropy for BUILD Boston, explains that the program helps to cultivate traits such as competence and resilience among the students. Via the experience of entrepreneurship, students’ perceptions of failure are transformed from “a bad thing” to “the most important thing,” he says.

And, with exposure to and engagement with the entrepreneurship and business community, students receive the validation that “you belong in that setting.”

Exploring Entrepreneurship Later in Life Discovering the path to entrepreneurship is necessary for many older entrepreneurs as well.

In “Senior Entrepreneurship: The New Normal,” founder and CEO of the Global Institute for Senior Entrepreneurship Elizabeth Isele notes, “Although senior entrepreneurship is widespread, there is a significant group of people for whom the option of becoming an entrepreneur is not seen as an option. For this group, an effort at building awareness is a necessary strategy.”

Isele, also a senior fellow in social innovation at The Lewis Institute, explains that even the word “entrepreneur” can be very intimidating and off-putting to this generation. She has called upon a range of agencies, particularly local community economic development leaders, to help change this perception.

Her recommendations are to set up “think tank” environments, where ideas are shared and feedback is offered, and to present these environments as

opportunities to be curious and to explore.

Ultimately, local leaders can help seniors realize that they have, in fact, already been thinking and acting with an entrepreneurial mindset.

Serial entrepreneur Tim Driver, who founded RetirementJobs.com, also advises that “going out on your own can be the ultimate retirement job. You are effectively in the driver’s seat. You’re in control.”

Not only can these individuals enjoy the benefits of entrepreneurship, including schedule flexibility and staying close to home, but they also can deploy their unique strengths, including their extensive business experience, industry knowledge, and networks. And, in doing so, they are providing definitive value to society.

“Have the Life You Want for Yourself, Not the One That Is Handed to You” In a multitude of ways, there are organizations and thought leaders working to raise up entrepreneurship as a path and to celebrate the strengths, as well as to serve the needs, of society’s youngest and oldest potential entrepreneurs.

Through findings from the latest GEM report, we see clear opportunity to engage, support, and connect with these age groups.

Wilson, speaking to BUILD’s mission, summed it up perfectly: “We want you to have the life you want for yourself, not the one that is handed to you.”

When an individual learns to work through problems, leverage a team, and plug into a community, his or her mindset is fundamentally shifted: Entrepreneurship is now desirable and viable. *Across the 23 innovation-driven global economies surveyed in the 2017 GEM Global report.

HOW CAN WE ACTIVATE ENTREPRENEURS AT ANY AGE? 5

WOMEN WEIGH RISKS AND REWARDS WHEN FACED WITH ENTREPRENEURIAL OPPORTUNITY Measures of attitudes, beliefs, and perceptions in the Global Entrepreneurship Monitor (GEM) help us understand how men and women see entrepreneurship differently. The 2017 Babson-sponsored U.S. GEM report finds that 59 percent of women entrepreneurs perceive opportunity, the highest rate ever recorded

by GEM, but their entrepreneurial intentions are not trending upward—yet.

Women aren’t less likely to see themselves as entrepreneurs simply because they lack overall confidence. They’re responding to messages they receive from the world around them about who is and isn’t supposed to lead and take risks.

The Gender Gap When it comes to perceived startup capabilities, fear of failure, and entrepreneurial intentions, GEM finds a significant gender gap.

Women’s perceived capability has decreased, making the large gender gap even wider in the past few years.

Women’s fear of failure has been tracking higher than that of men’s for a decade.

– SUSAN DUFFY, EXECUTIVE DIRECTOR OF CWEL AT BABSON

And, finally, women’s entrepreneurial intentions, or the “intentionally planned behavior ... to start a new business,” have remained the same for the past few years while men’s are increasing.

When we look at these measures together with women’s increased perception of opportunity, we are presented with a complicated narrative about women’s entrepreneurship. What is uniquely shaping women’s entrepreneurial perceptions and beliefs?

