Remarks by Lorraine Hariton, Special Representative for Commercial and Business Affairs Bureau of Economic and Business Affairs
at APEC Start-up Accelerator Leadership Summit
Taipei, Taiwan, August 13, 2013
(As Prepared for Delivery)
First, I’d like to thank the organizers of this Summit for their hard work in putting together such a fantastic event and providing me the opportunity to talk with you all today on the important topic of fostering innovation and entrepreneurship in the global market.
Before my career with the U.S. Department of State, I, like many of you here today, was a technology entrepreneur. I worked in Silicon Valley during the heart of the Internet bubble.
Like many start up CEO’s I came from the technology sector and had held executive roles for larger corporations before I joined a startup as what is often called “adult supervision.” I was able to bring these business skills with me as I built two companies, one focused on speech technology and the other on music technology.
These two ventures succeeded not only because we were able to leverage our own team’s expertise, business skills, and industry knowledge, but because we also had the benefit of being in Silicon Valley.
Silicon Valley brought together private sector expertise from corporations like HP and Fairchild, premiere universities like Stanford and research organizations like SRI and Xerox Parc. Innovation was supported by the U.S. government through programs like Arpanet. From this evolved the ecosystem for innovation and risk taking that we know today.
Creating similar types of ecosystems around the world is one the key focus areas in my work now at the U.S. Department of State.
Government’s Role in Global Entrepreneurship
When President Obama launched the U.S. government’s Strategy for American Innovation, he said, “Innovation is more important than ever. It is the key to good, new jobs for the 21st century. That’s how we will ensure a high quality of life for this generation and future generations.” In fact, in the US, more than 75% of the post-World War 2 GNP growth is due to new innovations.
We see governments all over the world making entrepreneurship and innovation a priority.
This is especially important today to create an environment that fosters innovation and entrepreneurship within a global context. In today’s global world, no one nation’s innovation system exists in isolation. Innovation can happen anywhere.
With globalization, the Internet and growing middle classes around the world, new solutions can come from anywhere. Allowing researchers and innovators to work in global teams, discuss problems, and collaborate on solutions can help supply chains bridge continents and allow innovations to move across markets, borders, and over oceans.
But, without support to bring innovations to scale, many entrepreneurs are not able to take advantage of the global economy and capitalize on opportunities that exist.
In many APEC economies there are still gaps that innovators and entrepreneurs face, especially in the areas of:
- Capacity building
- Linking to the global market
- Accessing capital
One of the programs that we have developed at the U.S. Department of State to address these issues is the Global Entrepreneurship Program or GEP.
Global Entrepreneurship Program
The GEP was launched by Secretary Clinton in April 2010 at the Presidential Summit on Entrepreneurship. The Program coordinates private sector and government programs to help build entrepreneurship ecosystems.
GEP’s partners include over 70 domestic and global NGOs, corporations, foundations, educational institutions and investors.
To develop entrepreneurship ecosystems, GEP partner organizations, with the help of the U.S. embassies and missions, further their activities, either by expanding current programs to a new place, or deepening existing programs in their current countries of operation.
Now I am going to discuss some of these partners in the context of the three key areas of capacity building, accessing global markets and accessing capital. Our missions around the world can work with you locally to bring these partners to your country.
One of our premiere partners is Global Entrepreneurship Week, as you heard about earlier this morning from Jonathan Ortmans. We have worked with our missions across the world to ensure to support this program, and have grown participation from just five missions to now over 80!
UPGLOBAL is born out of the merger of Startup America (a USG launched program to build domestic entrepreneurship ecosystems) and Start UP Weekend. It has a global network of locally-driven business model competitions open to any type of business idea and seeks to connect entrepreneurs with the communities and resources they need access to.
Accelerators & Incubators
We have also seen tremendous growth in accelerators and incubators around the world. In fact, I have visited Appsworks right here in Taipei. These programs provide a breeding ground for learning, mentorship, networking, and funding.
In fact, many U.S. incubators provide space for foreign entrepreneurs and may provide great opportunity for many of you.
One such incubator, 500 Start-ups, provides early-stage companies with up to $250K in funding, access to their startup accelerator program, and connections to unique networking events.
Plug and Play Tech Center global network includes over 300 tech startups, 180 investors and a community of leading universities and corporate partners. Plug and Play provides tech startups the necessary skills and access to organize, connect, and grow through networking events, education and immersion programs, as well as assistance in mergers & acquisitions.
In Washington D.C., 1776 is an incubator devoted to promoting entrepreneurship in the industries of health, energy, education, and government.
The program provides mentorship to grow its companies, connects them within the greater D.C. network, and provides a startup school to teach the basics of coding, business development, social media marketing, and product design and management.
As we have seen the growth of these accelerators and incubators within the U.S. open their doors to international innovators, we have also seen a trend toward more countries setting up incubators in Silicon Valley to help their entrepreneur’s access mentorship and funding. Countries such as Ireland, Australia, France, and Israel have all set up incubators in Silicon Valley.
This allows countries to access international capital and increases global linkages by exposing their entrepreneurs to the Silicon Valley ecosystem.
Linking networking opportunities to the global market
This conference and the challenge sponsored by Intel tomorrow are perfect examples of international collaboration efforts to bring innovators and entrepreneurs from all over the APEC region together to network and establish global connections.
