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Importance of Startup Incubators in Emerging Markets

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Entrepreneurship, at different scales, always has an impact on individuals and communities as it brings independence and prosperity.

Entrepreneurship in developing markets grows economies and can be a powerful social equalizer. To break down barriers, it is imperative to further promote business creation in such nations on a wider scale and as quickly as possible, especially as emerging countries are continuing to lose their brightest minds who opt to move to more prosper regions of the world; a brain drain that further accentuates economic disparities between countries.

According to the International Organization for Migration (IOM), this exodus affects African countries the hardest, since Africa has already lost one third of its human capital and is bleeding its skilled personnel at the rate 20,000 per year. These are highly educated university graduates: doctors, university lecturers, engineers and other professionals who are leaving the continent each year, for good!

Emerging countries desperately need to keep these skilled executives, managers and entrepreneurs. Many developing countries have understood this and have worked on trying to ease the problem by simplifying their company creation processes, and launching business accelerators and incubators. These initiatives remain scarce and are usually backed by the government or NGOs who tend to be the driving force.

NGOs tend to focus on projects that have local immediate impacts on disadvantaged communities. In a few cases, business coaches have launched private mentorship outfits, sometimes with the backing of government initiatives, but success stories are scarce and so often the impact is limited to the mentor having a successful mentorship business.

Developed nations, through regional investment and empowerment authorities, use the same acceleration models to promote projects that help employment and have an impact on local economies, but the most powerful effects, those felt worldwide, have always been initiated by the creation of startups that were backed by private funds through mechanisms like private incubators, accelerators, angel investors and venture capitalists.

Still, wide impact entrepreneurship isn’t exclusive to Silicon Valley, New York, Paris, London or Tokyo, and it is not always about using the latest technology! Simple solutions, developed by entrepreneurs in developing countries, can similarly have impacts on worldwide audiences.

Unfortunately “world reaching” ventures from emerging markets are rare, as entrepreneurs in these countries face major obstacles to building successful startups due to the local culture, the scarcity of experienced mentors and very inadequate funding. In fact the 2015 Africa Competitiveness Report details the most problematic problems for doing business in Africa. They are in order of importance: access to financing, corruption, lacking infrastructure, bureaucracy, and an inadequate workforce

Many entrepreneurs, in developing countries, simply do not trust themselves to compete on the international scene and stick to creating solutions that insure their local prosperity rather than embrace worldwide aspirations by building perhaps farther-reaching solutions, which may fail! It does not help that failure is often regarded as a form of inadequacy on the part of the entrepreneur, which further burdens, those that go through such stigma.

In the few cases where local entrepreneurs go with their ambition, they often have no recourse but go through banks, which seldom finance projects when there are no tangible collaterals and even then, they usually qualify these types of projects as risky and dictate financing at very disadvantageous terms.

Even with the Internet being the great equalizer that it is, startups who emerge from the developing word with worldwide ambitions remain very scarce, as investors often concentrate their investment in particular sectors or regions of the world and tend to shun investing in areas that present just too small of opportunities for them and thus, in their mind, are not worth the trouble of their time and investment, when in fact some of these startups can be lucrative investment opportunities, due to this very lack of competition for these projects! RoamStart in Tunisia, Fuzu in Kenya, Custos Media in South Africa, or Pointivo in Nigeria are examples of promising startups but there are still too few of them.

Some companies, especially from Europe, have seized on this opportunity and created private funds and incubators in several emerging countries. These incubators have launched startups for which they basically “hired” local entrepreneurs to develop local solutions based on “what already works” in leading nations. Rocket Internet, Seedstars and NUMA are some examples.

The market for such ventures being so open and at such an embryonic stage, the terms of the deals that the entrepreneurs get are often not as advantageous as those obtained by their counterparts in the US or Europe, but in light of the risk mitigation steps that need to be taken by these first movers and with terms being much more favorable than those of banks, this is an acceptable investment strategy since it is clear progress.

These investment outfits are growing very fast as a result of their first mover’s advantage and the lack of competition from other venture capitalists, so there is a bit of the “Wild West” effect. A few incubators, however, had to close! Hypercube Hub in Zimbabwe and 88mph in Kenya for example closed in 2015, Raizcorp on the other hand is a rare example of a profitable incubator not receiving grant funding. Other brave local outfits are launching, such as Wired Startups, out of Morocco, also a private company, who is launching its own brand of incubation, championing projects aimed at the U.S. market using unique co-founding partnerships.

This is encouraging for Africa, especially as we see in parallel that the number of investments is increasing. In fact, Disrupt Africa reports that African tech startups received funding in excess of US$129 million in 2016, with the number of startups securing funding up by 16.8 per cent year to year. Still, this remains a dismal number for such a large and full of potential continent.

In time, more local players will get over their fear of failure, especially as they accept that most startups can fail but that those startups that succeed can substantially cover the losses of a portfolio and even make it very profitable. Things should also stabilize even further as more local and international players get into similar forms of co-founders incubation types of agreements, and competition for talent and projects grows.

