tag:theconversation.com,2011:/global/topics/startups-13279/articlesStartups – The Conversation2024-02-19T13:42:23Ztag:theconversation.com,2011:article/2224862024-02-19T13:42:23Z2024-02-19T13:42:23Z‘Benevolent sexism’ in startups widens the gender gap by advantaging men over women<figure><img src="https://images.theconversation.com/files/575448/original/file-20240213-16-zum5sf.jpg?ixlib=rb-1.1.0&rect=16%2C16%2C3578%2C2376&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">It is not enough to remove the unfair barriers holding women back; we also need to confront the unfair privileges propelling men forward.</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><p>Women continue to face barriers in entrepreneurship, with <a href="https://ised-isde.canada.ca/site/women-entrepreneurship-strategy/en">only 17 per cent of small and medium-sized businesses being owned by women in Canada</a>. </p>
<p>To address this issue, the Canadian government has introduced the <a href="https://ised-isde.canada.ca/site/women-entrepreneurship-strategy/en/women-entrepreneurship-strategy-progress-report-2022">Women Entrepreneurship Strategy</a>. This strategy seeks to address the gender gap and biases in the Canadian venture capital system. </p>
<p>However, our understanding of the challenges women face in the startup ecosystem is limited. Past research has focused on overt <a href="https://journals.aom.org/doi/10.5465/amj.2016.1215">negative sexist attitudes that question women’s competence and suitability for entrepreneurship</a>.</p>
<p>This view overlooks the existence of more subtle, yet pervasive and socially acceptable, sexist attitudes that often go unnoticed. <a href="https://doi.org/10.1016/j.jbusvent.2016.10.005">Given the sheer number of people interested or working in startups today</a>, from investors to suppliers to job applicants, the effects of these subtle forms of sexism can accumulate across a large and diverse group of decision-makers.</p>
<p>For initiatives tackling gender inequality in entrepreneurship to be effective, we must gain a deeper understanding of the effects of these subtle biases faced by women entrepreneurs.</p>
<h2>Benevolent sexism in entrepreneurship</h2>
<p><a href="https://doi.org/10.1037/0022-3514.70.3.491">Benevolent sexism</a> is a form of bias that, on the surface, appears to be positive toward women, but ultimately reinforces gender roles and entrenches inequality.</p>
<p>Unlike overtly hostile forms of discrimination, benevolent sexism manifests in seemingly harmless beliefs. This type of sexism often portrays women as delicate or in need of protection, while men are positioned as the providers and protectors. </p>
<p>Because benevolent sexism is often expressed in ways that seem positive, it is rarely challenged by either men or women. It can serve to maintain traditional gender dynamics by creating the illusion of support for women while still restricting their autonomy. </p>
<figure class="align-center ">
<img alt="A figure of a woman standing on a stack of coins with a plastic cup placed over it. Beside it is a figure of a man standing on a taller stack of coins." src="https://images.theconversation.com/files/575439/original/file-20240213-16-l8bgb9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/575439/original/file-20240213-16-l8bgb9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/575439/original/file-20240213-16-l8bgb9.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/575439/original/file-20240213-16-l8bgb9.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/575439/original/file-20240213-16-l8bgb9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/575439/original/file-20240213-16-l8bgb9.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/575439/original/file-20240213-16-l8bgb9.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Benevolent sexism often portrays women as delicate or in need of protection, while men are positioned as the providers and protectors.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
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</figure>
<p>In particular, research shows that benevolent sexism <a href="https://doi.org/10.1177/0149206310365902">undermines women at work and results in them holding fewer positions of power in organizations</a>. The startup ecosystem is particularly fertile ground for this kind of sexism to manifest and worsen over time.</p>
<p>Since <a href="https://ised-isde.canada.ca/site/women-entrepreneurship-strategy/en">women are more underrepresented in entrepreneurship than in traditional organizations</a>, startup evaluators are careful not to act on overt sexist attitudes. This, in turn, gives room for more subtle forms of bias to emerge.</p>
<h2>Benevolent sexism advantages men</h2>
<p>Our <a href="https://doi.org/10.1177/10422587231178865">recent research paper</a> examined how benevolent sexism affects how evaluators judge woman- and man-led startups.</p>
<p>Initially, we theorized that startup evaluators with benevolent sexist views would more likely to rate women-led startups as less viable (i.e., more likely to fail). We did not expect their evaluation of men’s startups to be affected at all. </p>
<p>To test this hypothesis, we conducted three studies where participants were tasked with evaluating a hypothetical early-stage startup founded by either a man or a woman. Both entrepreneurs in our scenarios had identical qualifications and startup ideas.</p>
<p>The results from all three studies found that the more evaluators endorsed benevolent sexist beliefs, the more positively they judged men-led startups. There was no impact on the evaluation of women-led startups. This finding was the same, regardless of whether the evaluators themselves were men or women, in two out of the three studies.</p>
<h2>Addressing unwarranted advantages</h2>
<p>Our findings call for a fundamental rethinking of what attaining true equity entails. It is not enough to remove the unfair barriers holding women back; we also need to confront the unfair privileges propelling men forward. </p>
<p>This suggests that common solutions for addressing gender inequities are not sufficient. They mostly focus on barriers that women face, while ignoring the unwarranted advantages afforded to men. Such common solutions include focus on <a href="https://www.jstor.org/stable/43822387">women’s education, mentoring and networking</a>.</p>
