• What we do
  • The People
  • About Us
  • Why Innovation Africa
  • Contact Us
Innovation AfricaCreating the Future Today
  • Feature Articles
  • Innovation
  • Agriculture
  • ICT
  • Technology
  • Entrepreneurship
  • Health
  • Store
  • Contact Us
Menu
  • Feature Articles
  • Innovation
  • Agriculture
  • ICT
  • Technology
  • Entrepreneurship
  • Health
  • Store
  • Contact Us
  • Demystifying start-ups, or why Snapchat is an outlier

    March 16, 2017 Editor 0

    A market in Ramallah, West Bank. © Arne Hoel/The World Bank

    Snapchat made its historic initial public offering this month with a market valuation of $33 billion, which qualifies it as a decacorn (a firm valued at least $10 billion, compared to a unicorn, which is valued at a mere $1 billion). Snapchat, once the bane of parents as a teenage distraction, overtook Alibaba’s record of raising $22 billion in 2014 and has spawned two 26-year-old multi-billionaires.

    It is tempting to be dazzled by the likes of Snapchat, Uber, Facebook and Airbnb and to conclude that the start-up scene is dynamic and thriving. However, the reality is rather different, and perhaps even somewhat grim: U.S. Census data released in 2016 show that new business creation is near a 40-year low. According to a number of researchers, the rate of business start-ups and the pace of employment dynamism in the U.S. economy have fallen over the past decades.

    A critical factor in accounting for the decline in business dynamics is a lower rate of business start-ups and the related decreasing role of dynamic young firms in the economy. For example, the share of U.S. employment accounted for by young firms has declined by almost 30 percent over the past 30 years. This statistic has significant implications given that the churning effect of new firms is an important means of reallocating capital and labor from low-productivity to high-productivity activities, which in turn is required for long-term productivity-led growth.

    If this were not worryisome enough, the data also shows that since around the year 2000, there are far fewer high-growth young firms being created in the United States. Most start-ups fail, but a very small percentage (between 1 percent and 5 percent, based primarily on data from OECD countries) are innovative and dynamic, grow rapidly and create the most jobs and value, thus making a disproportionate contribution to overall productivity growth.

    The likelihood of a start-up in the United States becoming a high-growth firm is now lower than before the year 2000, which is counterfactual in the age of digital disruption. No one is quite certain of the economic, social, and demographic factors behind these trends of declining start-up activity and the dearth of high-growth firms in the United States, but there are a number of theories, including the effects of the Great Recession, generational cultural changes and changing risk appetite of young people, a burdensome regulatory environment, and the increasing importance of large, innovative firms that have adapted many of the appealing features of startups.

    A World Bank Group team is exploring the topic of high-growth entrepreneurship in developing countries to examine whether there are similar patterns and trends as in the United States and OECD countries. This study looks at the prevalence and characteristics of high-growth firms in various economies, the attributes of the firm and the entrepreneur, the business environment, and other factors such as the role of foreign direct investment and spillovers/linkages and agglomeration effects. The focus of the study will be also to assess the policy instruments being deployed and how effective are these in providing targeted support to high growth firms.

    The Global Entrepreneurship Congress (GEC) this week in Johannesburg, South Africa provides an excellent opportunity to exchange ideas and deepen insights on the challenges of identifying and nurturing high-growth firms. This year’s GEC theme is “Digital Disruption.” More than 4,000 disruptors — entrepreneurs, investors, policymakers and ecosystem builders from more than 160 countries — are coming together to exchange market-specific insights on how to identify and nurture the most innovative high-growth entrepreneurs from across the world to create high-quality jobs, drive productivity-led sustainable growth and find solutions to global challenges.

    Go to Source

    Related Posts

    • South Africa, Egypt, Kenya & Nigeria among top 10 African Software Development countries According to Github
    • Who Can Teach Leadership?Who Can Teach Leadership?
    • [News & Analysis] Malaria: As Drug Pilot Wraps Up, a Lively Debate About Its Future[News & Analysis] Malaria: As Drug Pilot Wraps Up, a Lively Debate About Its Future
    • Kenya: Orange Telkom Unveils 3G Firefox OS Low-End Smartphone in KenyaKenya: Orange Telkom Unveils 3G Firefox OS Low-End Smartphone in Kenya
    • Global Entrepreneurship Index- Sierra Leone 132/137Global Entrepreneurship Index- Sierra Leone 132/137
    • Converting premium value into social good
    Sovrn
    Share

    Categories: World Bank PSD

    Tags: start ups

    Lessons from Five Years of Helping Governments Foster Incentives Transparency Rural Women Diplomats – Mediation of a longstanding conflict in the Volta River Basin

    Leave a Reply Cancel reply

    You must be logged in to post a comment.

Subscribe to our stories


 

Recent Posts

  • Entrepreneurial Alertness, Innovation Modes, And Business Models in Small- And Medium-Sized Enterprises December 30, 2021
  • The Strategic Role of Design in Driving Digital Innovation June 10, 2021
  • Correction to: Hybrid mosquitoes? Evidence from rural Tanzania on how local communities conceptualize and respond to modified mosquitoes as a tool for malaria control June 10, 2021
  • BRIEF FOCUS: Optimal spacing for groundnuts in smallholder farming systems June 9, 2021
  • COVID-19 pandemic: impacts on the achievements of Sustainable Development Goals in Africa June 9, 2021

Categories

Archives

Popular Post-All time

  • A review on biomass-based... 1k views
  • Can blockchain disrupt ge... 760 views
  • Apply Now: $500,000 for Y... 751 views
  • Prize-winning projects pr... 711 views
  • Test Your Value Propositi... 686 views

Recent Posts

  • Entrepreneurial Alertness, Innovation Modes, And Business Models in Small- And Medium-Sized Enterprises
  • The Strategic Role of Design in Driving Digital Innovation
  • Correction to: Hybrid mosquitoes? Evidence from rural Tanzania on how local communities conceptualize and respond to modified mosquitoes as a tool for malaria control
  • BRIEF FOCUS: Optimal spacing for groundnuts in smallholder farming systems
  • COVID-19 pandemic: impacts on the achievements of Sustainable Development Goals in Africa
  • Explicit knowledge networks and their relationship with productivity in SMEs
  • Intellectual property issues in artificial intelligence: specific reference to the service sector
  • Africa RISING publishes a livestock feed and forage production manual for Ethiopia
  • Transforming crop residues into a precious feed resource for small ruminants in northern Ghana
  • Photo report: West Africa project partners cap off 2020 with farmers field day events in Northern Ghana and Southern Mali

Tag Cloud

    africa African Agriculture Business Business model Business_Finance Company Crowdsourcing data Development East Africa economics Education Entrepreneur entrepreneurs Entrepreneurship ethiopia ghana Health_Medical_Pharma ict Information technology Innovation kenya knowledge Knowledge Management Leadership marketing mobile Mobile phone nigeria Open innovation Organization Research rwanda science Science and technology studies social enterprise social entrepreneurship south africa Strategic management strategy tanzania Technology Technology_Internet uganda

Categories

Archives

  • A review on biomass-based hydrogen production for renewable energy supply 1k views
  • Can blockchain disrupt gender inequality? 760 views
  • Apply Now: $500,000 for Your Big Data Innovations in Agriculture 751 views
  • Prize-winning projects promote healthier eating, smarter crop investments 711 views
  • Test Your Value Proposition: Supercharge Lean Startup and CustDev Principles 686 views

Copyright © 2005-2020 Innovation Africa Theme created by PWT. Powered by WordPress.org