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The Untapped Resource

The power of entrepreneurship for job creation and economic development is well established.  Yet one of the main ingredients is the availability of human talent.  In addition to the challenges business incubators face in terms of increasing government austerity and financial tightening across all sectors, incubators and new ventures in emerging markets face even tougher challenges due to the immigration of the country’s “best and the brightest” often leaving to pursue opportunities abroad - the so-called ‘brain drain’ - leaving fewer behind to serve as entrepreneurs, angel investors, mentors and role models.

However, there are new initiatives to turn the ‘brain drain’ into ‘brain circulation’ through what is referred to as “Diaspora Networks” by engaging diaspora in economic and social development in their homeland.

Diaspora groups are being recognized as important stakeholders and potentially powerful actors in socio-economic development. For example, in 2011 officially recorded remittance flows exceeded US$350 billion worldwide. However, the influence that diaspora communities wield goes far beyond financial transfers and has the potential to extend along the whole spectrum of socio-economic development

Entrepreneurship among immigrants in the world’s most advanced economies is on the rise.  Research from the Kauffman Foundation shows that roughly 25 percent of successful high-tech startups over the last decade were founded or co-founded by immigrants. Their experience, insights, knowledge and networks could not only be useful to entrepreneurs in their homelands, but could even lead to new business opportunities for the diaspora. Incubators are a logical partner for these efforts.


As Mentors

As Lynne Henkiel mentioned in her “Walk the Talk” article in the inaugural issue of The Business Incubator, “entrepreneurs speak their own language,” but some incubators, including iPARK at El Hassan Business Park (EHBP) in Amman, Jordan, face the challenge of finding enough ‘master speakers’ to develop the capacity of young novices. Those that have been enthusiastically working with entrepreneurs for years are showing signs of fatigue. EHBP is now looking into ways to engage the Jordanian diaspora - in Silicon Valley and elsewhere - to support aspiring technology-based entrepreneurs and develop a stronger ecosystem of entrepreneurship and innovation in Jordan.

In particular, EHBP has determined Jordan’s diaspora is uniquely positioned to assist startups with technological knowledge and market information, entry and navigation – especially in an international capacity. To sustain growth and create jobs, companies in smaller countries like Jordan will need to have a global presence. Mentors from the diaspora could make simple introductions, record a training session for a databank, and/or mentor a startup over many months. Such support will be of great value to EHBP. Jordan has a very young population but little in entrepreneurial culture, so EHBP and similar organizations find that the need for mentors and business skill coaches far outweighs the supply.

Jordanians abroad are best suited to provide this type of insight, for not only do they understand the culture and challenges startups face in Jordan, they also understand the educational system and the gaps that may exist for graduates when they enter the ‘real world’. Diaspora mentors can be a highly-effective bridge between young startups and the global economy.

As Business Angels and Investors

As Antonio Sfiligoj discussed in the last issue of The Business Incubator, incubators can help connect entrepreneurs with business angel investors, who can provide early stage funding and often mentorship, as well as additional support.

Business angel networks would be remiss should they not work with successful diaspora. Because they are familiar with the culture, the language and the challenges new businesses face, diaspora are often less risk-adverse than other potential angel investors in the homelands. They may also have familial and personal networks that could be of use to entrepreneurs. Furthermore, with the rise of communications technologies and the internet, there is no reason why angels cannot be located in other countries.

Angel networks and incubators may also wish to consider creating an investment mechanism, perhaps a fund or tool to help entrepreneurs and diaspora members connect. Such instruments could be appealing to those who might otherwise just continue to send remittances.

As women role models

Entrepreneur role models for women are particularly important. The female labour force participation rate in MENA is just 26 percent - the lowest of any region, according to the World Bank, yet they have achieved equal or even better levels of education. In the first quarter of 2012, the unemployment rate for Jordanian men with a bachelor’s degree or higher was 24.2 percent; for women with a college degree, the rate was 67.5 percent. Of the total female labour force, 55.5 percent had at least a bachelor’s degree, whereas only 21.3 percent of the male labour force did.

Successful businesswomen from the diaspora can play a critical part in changing gender stereotypes around entrepreneurship in the homeland - particularly in high-growth, technology-based industries  typically led by men. Connecting to other programs may be a relatively easy way incubators can easily implement their own initiatives, but ensuring women are included as mentors and angels is vital.

In addition, incubators can help publicize the work of women entrepreneurs in the diaspora, especially at universities, to inspire young women to choose an entrepreneurial path and market the services of incubators to them - especially if they include mentorship from those featured in the publicity.

