The power of three

2013-11-15 04:00:00.0
Max Loh

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IN the Global Entrepreneurship Monitor (GEM) 2012 report, Singapore was ranked third in both total early-stage entrepreneurial activity rate and entrepreneurial intention rates. Of the respondents surveyed, 11.6 per cent are in the process of setting up their business, or have already started not more than 3.5 years ago. This is higher than past reported rates of 6.6 per cent in 2011 and 4.9 per cent in 2006. There is much to cheer about. Indeed, the entrepreneurial scene in Singapore has progressed steadily over the years. Through our experience in organising the EY Entrepreneur Of The Year (EOY) awards for more than a decade, we have seen increased diversity in the pool of nominations across dimensions such as business sector, gender and age. The change in our entrepreneurial landscape is by no means accidental. The government has been instrumental in fostering a pro-enterprise environment through policies, funding, support, education and promoting a greater appreciation of the nexus between entrepreneurship and sustained economic growth. The formation of the Entrepreneurship Review Committee (EnRC) earlier this year is yet another concerted move to strengthen the entrepreneurship culture in Singapore and enable promising start-ups to grow into global competitive enterprises. The EnRC comprises members from a wide spectrum of the entrepreneurship community, including entrepreneurs, venture capitalists, angel investors and institutes of higher learning. The intersection of public and private sector views on this committee is expected to yield a robust dialogue around this important subject. This echoes EY's global research, where we found that the coming together of entrepreneurs, government and corporates is critical to building a thriving and sustainable entrepreneurial ecosystem. While entrepreneurs are vital change agents in developing new products and services, creating new business models and industries, generating jobs and contributing to prosperous societies in that process, they need the support of government and corporates. To understand the role that government and corporates play, we examine the core pillars of a vibrant entrepreneurial ecosystem. Access to funding is one of the most common stumbling blocks for entrepreneurs. Many entrepreneurs rely on their own savings, or family and friends for early stage funding. Bank lending, while seen as an important source of funding, may not be accessible to all entrepreneurs. That is where cash grants, government backed equity financing schemes, business incubator schemes, debt financing schemes, and tax incentives are essential to lower the barriers to starting businesses. In Singapore, entrepreneurs can benefit from government start-up programmes, such as the ACE Startups Grant, Spring Start-up Enterprise Development Scheme and the Technology Enterprise Commercialisation Scheme, as well as corporate support through angel investments. However, funding without mentorship is lost capital. Governments and corporates can take the opportunity to provide high quality mentoring alongside funding so that once businesses are established, entrepreneurs have the skills to make good the initial investment. Tax and regulation are key levers for improving a country's business environment. Singapore's favourable tax rate, simplified tax procedures and established infrastructure have made the country a relatively easy place to start a business. Notwithstanding that, governments can make it easier for entrepreneurs to navigate the tax system so that they can focus on what they do best: growing their business and driving innovation. Corporates can play a part by sharing their public policy experience with entrepreneurs. It pays to be mindful that many point-in-time policies and regulations, while necessary and useful, could be solutions to short-term issues. A strong sustaining entrepreneurial culture must underpin all efforts to drive entrepreneurship - and this perhaps presents the greatest challenge today. Societal values need to shift to better embrace risk-taking, tolerate or even celebrate failure, and support alternative pathways to and perceptions of career success. Governments can play a significant role in changing cultural attitudes towards entrepreneurship through education, as can corporates, through celebrating entrepreneurial values and advocating innovation as a way of life in their companies. Investments must be made to create an effective education and training system - both in general and relating to entrepreneurship, formal or through mentoring and coaching. Early to advanced education is central to inculcating the right entrepreneurial values and attitudes in the young, and imparting the ability to recognise business opportunities and the knowledge, self-esteem and skills to put ideas to commercially viable use. Institutes of higher learning are fertile grounds for nurturing entrepreneurial talent. Schools can thrive on strong relationships with industry and even angel groups - not just those based in Singapore - so as to provide students with real-world learning and connections, through collaborations such as attachments, mentorship or idea sponsorships, which corporates are counted upon to support. University programmes could also take on an integrated and multi-disciplinary approach where for example, the science and technology students with innovative ideas are not separated from the business students, who could add value to those ideas from a business perspective. It now leaves the collaborative support of governments, entrepreneurs and corporates to bring the various core pillars and multiple stakeholders of the entrepreneurial ecosystem together to work in tandem. Clearly, building a strong entrepreneurial ecosystem must be a tripartite effort that fully exploits what I would call "the power of three". The writer is managing partner, Asean and Singapore, Ernst & Young The views reflected in this article are the views of the author and do not  necessarily reflect the views of the global EY organisation or its member firms