An Ecosystem Problem The Center for Women’s Entrepreneurial Leadership (CWEL) at Babson helps us better understand the implications of the ecosystem.

Given these messages and the observations that women are making about who starts companies, who invests in them, and who receives funding, it is no wonder that their increased perception of opportunity does not automatically translate into increased entrepreneurial intention, especially when they may already have career opportunities that meet their needs. When faced with the realities of entrepreneurship, women may evaluate the pros and cons and simply choose not to start.

Biases and Behaviors In “A gendered look at entrepreneurial ecosystems,” Babson’s vice provost of global entrepreneurial leadership Candida Brush, and co-authors, explain

that there are many aspects of the ecosystem that relate to and can impact self-efficacy, or “the confidence—not the competence—that we have what it takes to be successful.”

Institutions, organizations, and individual players, including role models and mentors, can help or hinder women-led venture creation.

One example of a gendered institution is venture capital financing. In a survey conducted by the Diana Project™, businesses with all-male teams were more than four times as likely to receive VC funding as businesses with even one woman on the team.

There is potential for this to change. New investing platforms designed for women, networks of female angel investors, and VC firms are not only creating access to capital for early- and seed-stage women entrepreneurs, but also educating and developing a cohort of women investors.

This is particularly significant when you consider the impact this new cohort could have on the decision-making process. According to the Diana Project, VC firms with women partners are more than twice as likely to invest in companies with a woman on the management team and almost four times as likely to invest in companies with women CEOs. Gender comes to life in work organizations as well, through assumptions and

6 WOMEN WEIGH RISKS AND REWARDS WHEN FACED WITH ENTREPRENEURIAL OPPORTUNITY

behaviors. Even the organizations that are seen as “essential for creating a vibrant entrepreneurial ecosystem” and critical to the entrepreneur’s journey, such as accelerators, incubators, and co-working spaces, can be gendered.

Another critical player is the mentor. The mentor, along with other players, can act as a gatekeeper to resources, and here again WIN Lab takes up the baton, through robust mentorship.

Brush notes that the vast majority of accelerators around the world are maledominated: Less than a quarter of participants are female.

Angela Sanchez MBA’11, founder of Artyfactos, has spoken about the tangible benefits of having a mentor when it came to introducing her products to retailers. Thanks to her WIN Lab mentor’s network and introductions, Sanchez’s products are now nationally retailed.

Fortunately, there have emerged new organizations for women entrepreneurs that intentionally build startup environments to develop their self-efficacy by creating community and enabling access to resources and networks.

Women Innovating Now (WIN) Lab® at Babson is an intensive, five-month accelerator program created by CWEL to provide high-growth women entrepreneurs with not only a business curriculum, but also one-on-one coaching and a cohort. With an environment that provides four critical elements—female role models, champions and experts, a low-stress environment, and mastery experiences—WIN Lab drives self-efficacy.

Finally, we look at the influence of the many players in the entrepreneurial ecosystem on an individual level. One player is the role model.

We know that the stereotype of the entrepreneur is male—“the white guy in the suit or the white guy in the hoodie” in the words of Susan Duffy, CWEL’s executive director—and that this could have a negative impact on women’s perceptions.

As Brush explains: “In areas where the role models are male or have only masculine qualities, women may not perceive that venture creation is possible, and they may have a greater fear of failure or less confidence in their abilities to start a business.” Especially when you consider that the effect of having a role model is more significant for women’s self-efficacy than men’s, female role models become all the more relevant.

A New Ecosystem for Women Entrepreneurs We begin to understand the impact that ecosystems can have on women entrepreneurs and their perceptions. Facing gendered institutions and norms, work organizations and environments, and stereotypes, a women entrepreneur could logically choose not to start up.

But, there are reasons to be optimistic. The GEM report notes that women are the majority owners of nearly 40 percent of the approximately 30 million businesses in the United States. Not to mention, the total number of womenowned businesses increased by 49 percent in the last decade. And, better yet, there are more investors, accelerator programs, organizations, and support structures than ever before.