As clients

Members of the diaspora are usually embedded in the socio-economic fabric of the country in which they live and work. When they become involved with business incubators in their homelands, they often find personal value from the intrinsic rewards that comes from sharing their knowledge and experience with others, as well as contributing to their home country’s economic development. However, by being closely involved in start-ups, they will be among the first to know of policy and regulatory changes, and will have a first-mover advantage in new investment opportunities. This could even lead to diaspora starting their own businesses at the incubator, perhaps as a means to outsource or supply their existing companies, which could provide them with a competitive advantage during an economic downturn, while creating new jobs in the homeland.

The ‘brain drain’ may indeed be reversing. In a recent Kauffman Foundation survey of foreign students in the United States, only six percent of Indian, ten percent of Chinese and 15 percent of Europeans expressed a wish to stay in the U.S. permanently. In addition, 64 percent of Indian students, 68 percent of Chinese students and 66 percent of European students indicated they wanted to start a business within the next decade - the majority wishing to do so in their home countries (53 percent of Indians and 55 percent of Chinese). Incubators everywhere may find similar sentiments in their diaspora and discover a completely new client base – and one whose international experience and networks could be shared with younger, wholly domestic clients.

Engaging diaspora

What is great about entrepreneurship is that it is self-perpetuating. A single success story will inspire others and each success builds the collective knowledge and experience necessary to foster a robust entrepreneurial ecosystem. Such a cycle can be true of the diaspora as well. The more people get involved, the more others will want to join.

The challenge is getting started. EHBP has found that many diaspora members are very interested in becoming more involved in the development of their homeland, but no one has been asked. Asking is important, but it is critical that the resources, networks and follow-through are there to ensure effectiveness and sustainability.

To achieve this, EHBP utilizes its existing networks; reaching out to Jordan’s embassies and consulates, professional associations, and foreign direct investment and expatriate agencies; partnering with existing organizations; and speaking to leaders of other diaspora organizations. Most countries or region of the world have existing diaspora organizations, including: The Indus Entrepreneurs (TiE, which has reach across Asia), The African Network, The Korean IT Network, Al-Mubardarah: Arab Empowerment Initiative, and many more.

By engaging diaspora, incubators can augment their critical role in reversing ‘brain drain’ as well as increasing ‘brain circulation’ and entrepreneurship, especially in emerging markets. Diaspora can serve incubators by being effective: role models -- particularly for young entrepreneurs, women, mentors, angel investors and even clients.

The challenge however remains for each country to find the right mechanism and platform that can efficiently facilitate the organization and mobilization of their professional Diaspora and allow the sharing information, exchange of knowledge and development of working relationships.

About El Hassan Business Park

The Business Park at El Hassan Science City (EHBP) is where the best ideas from the academic and research institutions at El Hassan Science City and throughout Jordan are turned into sustainable businesses -- creating jobs and contributing to social, environmental and economic development.
In addition to managing larger-scale projects that foster the growth of the entrepreneurial ecosystem of Jordan, EHBP also houses four organizations:

  • The Queen Raina Center for Entrepreneurship, which holds nationwide business plan competitions and conducts outreach and training at universities and schools throughout Jordan

  • iPARK, which is a value-added incubator and accelerator for technology-based companies

  • The Intellectual Property and Commercialization Office, which assists researchers and entrepreneurs with patents, licensing and copyrights nationally and globally

  • The Bedaya Business Angel Network, which helps new businesses prepare for and find angel investors

Diaspora in Action

In 2004, Zaid Ayoub, a successful entrepreneur in the Semiconductor Design and Verification business in Silicon Valley, established an Engineering Design Backoffice at the iPARK Technology Incubator in his home country, Jordan. Over the next 2 years, the office grew to over 18 engineers with world class skills. After, successfully exiting his business, Zaid return to Jordan to become an entrepreneur, an active Angel investor, a mentor and to lead JTronix , Jordan’s national initiative to develop a vibrant Electronics and Semiconductor ecosystem and industry.

Dr Wissam Rabadi is the Executive Director at El Hassan Business Park in Amman, Jordan responsible for the Incubation and Investment programmes through the iPARK Technology Incubator and the BEDAYA Business Angel Network. He has over 15-years experience in the Commercialization of Technology, Management of Innovation and New Venture Creation. He was the New Business Development Manager at Texas Instruments and a Professor of Engineering at the American University in Dubai among others. He holds a PhD in Computer Engineering and an MBA from the University of Texas in Austin.

Autumn Gorman has been serving as an USAID-sponsored Emerging Markets Development Advisers Program Fellow at El Hassan Business Park in Amman, Jordan for much of the past year. In addition to advising entrepreneurs at the incubator and in the angel network, she is co-founding a new organization to engage Jordan’s diaspora in development. She holds an International MBA in Sustainable Development and a Master of Arts in Intercultural Communication from the University of Denver, CO.
Published on 14-10-2012 13:46 by David Tee. 1720 page views

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