Two weeks ago, the African entrepreneurship and innovation sector received a huge boost of encouragement when the American payments giant Stripe announced the acquisition of the Nigerian company Paystack for $200 million USD.
But the most important news was not the impressive amount, or the expression of confidence in the local technology: according to a press release announcing the acquisition, Stripe bought the company in order to "expand into the African market".
While this sentence may seem insignificant next to a number like $ 200 million, it does tell an important story: a story of confidence not only in technology or the team, but in the local market. Stripe, one of the leading fin-tech players in the world, executed the deal because it believes in the economic potential of entering the emerging African market, and was willing to pay a lot of money for it.
Together with Facebook's announcement from last month of opening a second African office in Lagos, the long list of indications that the local ecosystem is developing just got a little longer.
The recent developments are not a result of luck or coincidence, but of investment of many efforts and resources. To reach such achievements and enable the creation of mega-companies, a whole ecosystem is needed; one that will support entrepreneurs and allow innovative, bold companies to thrive. But developing such an ecosystem is not so easy. It is a complex and complicated task, requiring not only investment, but in-depth planning and research. Fortunately, different countries have already done this successfully, and now we can learn a thing or two from their experience. And who better to start with, than the startup nation?
Small Country, Big Tech
Over the past few years, Israel has been known as the "start-up nation," and for good reason. Despite its small size (only 9 million citizens), Israel has released some of the most innovative companies and entrepreneurs in the world, including some of the glittering exits that came out of the Middle East (such as MobilEye, which was sold to Intel for about $ 14 billion, the famous navigation app Waze that was acquired by Google, and many more ).
But beyond being a powerhouse of technology, research and entrepreneurship, Israel also presents one of the most developed and leading ecosystems in the world. If we analyze and learn from it, we can refine some "guiding principles" with which we can lay the foundations necessary for a thriving innovation ecosystem, and lead countries and regions to a more advanced and innovative future.
Cultivating an innovative culture and entrepreneurial mindset
The chances of success of a start-up, innovative and promising as it may be, are very low. Even in the most developed countries and the most advanced ecosystems in the world, a new venture is most likely to fail. Therefore, in order to develop a strong ecosystem, large numbers are needed: the more entrepreneurs dare and form more companies, the greater the number of success stories, which in turn will fuel the circle and make more entrepreneurs dare to form a new company.
In Israel, if you ask 10 people on the street, it is likely that half of them have set up or are working in a start-up. But establishing more and more companies is not enough: there is a need to develop an innovative culture and entrepreneurial mindset, as well as to disseminate basic knowledge to the general public. Only by widespread dissemination of knowledge and development of the right mindset among many, can a greater number of entrepreneurs be achieved.
Advanced academic programs
Israel is the home of some of the oldest, leading academic programs for innovation and entrepreneurship, including specific programs, student clubs, and even a B.A in the studies of entrepreneurship.
The purpose of the various programs is twofold: First, to teach students from different disciplines the different principles of entrepreneurial and innovative thinking, as well as the range of skills required ("hard" and "soft" skills), thus maximizing their chances of future success, whether as entrepreneurs or as innovative and creative employees. Second, academic institutions are a tremendous source of research knowledge: through smart mediation for the industry, companies and entrepreneurs, researchers can also be helped to think in more entrepreneurial and business terms, and turn scientific breakthroughs into promising business ventures with improved chances of success.
The combination of a small country (both in the number of people and in the land size) and the local mentality have made Israel a paradise for entrepreneurs, where “everyone knows your name”. The interpersonal connections and collaborations help entrepreneurs from day 1. But to create a hyperlinked ecosystem, there is a need for more than the physical properties: only a sophisticated connection system will bring value to both parties and help the entire ecosystem. Dedicated meet-ups, conferences, meetings (physical and virtual), networking events, demo-days, and more, all built over the years and now allow entrepreneurs, investors and professionals to meet in the right place, and the right time.
Connection to industry
Until recently, some people thought that innovation was a sector that could operate in parallel with others, separate from the rest of the economy. Today, we know that in order to lead groundbreaking ideas it is necessary to have different principles of innovative and creative thinking combined with professionals from the relevant field. In Israel, the connection between the industry and the innovation ecosystem is absolute: companies run accelerators and incubators in their fields of operations, host events and dedicated meetings, and work closely with various programs, universities and ventures to explore new ideas, pilot, and integrate them into day-to-day operations.
Acceptance of failures
One of the most significant factors for a successful ecosystem is the exact opposite of success. In Israel, entrepreneurs are not afraid to talk openly about failed ventures, bad decisions they have made, and promising ideas that have vanished into thin air. Accepting failure as a legitimate thing allows entrepreneurs to dare and dream bigger and further, and pursue the craziest ideas. These are the ideas from which the most innovative companies have emerged, and are the ones that will lead the ecosystem in the future. More simply put: only an ecosystem that accepts failures can be accountable for success stories.
Support through various stages
In many places throughout the world, there is a perception that start-ups need help only at the early stage, before becoming large and well-established companies that can manage on their own. But the truth is completely different: in order to turn crazy ideas into reality, extensive and ongoing support is needed throughout the venture’s life cycle. Too many times companies that have overcome the initial obstacles find it difficult to face the new challenges that await after they cross the 5-year bridge. Help is needed along the way and can maximize the chances of success. This also enables deeper ecosystem engagement as it inserts more professionals in the game, including law firms, accounting firms, PR agencies, etc.
Over the past few years, many governments have finally realized the tremendous potential of the field of innovation, investing efforts and resources in establishing thriving local ecosystems. Understanding and recognizing potential are important for kickoff. Now, guiding principles and tangible steps are needed. By analyzing and learning from the experience of others, the same basic principles that led different ecosystems to success or failure can be refined. Only by doing so, we can maximize the chances of success, not those of the companies or entrepreneurs, but of the entire ecosystem.