If the barriers that women face in the entrepreneurship ecosystem continue to break down, then perhaps women’s perceived capabilities and intentions will finally rise in tandem with their increasing perception of opportunity.

WOMEN WEIGH RISKS AND REWARDS WHEN FACED WITH ENTREPRENEURIAL OPPORTUNITY 7

STARTING BUT NOT SCALING Entrepreneurship that matures into established business ownership

“Entrepreneurship among non-White Caucasian ethnicities will be important,

contributes immeasurably to society through innovation, job creation,

not only for job creation but also for introduction of unique business concepts

and stabilization of the economy. Even more benefits are yielded when

and connections to new markets, including international ones.”

the entrepreneur is of a diverse ethnicity group, according to U.S. Global Entrepreneurship Monitor (GEM) report. But, significant challenges currently stand between entrepreneurship and enduring businesses.

We hear about the positive impact of entrepreneurship in this statement—but this impact is predicated on the basis that this entrepreneurship is sustained.

For White Caucasians, chances are good. Twelve percent of White Caucasians are starting and running a new business while 9 percent are running

If America Is a Melting Pot, Then Who Is the American Entrepreneur?

The latest Babson-sponsored GEM report points out that the demographics of Total early-stage Entrepreneurial Activity (TEA) mimic the demographics of the U.S. population.

According to the findings, nearly one-third of all entrepreneurs are non-White

established businesses, defined as 3½ years or more.

While significant numbers of entrepreneurs are of diverse ethnicities, the numbers drop off when we look at established business owners. Twenty percent of African Americans start businesses, but only 4 percent are established business owners. We see the same phenomenon with Asian (17 percent start versus 7 percent run established businesses) and Hispanic (12 percent start versus 5 percent run established businesses) ethnicities.

Caucasian, which is generally consistent with the non-White Caucasian percentage of the general population.

Why Some Ventures Succeed— and Some Don’t Do these entrepreneurs have the resources critically needed to see a business to maturation? And, what are these resources?

Richelieu Dennis ’91, founder, CEO, and executive chairman of Sundial Brands, spoke about the barriers to entrepreneurship when he was inducted

by Babson College into its Alumni Entrepreneur Hall of Fame. He distilled the challenges and critical resources down to an acronym: ACE – Access, Capital, and Expertise.

Networks are known to be key to business success, providing a variety of resources such as collaboration, opportunities to access capital, support, and advice. But, diverse entrepreneurs often lack this social capital and are hindered in their attempts to make connections within the business world.

The challenges surrounding financial capital also are considerable, and they begin with the application process.

In the 2016 Small Business Credit Survey Report on Minority-Owned Firms,

Changes in GEM data over time suggest that, as the population changes, so do entrepreneurs. For example, the rate of entrepreneurship pursued by diverse ethnicities was 5 percent higher in 2017 than in 2016.

We hope increased diversity in entrepreneurship will bear out, as non-White entrepreneurship can deliver unique value to society. As the report notes, 8 STARTING BUT NOT SCALING

African American–owned firms reported more attempts to secure credit than White-owned firms, but the attempts were for lower amounts of financing. And, among those African American firms that did not apply, 40 percent did not move forward because they were discouraged. This compares with 14 percent of White-owned firms and 21 percent of Hispanic- and Asian-owned firms.

The outcomes of applying for funding are disparate as well. Only 40 percent of firms owned by diverse entrepreneurs with good credit received the full amount requested, compared to 68 percent of firms owned by White-Caucasian entrepreneurs. In addition, the percentage of firms owned by diverse entrepreneurs that received any financing at all was lower than that of other firms.

not lead to success—all three are necessary, from Dennis’ perspective.

