Monday, January 26, 2009

Could the Next Silicon Valley Be in Developing Country?

In 1997, while working with businesses in Buenos Aires, Argentina, Linda Rottenberg thought mentors could help entrepreneurs there and in other emerging markets expand their businesses and eventually replicate the successes found in the Silicon Valley area of California.

That year, teaming with venture capitalist Peter Kellner, Rottenberg founded Endeavor, a New York-based nonprofit organization that connects promising entrepreneurs with top business leaders in their communities.

Entrepreneurs are the ones most likely to bring growth to developing market economies, Endeavor spokeswoman Elmira Bayrasli told America.gov.

Brazilian Bento Koike used Endeavor's assistance to build his wind turbine manufacturing firm. The company recently struck a $1 billion deal with General Electric Company.

With help from Endeavor mentors, Leila Velez, who grew up in poor neighborhoods of Rio de Janeiro, Brazil, expanded her beauty salon into a company that now generates $30 million in revenue. Entrepreneurs in Brazil agree to donate 2 percent of their company's equity each year to make Endeavor's operations in that country self-sustaining.

Endeavor wants entrepreneurs to think big. South African Vinny Lingham created his Web-building company, called Synthasite, in Cape Town with the help of Endeavor. He is proud of being from South Africa and hopes that one day he can become that country's president.

In America, where entrepreneurship thrives, people with ideas for a business have access to role models and startup money. But in many places in the developing world, there is a dearth of role models who can offer advice and capital, Bayrasli said.

Endeavor finds business owners with innovative ideas and potential to create jobs and provides them with access to networks that can boost them toward success. It does not fund entrepreneurs.

Since it began, its national boards have selected 330 of these "high impact" entrepreneurs. Collectively, those entrepreneurs have created 90,000 jobs and in 2007 generated $2.5 billion in revenue.

The companies founded by Endeavor entrepreneurs have been "important drivers of wealth creation" and have generated jobs that promote social mobility and fair income distribution, Rottenberg writes in Entrepreneurship in Emerging Economies, published by the Inter-American Development Bank.

After initial operations in Argentina and Chile, the organization spread its work to South Africa, the Middle East and four more countries in Latin America. It plans to be in 25 countries by 2015. Endeavor's most recent country additions were Turkey, Egypt and Jordan. The Jordan office works with the Queen Rania Center for Entrepreneurship to identify entrepreneurs to help.

In July 2008, a philanthropic group established by Silicon Valley business leader Pierre Omidyar, founder of online auction site eBay Inc., announced a $10 million donation to help Endeavor build its international operations.

Also in July 2008, the Inter-American Development Bank gave Endeavor $2.7 million to expand activities in Latin America to cities beyond country capitals.

EFFECT OF FINANCIAL CRISIS ON ENTREPRENEURS

In December 2008, Endeavor released the results of a survey showing how the global financial crisis is affecting entrepreneurs in developing economies.

While 55 percent of entrepreneurs surveyed said they expect more difficulty in obtaining financing in 2009, 84 percent said they have taken measures to protect their businesses - including changing their business models, suspending projects and freezing hiring.

Yet, they said, they expect a 31 percent rate of growth in 2009, benefiting from opportunities to hire talented workers laid off by other firms.

More information on Endeavor is available on the organization's Web site.