Why High-Impact Entrepreneurship Matters
The following is a guest commentary for CNBC.com.
Recently, Bono admitted to some "humbling" realizations about foreign aid—claiming that when it comes to fostering sustainable economic growth, "job creators and innovators are ... the key, and aid is just a bridge."
Sometimes we need to listen to our rock stars.
It's no secret: the world needs jobs. The UN estimates that worldwide, more than 500 million new jobs need to be created by 2020. Especially when it comes to emerging markets, there is a growing realization that entrepreneurship is the best answer to high unemployment. But not just any type of entrepreneurship: high-impact entrepreneurship.
High-impact entrepreneurs are visionaries who generate the highest returns, create the most high-value jobs, have the most significant impact on their communities, and inspire the most people to follow their lead — saying "if she or he can do it, I can do it too."
For 15 years, my organization, Endeavor, has been finding, training, and promoting high-impact entrepreneurs around the world. Now in 17 countries, we have screened 30,000 entrepreneurs and selected 726 individuals representing 455 companies to be part of our global network.
Aided by 2,500 top-flight business mentors that form Endeavor's boards and global "VentureCorps," these entrepreneurs have created 200,000 jobs and annually generate over $5 billion in revenue. These results affirm data released by our research arm, Endeavor Insight, that just 4 percent of the world's entrepreneurs create 40 percent of its jobs.
As another illustration, consider this question: what would it take to grow a country's GDP by 1 percent? In Mexico, for instance, it would take 273,000 new microfinance companies to achieve this result — but only 105 mid-sized "high-impact" companies.
Bottom line: if you want to grow an economy, you need to grow high-impact entrepreneurs.
So what's the best way to support these promising future job creators? As Endeavor has found, in emerging and growth markets — whether it's in Latin America or Africa, in the Middle East or Southeast Asia — entrepreneurs still face considerable barriers to growth: few role models, a lack of trust, a limited pool of quality management, an inability to access smart capital, and insufficient contacts.
For this reason, engaging the private sector in mentoring these promising yet undiscovered innovators is a key aspect to developing an entrepreneurial ecosystem. Entrepreneurs don't just need venture capitalists but "mentor capitalists." They need access to business leaders who can serve as mentors, advisers, connectors, investors and role models.
In other words, forget the myth of entrepreneurs being self-made. Even icons like Bill Gates or Richard Branson or Mark Zuckerberg didn't make it alone. They thrived in an environment that fostered and promoted their success, and in a network that helped nurture their growth.
Whenever I go to Silicon Valley, people talk about the abundance of venture capital and universities as a key driver of success. But the true magic is the network of people who together form an ecosystem of innovation. An ethos thrives wherein entrepreneurs don't just focus on their own success, but understand their own success depends on nurturing the next generation.
This multiplier effect is the true special sauce of entrepreneurship. It's the key to fostering employment and opportunity in growth markets around the world—and increasingly, here at home.