Small and medium-sized enterprises are a considerable part of the economy, both in terms of economic output and jobs. This is especially so in emerging economies.
Research shows that entrepreneurial support can be highly effective in terms of boosting revenue, employment, and financing. It seems common, however, for entrepreneurs to struggle once their tenure in these programs ends. This can be problematic in emerging economies where entrepreneurs may lack access to a broad range of professional services to help them grow their businesses.
Pacing it
The researchers reveal a novel type of entrepreneurial support organization that they refer to as a pacer. These aim to provide support over the long term and operate in the same way a pacemaker in a marathon does.
This long-term focus aims to help SMEs make progress not just economically but also socially. The pacers provide a range of support, such as mentorship, learning opportunities, and peer engagement to post-revenue businesses.
These tend to follow on from more intensive support in the early stages, in a similar way to more traditional entrepreneur support organizations, before the founders graduate into more long-term support after that.
What’s more, this support is often offered despite not taking an investment stake in the firm. Other pacers might make a small investment in the firm to underline their long-term commitment.
Long-term value
After reviewing the performance of both pacers and the startups they support, the researchers identified four key elements that underpin the value they provide:
- Volunteer networks, with these typically pooled from members and nonmembers.
- Digital platforms, which allow for the provision of various content to support entrepreneurs.
- A unique funding mix, which sees pacers pull in financial support from philanthropists, donors, membership fees, and equity capital. These diverse sources underpin the long-term nature of the programs.
- A collectivist organizational culture, which is crafted by various routines and rituals that remind members of their shared values.
Long-term support infrastructures such as those provided by the growing cadre of pacers are important ingredients to cultivating sustainable entrepreneurship ecosystems in emerging markets.
