The hardest question to ask is why.
Why does an entrepreneur set up a business, ie what is her goals; why in that field; why those investors over others or that exit route and timing? Why does someone back the entrepreneur or do business with them? And, why does a country care if the business succeeds?
It is the latter ‘why’ that is an interesting question to ask as the UK government provides its association with the Global Corporate Venturing Tech Scout Challenge tomorrow to bring nine of the best of British entrepreneurs in front of more than 40 corporate venturing units managing more than $5bn of venture assets under management. The afternoon will provide a useful comparison for how these UK-based start-ups are competing in the international arena as a further six entrepreneurs from overseas are challenged by the corporate venturing units.
Harvard academic Josh Lerner in his recent book, Boulevard of Broken Dreams: Why Public Efforts to Boost Entrepreneurship and Venture Capital Have Failed – and What To Do About It, followed up on his earlier work into the US government’s Small Business Innovation Research (SBIR) programme by looking at regions where public money has catalysed entrepreneurial and venture ecosystems as well as reasons it has failed in other geographies.
But beyond the reasons why governments are keen to boost entrepreneurial activity – prevents people claiming unemployment benefits, mops up youthful talent leaving university, creates new jobs and reinforces or creates clusters of excellence – and how they do so, it is interesting to ask whether nationalism helps the entrepreneurs?
Entrepreneurs tend to be driven by money. Usually initially enough money to feed themselves and any family then as a way of keeping score on their success and to provide security for the future. But other factors come into play, such as wanting to see an idea implemented, as a retort to critics or doubters, because no one else will employ you (or you don’t want to work for anyone else) or as a way of helping your country.
People might emigrate or take their companies to other regions but as the sea turtles returning to China from the US, or Irish diaspora, show a historical or familial tie to a plot of land or country can have meaningful impact.
But while the identification of a company with a country can be a two-edged sword, as Huawei is with China, Krupps was with Germany or Samsung with Korea, it can be an effective nation-building tool.
In the UK and other western markets the sense of national purpose has been seen as a dirty word – a recipe for nationalised or semi-privatised companies, such as British Leyland, to pass off shody goods to a local population with a flag sticker in the window.
The European Union in building a free market has cracked down on state subsidies for national industries in some areas while governments in other regions try and promote champions or offer cheap loans to underpin their price tenders.
As governments search for economic growth through equity rather than just increasing headline asset values through more debt, as well as fuller employment levels, having relative attractiveness can encourage the best entrepreneurs to stay or come, along with the capital to support their growth.
Capital tends to follow demand if returns stack up. Naïve calls for more patriotism are unlikely to work if a country also wants to attract the best immigrants and keep them here or build influence through soft power but understanding how a wider range of motivations influence entrepreneurs and then using them might lead to more successes being publicised and building back a sense of pride of national purpose is one tool the UK Trade and Investment department is polishing up again it seems in light of other countries’ success.