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About the Author

This article was written by Mounir Elabridi. Mounir is Co-Founder and CEO of Wired Startups, a startups incubator, based in Morocco. Wired Startups brings together teams of developers, entrepreneurs and designers and helps them build investable prototypes for the international market. Follow Wired Startups on Twitter, Facebook and LinkedIn.

Callum Connects

Mikyung Kim, TV Commercial Producer

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Mikyung Kim is a savvy producer who runs her own TV and print production business, based in Hong Kong.

What’s your story?
I am a TV commercial and print producer working with advertising agencies and brands to bring their communication needs to the screen. My background is in film production and I started my career in Hollywood working with Oscar winning directors Michel Gondry and Alejandro González Iñárritu. Before starting my own company last year to produce content directly with agencies and brands, I was with Ogilvy & Mather Hong Kong for nearly five years as the Senior Producer and Head of TV running the film production department.

What excites you most about your industry?
How it’s constantly evolving! Every day is different and it’s certainly never boring. I love that it’s a creative industry and that my job involves talking to people with creative minds on how we can bring a story on paper to life. It’s exciting that the advertising industry places high value on the creativity and effectiveness of content. I’ve produced a few commercials that creatively push the envelope with fun and sometimes wild ideas that have converted into positive brand awareness. Ever heard of KFC Finger Lickin’ Good…Nail Polish that yes, tastes like chicken? https://www.adweek.com/creativity/kfc-just-made-edible-finger-lickin-good-nail-polish-yeah-tastes-chicken-171245/

What’s your connection to Asia?
I was born in Seoul and raised in Hong Kong until graduating from high school at HKIS. I spent my university years in Boston at Emerson College and worked in Los Angeles at Anonymous Content and Partizan Entertainment. But on a brief visit back to Hong Kong in 2010, I decided to move back and continue my career here, and it was the best decision I ever made.

Favourite city in Asia for business and why?
Hong Kong is my home so it will always be my favourite city for business and for me personally. What I love about Hong Kong is that while I am based here, I can actually work with agencies and brands from anywhere in APAC. If I need to attend an important meeting, I can just hop on a quick flight easily. I spent most of 2017 working in Seoul with Korean agency Cheil and Samsung, and currently I am working with Japanese agency ADK and Toyota based in Singapore.

What’s the best piece of advice you ever received?
“Fake it until you become it,” from Amy Cuddy’s TED talk. Worth a watch. This helped me early in my career when I felt like I was under qualified for the job I was in. I learned to fake my confidence and fake a powerful body language until I truly felt that confidence became something real. It was nerve wracking at first but it worked and now I don’t have to fake it.

Who inspires you?
My friends. Noelle who worked part time jobs while being a full time student to pay her own tuition while we were in college together. Osti who is a lawyer focused on supporting developing nations and a board member of Redress, an environmental NGO working to reduce waste in the fashion industry. Vanessa who runs a real estate company, co-owns the gym Crossfit Asphodel, started a health foods business called Quo and NGO The Keep Moving Project to promote wellness in our community. Cathy who will be the first Asian woman to direct a big budget superhero film starring Margot Robbie with Warner Bros and DC. And too many more to name!

What have you just learnt recently that blew you away?
5.2 million plastic bottles are thrown away in Hong Kong every day. Plastic pollution is a major issue for the environment and we as responsible citizens can do our small part by reducing our consumption of unnecessary plastic. I do mine by having a water filter at home and carrying my own reusable water bottle with me everywhere I go. I love the brand Hydroflask because the stainless steel material keeps water hot or cold for hours, so I don’t feel tempted to buy a cold water at 7-11 on those hot, humid days we have here.

If you had your time again, what would you do differently?
About five years ago I purchased my very first stock and put one month’s salary into it, which at the time was a lot of money for me. Knowing how that stock has performed now, I would have put all my savings into it.

How do you unwind?
Exercise is essential in my daily life to help clear my head and de-stress. My go to is a workout at Crossfit Asphodel, running outdoors, yoga and hiking. But a glass of red wine and live music at Soiree in Soho on Sunday night works pretty well too!

Favourite Asian destination for relaxation? Why?
One of the best trips I ever took was to the island of Lombok in Indonesia. Two girl friends and I did a 3 day 2 night hiking and camping trip to summit the Mount Rinjani Volcano. It was physically challenging but mentally relaxing. There was no cellphone reception, no distractions, we had the company of nature and nights with skies full of shooting stars. It was pretty magical. We then went to the Gili Islands for a few days of scuba diving, yoga and sitting on the beach doing nothing but sipping on coconuts. That was pretty relaxing too.

Everyone in business should read this book:
“Nice Girls Don’t Get the Corner Office” by Lois P. Frankel and “Lean In” by Sheryl Sandberg. Essential reads for every working woman and/or man who wants to know how to support the working women in their life.

