There is no shortage of government and foundation programs to reduce poverty. Despite the progress made over the last 50 years, poverty persists.
Can poverty be eradicated?
Look at India’s growth in the last two decades fueled by its Unicorn-Entrepreneurs. India has helped 415 million people escape poverty in the 16 years from 2005-2021. The pharmaceutical and software industries have been the catalysts for this improvement and the key reason for their takeoff and global competitiveness have been Unicorn-Entrepreneurs such as Narayana Murthy of Infosys, Azim Premji of Wipro, and Cyrus Poonawalla of Serum Institute.
Combine this achievement with the fact that VCs do not get involved till after evidence of potential, which means that Unicorn-Entrepreneurs have to develop the venture from idea to Aha without VC. In the U.S., about 76% of billion-dollar entrepreneurs avoided VC and 18% delayed it till after takeoff and stayed in control.
Replace Small business and VC: The Old Favorites of Economic Development.
It’s time to focus on developing Unicorn-Entrepreneurs as the primary drivers of economic growth. We need to rethink our approach to small businesses and venture capital, which have traditionally held the spotlight in discussions of economic development.
Here are 5 reasons to teach everyone Unicorn-Entrepreneurship skills:
· Poverty reduction requires wealth importation. Small businesses typically circulate wealth imported by others. Areas need globally competitive businesses to import wealth.
· Wealth importation needs globally competitive businesses that create value. This means shifting away from focusing on raw materials with little value added to high-value added businesses that can succeed globally.
· Value-added businesses have mainly been built on emerging trends. This means that areas need to train entrepreneurs skilled in emerging trends.
· Unicorn-Entrepreneurs excel in emerging trends: But Unicorn-Entrepreneurs need skills. Neither VCs nor anyone else can accurately identify entrepreneurial potential before the entrepreneurs prove them. For instance, nearly 10 VCs rejected Steve Jobs. This highlights the importance of teaching everyone the necessary skills to build unicorns, as VCs typically get involved after entrepreneurs have proven unicorn potential – they follow proof of potential rather than leading it. Pitch competitions that benefit a few based on instinct should be replaced by skills competitions that benefit many based on proof.
· Entrepreneurs need to learn the skills and finance-smart strategies employed by Unicorn-Entrepreneurs to achieve takeoff without VC, similar to the methods used by the 94% of billion-dollar entrepreneurs who avoided or delayed VC.
The Proof
Here are billion-dollar entrepreneurs who helped economic development with the right skills:
· Richard Burke built UnitedHealthcare without VC, using his skills in healthcare and finance.
· Dick Schulze led Best Buy without VC, capitalizing on his expertise in consumer electronics.
· Michael Dell established Dell without VC during the emergence of the PC industry.
· Joe Martin launched Boxycharm.com without VC, drawing from his expertise in online selling.
· Brian Chesky created Airbnb with late VC funding thanks to his proficiency in online selling.
· Gaston Taratuta built Aleph Holding into a multi-billion-dollar global digital advertising giant with an investment of $5,000.
· Niraj Jain built Wayfair into a behemoth without early VC.
· Thai Lee built SHI International, a billion-dollar IT company with the right skills.
A discernible pattern emerges. These entrepreneurs weren’t rich but possessed an unwavering drive for success. Along with their teams, they harnessed the essential skills for navigating emerging industries.
MY TAKE: Teaching finance-smart strategies and skills to everyone can be one of the most effective strategies for alleviating global poverty. The capital-intensive VC model benefits only around 20 out of every 100,000 entrepreneurs. It might be time for the venture development ecosystem, particularly universities, to broaden their perspective and explore the skills-based approach that has proven effective for a greater number of entrepreneurs. This shift entails not succumbing to the hype generated by the VC community and its supporters in the media and entrepreneurial education sector.
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