Similarly, the Goldman Sachs 10,000 Small Businesses program takes a multipronged approach. Providing a network of business support services, capital, and a business curriculum designed and co-delivered by Babson College, it serves a highly diverse group of entrepreneurs from across the

Not to mention, diverse entrepreneurs are disproportionately hurt by the cost

United States, representing different ages, education levels, business ages,

and lack of access to capital. In one staggering figure from the Annual Survey

and industries. The program enables business owners to identify and take

of Entrepreneurs Briefing Series, produced by the Ewing Marion Kauffman

advantage of growth opportunities, and its impact is measurable.

Foundation, the profitability of African American–owned businesses is almost three times as likely to be hurt by lack of access to capital as that of Whiteowned businesses.

Through exposure to funders, education about financing options, and the development of pitch skills, the program sets up participants to make themselves more fundable. The program’s alumni apply for and receive

Finally, there is expertise. Entrepreneurs of diverse ethnicities may not have

funding more often, and the numbers only improve over time. Moreover, when

the vital relationships they need and face “lack of mentors and role models,

they apply, they receive a larger percentage of the amount they request.

difficulty finding good professional partners, and indifference—or even

Alumni also go on to engage with and develop strong business relationships

hostility—from business networks.”

with their banks.

Through peer learning and collaboration, 10,000 Small Businesses creates a network where one may not have existed before. Eighty-eight percent of graduates go on to do business together, and they leverage their new connections for business growth.

If I don’t have an opportunity to walk into a bank and have equal footing ... or walk into a supplier and have the same terms as my competitors, I’m not going to be successful.

– RICHELIEU DENNIS ’91, FOUNDER, CEO, AND EXECUTIVE CHAIRMAN OF SUNDIAL BRANDS

Ultimately, the program’s impact manifests in revenue growth, reported by almost four of five alumni 30 months after completion, and job growth, reported by 57 percent of alumni in the same time frame. These are positive results, and these are the very same results that the U.S. GEM report attributes to entrepreneurship when it is successfully sustained to maturity.

From Early Stage to Established When entrepreneurship thrives among diverse ethnicities, industries, communities, and the economy all benefit immeasurably. When it doesn’t survive, the downside is significant, and, as Richelieu Dennis remarked, can manifest as a destabilizing effect.

But, with a strategic view and a holistic approach, the challenges that diverse

These challenges add up to a scarcity of social capital, which can be as

entrepreneurs currently face on their way from early stage to established can

crippling as a scarcity of financial capital.

be diminished, and we can see these businesses go on to flourish.

Breaking Down Barriers How can we better open the door to entrepreneurial growth among diverse entrepreneurs?

Dennis is applying the ACE approach as the strategy behind his New Voices Fund, the $100 million fund he established via the sale of Sundial to Unilever, which seeks to empower women entrepreneurs of color. One of these elements alone will STARTING BUT NOT SCALING 9

SETTING THE STAGE FOR STARTUP SUCCESS According to the latest Babson-sponsored U.S. Global Entrepreneurship

address each of these gaps and to set entrepreneurs on the path to growing

Monitor (GEM) report, 43 percent of entrepreneurs in innovation-driven

their businesses and creating jobs.

economies around the world see opportunities near where they live.* In the U.S., this number is much larger, at an impressive 64 percent.

This difference between the U.S. and its peers suggests a culture that

A Framework for Fostering Entrepreneurship

celebrates entrepreneurship, a system made up of support and resources, and, as a result, high opportunity awareness among American entrepreneurs.

Each of these groups can deliver truly unique social and economic value to

But, opportunity perception does not necessarily translate into action—or

society via entrepreneurship, but they face many challenges in starting up.

being able to sustain it.

There are a multitude of elements that can affect whether entrepreneurs act on opportunity and are able to successfully sustain their ventures. One

The Diverse Experiences of American Entrepreneurs

framework used to make sense of these elements is the Domains of the Entrepreneurship Ecosystem, created by Daniel Isenberg, founding executive director of the Babson Entrepreneurship Ecosystem Project.