Shameless plug for your business:
I am a TV commercial and print producer that can plug into an existing advertising agency or brand team to produce their communication needs. Many advertising agencies these days are scaling down so they have creative directors and account services but may not have an in-house producer, so I can fill that gap by becoming a part of the existing agency team. For brands that want to produce content directly without involving an agency, I can also bridge the gap by bringing my production knowledge in-house and working as part of the marketing/brand team and liaising with the other departments in the company such as product team and ecomm.

How can people connect with you?
They can email me at [email protected]
or visit my website at mkimproducer.com

This interview is part of the ‘Callum Connect’ series of more than 500 interviews

Callum Laing is an entrepreneur and investor based in Singapore. He has previously started,
built and sold half a dozen businesses and is now a Partner at Unity-Group Private Equity and Co-Founder of The Marketing Group PLC. He is the author two best selling books ‘Progressive Partnerships’ and ‘Agglomerate’.

Connect with Callum here:
twitter.com/laingcallum
linkedin.com/in/callumlaing
Download free copies of his books here: www.callumlaing.com

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Callum Connects

Renne Ballard, Owner of Renée Ballard Communications

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Renne Ballard runs a social media agency working with business women, helping them find their business’s voice.

What’s your story?
I began my career in PR/communications ten years ago in Australia, after arriving home from two years in Dubai. In Dubai I was working for Emirates Airlines as a flight attendant and flying around the world non-stop for two years. This really sparked my interest for how people communicate. I started out as a community manager for an online advertising company, then moved into the corporate world of outdoor advertising, managing internal and external PR and communications. After having a baby four years ago, I decided to leave the safety net of corporate, and stride out on my own. I now run a social media agency and I specialise in working with business women, helping to find their business’ voice so they can use social media to achieve their business goals.

What excites you most about your industry?
I love the open accessibility online provides. It’s free for businesses to get online and connect with their target audience. Twenty years ago, advertising and PR was insanely expensive and quite elitist, but through incredible platforms like Facebook or Twitter, any business can connect with who is looking for their product/solution. Social media is particularly effective for small businesses because they have the edge when it comes to authenticity and a clear voice.

What’s your connection to Asia?
I’m in Hong Kong because I’m a trailing spouse. I know it’s such a daggy term, but I love it, it makes me sound so dedicated to my husband! Alas, we came to Hong Kong for my husband’s work. He’s the Design Director of Asia for an international retail design agency. We’ve been here for almost two years and it’s been a huge learning curve in terms of business and culture. We love the fast-paced nature of Hong Kong and the fact that everything is open late – it suits me perfectly because I’m nocturnal.

Favourite city in Asia for business and why?
That’s easy, Hong Kong. It’s the perfect blend of start-ups and mothership-sized institutions. I love the small business side, watching the collaborations between workshare spaces with galleries, networking groups and foodies; it’s a hothouse of creative partnerships here.

What’s the best piece of advice you ever received?
When you’re are feeling scared about your next step, lean in and feel the difference. Is it fear mixed with excitement? Or fear mixed with dread? Always go with the former and cut loose the latter.

Who inspires you?
I love Tamara Mellon (Jimmy Choo founder). She has created multiple empires and she never stops trying new business models and pushing her limits. It helps that I love shoes too.

What have you just learnt recently that blew you away?
I just turned 40 years old. At best, I’m probably halfway through my life. It makes me constantly question, “Am I where I want to be?”

If you had your time again, what would you do differently?
I would have asked more questions to the people I looked up to, and listened less to the people telling me I won’t achieve my goals.

How do you unwind?
In this day and age, it’s scandalous to say, but I love sunbaking. At any chance, you’ll find me poolside, laying in the sun in a trance-like state.

Favourite Asian destination for relaxation? Why?
Northern Danang in Vietnam. We were there at Christmas, at the foot of the mountains and it was beautiful. Heaps of wildlife and jungles and enough five star resorts that I was never parched once.

Everyone in business should read this book:
‘The E Myth’ by Michael Gerber. It’s an oldie but a goodie because it succinctly outlines how to transition from a one person operation to a global business like McDonalds. Once you see how important systems and processes are, you can recognise shambolic companies a mile off.

Shameless plug for your business:
Renée Ballard Communications is a social media agency that works with business women who are ready to make social media work for them. We create effective, powerful social media strategies that are tailored to the people who will be breathing life into them. We hand on heart promise to never use annoying, marketing buzzwords and that we value laughter above everything else.

How can people connect with you?
[email protected] or www.reneeballard.com or +85296670115

Twitter handle?
@ballard_comms

This interview is part of the ‘Callum Connect’ series of more than 500 interviews

Callum Laing is an entrepreneur and investor based in Singapore. He has previously started,
built and sold half a dozen businesses and is now a Partner at Unity-Group Private Equity and Co-Founder of The Marketing Group PLC. He is the author two best selling books ‘Progressive Partnerships’ and ‘Agglomerate’.

Connect with Callum here:
twitter.com/laingcallum
linkedin.com/in/callumlaing
Download free copies of his books here: www.callumlaing.com

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