Should the Entrepreneurial Development Ecosystem Split in Two?
Is the Entrepreneurial Development Ecosystem (EDE) neglecting entrepreneurs?
At a conference on the future of EDE, everything remotely related to new business seemed to fall under the umbrella of EDE, including:
· Venture Development, Entrepreneur Development, and Social Development: Venture development is the Tech-VC model that is based on new innovations. Entrepreneur development is the Entrepreneurial Skills-based model. Social development seeks to solve social problems with entrepreneurial strategies. They were all discussed as part of the EDE.
· Small Businesses and VC-Funded Ventures: Small businesses and VC-funded unicorns were discussed as perhaps the two types of entrepreneurial for-profit businesses.
· Profit-Making Ventures, Social Ventures, and Lifestyle Issues. The assumption seems to be that entrepreneurial skills can help find new solutions to solve every problem.
The Entrepreneurial Development Ecosystem has two underlying themes:
· Venture Development, which is based on the opportunity and capital, covers idea innovation, strategy, pitch, angel capital, and VC. VCs replace the entrepreneur with a professional CEO after the opportunity or strategy’s potential is evident
· Entrepreneurial Skills, which includes the expertise to start, launch and build the venture to a successful company. By using finance-smart skills to grow with or without VC, the entrepreneur stays on as CEO and controls the venture and the wealth it creates. These skills can help everyone, everywhere.
Here are some key questions for Business Schools:
· Does the Business-School EDE have the resources and expertise to do justice to all of the above (venture development, entrepreneur development, social development, small business, etc.) or should it focus? And, if so, where?
· Is the Business-School EDE focused on Entrepreneurial Skills for students and entrepreneurs, or does it include Venture Development assuming that it is the same as Entrepreneurial Skills?
Here are 4 reasons why Business-School EDEs should focus on Entrepreneurial Skills, not Venture Development.
Skills are the foundation for every venture. VC is the foundation for nothing
· Skills are the foundation of a venture, be it a growth venture, a small business, or a social venture. VC is the foundation for nothing. “All” it adds (according to some entrepreneurs) is capital after evidence of potential and fails on about 80% of ventures financed.
· Skills are not dependent on VC because entrepreneurs get to Aha without VC. VC is dependent on skills to bring the venture to Aha, where VCs can see evidence of potential.
Venture Development focuses on ventures. Entrepreneurial Skills focuses on entrepreneurs
· Venture Development focuses on product innovation, pitch competitions, angel capital, minimum viable product, and VC. The assumption is that VC will fund high-potential ventures and replace the entrepreneur with a professional CEO. So, Venture Development does not need to worry about finance-smart strategies or skills to grow without VC
· Entrepreneurial Skills focuses on the needs of the entrepreneur. It teaches the proven skills and finance-smart strategies of unicorn-entrepreneurs to takeoff without VC and grow with or without VC after takeoff. VC helps very few after Aha. Entrepreneurial Skills can help all before and after Aha. These skills bridge the gap from idea to Aha when potential is evident.
Venture Development needs VC. Entrepreneurial Skills needs expertise.
· Venture Development seeks a viable product and strategy to attract angel capital and VC, when entrepreneurs are replaced.
· Unicorn-Entrepreneurship uses finance-smart skills, strategy innovation, smart capital, and launching without VC. Entrepreneurial Skills can develop self-sufficient entrepreneurs. Not all entrepreneurs can attract a team and capital, nor do they want one.
Venture Development helps few. Entrepreneurial Skills helps all.
· Venture Development and VC work for ~20/100,000 entrepreneurs, for about 6% of billion-dollar entrepreneurs who got VC early and were replaced as CEO, and for about 3% of VCs, nearly all of whom are in Silicon Valley and who are said to earn about 95% of VC profits.
· Entrepreneurial Skills can teach self-sufficient skills and smart strategies of Unicorn-Entrepreneurs, which has worked everywhere and for all. It has helped about 94% of billion-dollar entrepreneurs who avoided VC or delayed it and stayed in control of their ventures.
MY TAKE: There is not enough capital to fund all of the world’s entrepreneurial hopes. Instead of focusing on capital-intensive venture development, business schools can focus on finance-smart entrepreneurial skills to help everyone develop more successful ventures everywhere – with less capital. And guess what? Even the VCs can benefit – there will be more unicorns for them to fund.