GEM enables us to deepen our understanding of entrepreneurial attitudes

Isenberg recognizes that there are hundreds of elements at work, so he groups

and behaviors.

them into six major domains: “a conducive culture, enabling policies and

As part of a five-part story series, we took a closer look at the nuances of

leadership, availability of appropriate finance, quality human capital,

entrepreneurial opportunity for three groups: youth and seniors, women,

venture-friendly markets for products, and a range of institutional and

and diverse ethnicities. We saw underlying differences in how they view

infrastructural supports.”

entrepreneurship, which ultimately can affect their view of the opportunities

These domains interact, intersect, and overlap, and the ecosystem is highly

and their ambition to act on it.

dynamic and constantly changing.

For youth and senior entrepreneurs, entrepreneurship can seem foreign and unrelatable. Organizations and thought leaders are helping youth and seniors

The Ecosystem and the Entrepreneur

to better see themselves as entrepreneurs. In this way, they are opening the door for them to ideate, innovate, and, in some cases, even collaborate

In the ecosystem framework, we see the elements that enable entrepreneurs

across age groups.

to act on opportunity and to be supported in their entrepreneurial ventures.

For women entrepreneurs, there is a distinct difference between perceiving

Of course, to see an opportunity in the first place requires a very specific mindset.

opportunity and acting on it. Messages they receive about who is, and isn’t, starting and leading companies may factor into their considerations, and ultimately impact their decisions to not start up. New investors and funding platforms, work organizations, and support structures are helping to reset these messages and break down the barriers for women entrepreneurs.

Lange also called out data pertaining to the reasons for discontinuing a business. Not only do U.S. entrepreneurs see opportunity at rates higher than their international peers, but opportunity continues to be a theme throughout their journeys. While most entrepreneurs outside the U.S. discontinue their businesses because of unprofitability, the primary reason for U.S.

Lastly, for entrepreneurs of diverse ethnicities, starting a venture is one thing,

entrepreneurs is the pursuit of another opportunity. This is an exciting and

but sustaining it is another. These entrepreneurs may not have the social

optimistic data point about the mindset toward opportunity, and the activity

and financial capital, as well as the expertise that is critical for business

that can ensue.

maturation. Programs leveraging multipronged approaches can help to

10 SETTING THE STAGE FOR STARTUP SUCCESS

Isenberg explains opportunity awareness as a contrarian perspective on the part of the entrepreneur: “This perception that you know or have something that others don’t know or have, implies the intrinsically contrarian nature of entrepreneurship, because the perception of opportunity is based on the belief that other potential entrepreneurs either don’t see what you see, and/

What’s Next?

Looking ahead, we anticipate greater interest in understanding the conditions for entrepreneurship.

or view exactly the same situation differently, and/or in fact, until it is too

Recognizing the importance of the ecosystem to startup success, the

late, perceive your assets or ideas or assessments as relatively worthless,

2018/2019 Global GEM report introduced a new measure: the National

impossible, or stupid.”

Entrepreneurship Context Index (NECI), a composite score which can be used

Whether we term it as forward thinking and visionary, or contrarian, the unique mindset of the entrepreneur to see opportunity, combined with advantageous conditions to act on it, is powerful alchemy.

to evaluate the environment for entrepreneurship. With this index now in place, stakeholders will be able to assess the strength of their environments and to identify the opportunities to improve.

We hope that this new data, along with insights into the unique challenges that face different early-stage entrepreneurs, will provide the impetus to address the weaknesses of the ecosystem and to contribute to a new scenario, in which the entrepreneur, who recognizes opportunity, is energized

In order to act on opportunities, you have to be open and actively pursuing the identification of these opportunities.

and empowered to take the first step—and then the next—to start up. *Across the 23 innovation-driven global economies surveyed in the 2017 GEM Global report.

– JULIAN LANGE, BABSON ASSOCIATE PROFESSOR AND LEADER OF THE U.S. GEM TEAM

SETTING THE STAGE FOR STARTUP SUCCESS 11

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