There are many similar examples of these types of programs throughout the APEC economies.
The Chilean government, for example, is committed to linking their innovation efforts to the global market by sponsoring a $40 million grant to launch Start-Up Chile. The program brings innovators and entrepreneurs from all over the world into Chile by providing equity-free seed funding of $40,000, temporary work visas, and networking opportunities.
The entrepreneurs in this program are placed within an incubator setting and are continually mentored. They are also required to reach out to the local community to share their knowledge.
With this program, Chile is not only able to foster entrepreneurship within its borders, but create linkages globally by bringing in talent from around the world and providing entrepreneurs access to capital and new markets while creating new jobs in a more global context.
Taking advantage of diaspora communities is also a key way to support global networking. Members of your communities do not just live within the confines of your countries’ physical borders anymore. Linking to cultural and national networks abroad is a fantastic way to start bridging the global gaps.
La Idea is one program that does this within the Latin American community.
Launched by former Secretary of State Clinton, La Idea, an initiative of the International diaspora Engagement Alliance (IdEA), is a public-private partnership designed to promote linkages between the Latin American and American entrepreneurs.
La Idea will provide free business counseling, access to finance, and connections to opportunities across the Americas.
The program has recently launched an online business competition, open to U.S. entrepreneurs working with Latin American businesses. The winner will receive $50,000 in cash and in-kind services. This competition not only provides a great opportunity for entrepreneurs, but promotes collaboration across the greater America region.
Lower Mekong Initiative
Another initiative under the Lower Mekong Initiative (LMI), a multilateral partnership effort initiated by the United States in 2009 for promoting cooperation in the Mekong sub-region, is TIGERS@MEKONG.
TIGERS@Mekong, a public-private alliance platform aimed at boosting competitiveness and growth in targeted Mekong economies by supporting young innovators and entrepreneurs.
At the end of this month, TIGERS@Mekong will hold its DEMO kick-off event in Ho Chi Minh City, Vietnam, to facilitate growth and strengthen the startup and innovation ecosystems in the region.
These types of initiatives help build extremely impactful regional networks to create greater opportunities for knowledge-sharing, collaboration, mentorship, and capital for entrepreneurs and innovators who were previously limited in their ability to scale.
Access to Capital
We have discussed how important it is to build skills and provide global linkages to support the growth of innovators, but one of the key areas that still remain a challenge is access to capital.
Building local angel networks
The U.S. Department of State has been actively working on several initiatives to help provide entrepreneurs outside of Silicon Valley access capital.
One such example is through angel investing training.
Many APEC economies have environments in which capital is usually distributed only within a family, leaving a gap in funding for those innovators and entrepreneurs that may not have access to family funds.
Those with funds may also be weary of investing in ideas or industries with which they do not have familiarity.
One important way to overcome this obstacle is to educate potential local investors on the concept of angel investing and venture capital.
The U.S. Department of State works with its private sector partner, Angel Resource Institute to sponsor trainings and conferences for investors and entrepreneurs. These trainings help to strengthen the angel investment infrastructure and develop an understanding of how early stage investment catalyzes economic growth.
Conferences held in Indonesia and Mexico were extremely valuable in not only providing a learning opportunity, but as a networking event to connect small business owners with potential investors. After our training in Indonesia, a new angel network has been formed and is funding entrepreneurs throughout the country.
With the success of these events, future conferences are now being planned in Morocco, Jordan, and the Philippines.
Another partner of ours is Golden Seeds Angel Group, an investment firm that is dedicated to providing above-market returns through the empowerment of women entrepreneurs and their investors. The fund provides training in angel and venture investing to help both entrepreneurs and potential investors.
Today, the trend towards angel investing for seed capital is growing rapidly with more formalized groups like the AngelList to help angels connect with companies. Currently AngelList has over 100,000 startup profiles of which about 3,000 have been funded by AngelList connections. AngelList has resulted in more than $10 million worth of investment per month, with a significant portion of this coming from the international markets, including India, Israel, the U.K., and Canada.
We are also seeing additional sources like Crowd Funding to raise money for young entrepreneurship becoming even more accessible and globalized.
Crowdfund Capital Advisors is a consulting and advisory firm that works specifically with professional investors and government organizations to educate on crowd-funding and help constituents generate and create crowd-funding environments within their own communities.
As you’ve heard today, fostering an environment that supports innovation and entrepreneurship in a global context takes a significant commitment from governments, the private sector, and educational institutions.
One of the key components to enabling this growth is collaboration. This October 11-12, the 2013 Global Entrepreneurship Summit will be held in Kuala Lumpur, Malaysia, with the theme, “Empowering and Connecting Entrepreneurs.”
This theme speaks to the fantastic progress being made in the APEC and ASEAN regions. With an increased commitment to building an entrepreneurial ecosystem together, we can begin to lay the foundation for great future economic growth.
We encourage you all to attend. President Obama will be there in person to lead the event and renowned leaders from every aspect of the entrepreneurship world will be there. Many of our partners will be sponsoring side events in addition to the main tent. Just Google Global Entrepreneurship Summit 2013 to register.
I am very grateful for the opportunity to speak with you all today and am excited to hear from our other fantastic speakers throughout the day. Good luck to those who will be participating in tomorrow’s challenge, and I hope to see you all in Kuala Lumpur later this year.