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<img alt="Two sets of hands giving a thumbs down gesture and two sets of hands giving a thumbs up gesture" src="https://images.theconversation.com/files/575438/original/file-20240213-30-fhc5u2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/575438/original/file-20240213-30-fhc5u2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/575438/original/file-20240213-30-fhc5u2.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/575438/original/file-20240213-30-fhc5u2.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/575438/original/file-20240213-30-fhc5u2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/575438/original/file-20240213-30-fhc5u2.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/575438/original/file-20240213-30-fhc5u2.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">The study results found that benevolent sexism unfairly favours men-led startups.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
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<p>To effectively address the gender gap in entrepreneurship, we need to raise awareness about the hidden effects of benevolent sexism. This could be done through education and training of entrepreneurs, mentors and investors. Such interventions could communicate to these stakeholders that while benevolent sexism seems positive it is actually harmful.</p>
<p>Further, we need to redesign the startup evaluation process. The current ambiguous and unstructured conditions of startups allow subtle biases to emerge. </p>
<p>To address this issue, we need clearly defined and transparent criteria for evaluating startups. Indeed, past research shows that creating <a href="https://doi.org/10.1287/orsc.2014.0950">clear structure, transparency and accountability in evaluation processes</a> are critical for reducing biased decision-making.</p>
<h2>Fix the system, not women</h2>
<p>Our research challenges traditional interventions that solely address overt sexist attitudes towards women. Many interventions suggest that women need to change. </p>
<p>For example, women are advised to <a href="https://doi.org/10.5465/amj.2016.1215">change their communication and negotiation styles</a>. They are also advised to venture into more <a href="https://doi.org/10.1287/stsc.2022.0170">masculine and higher profile industries</a>.</p>
<p>Such advice overlooks the advantages men receive. As our research demonstrates, even when women have identical qualifications and ideas, men-led startups are seen as more promising. Moreover, well-intended initiatives designed to address gender gaps in entrepreneurship may <a href="https://doi.org/10.5465/amr.2017.0087">backfire since they signal women need help, which propagates a benevolent sexist tone</a>.</p>
<p>This calls <a href="https://doi.org/10.1111/j.1540-6520.2006.00138.x">for fixing the system rather than fixing women</a>. We need to address gender inequity by examining and changing evaluators’ attitudes and behaviours, as opposed to encouraging women to change.</p><img src="https://counter.theconversation.com/content/222486/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Nhu Nguyen received funding from the Ontario Graduate Scholarship (OGS). </span></em></p><p class="fine-print"><em><span>Ivona Hideg's research has received funding from the Social Sciences and Humanities Research Council of Canada (SSHRC).</span></em></p><p class="fine-print"><em><span>Yuval Engel received funding from The Netherlands Organization for Scientific Research.</span></em></p><p class="fine-print"><em><span>Frederic Godart does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>For Canada’s new Women Entrepreneurship Strategy to be effective, we must gain a deeper understanding of sexism in startup spaces.Nhu Nguyen, PhD Ccandidate in Management, McGill UniversityFrederic Godart, Associate Professor, Organizational Behavior, INSEADIvona Hideg, Associate Professor and Ann Brown Chair in Organization Studies, York University, CanadaYuval Engel, Associate Professor of Entrepreneurship, University of AmsterdamLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2173712024-01-09T19:16:49Z2024-01-09T19:16:49ZMagazines were supposed to die in the digital age. Why haven’t they?<figure><img src="https://images.theconversation.com/files/565041/original/file-20231212-23-u1vhzr.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C4031%2C3024&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/melbourneaustralia-30th-june-2019-australian-magazine-1439740124">Shutterstock</a></span></figcaption></figure><p>In the classic comedy Ghostbusters (1984), newly hired secretary Janice raises the subject of reading, while idly flipping through the pages of a magazine. The scientist Egon Spengler responds with a brusque dismissal: “<a href="https://www.youtube.com/watch?v=D3v_ogRaTf4">print is dead</a>.”</p>
<p>Egon’s words now seem prescient. The prevailing assumption of the past couple of decades is that print media is being slowly throttled by the rise of digital. Print magazines, in particular, are often perceived as being under threat. </p>
<p>While not nearly as popular as they once were, magazines haven’t died. New ones have started since the dire predictions began, while others continue to attract loyal readerships.</p>
<p>So what’s the enduring appeal of the print magazine? Why didn’t it die, as so many predicted?</p>
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Read more:
<a href="https://theconversation.com/substack-newsletters-are-a-literary-trend-whats-the-appeal-and-what-should-you-read-211429">Substack newsletters are a literary trend. What's the appeal – and what should you read?</a>
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<h2>Printed words in an online world</h2>
<p>The word “magazine” derives from the <a href="https://www.etymonline.com/word/magazine">term for a warehouse or storehouse</a>. In its essence, it is any publication that collects different types of writing for readers. Each instalment includes a range of voices, subjects and perspectives. </p>
<p>Print magazine culture has certainly seen a decline since its heyday in the 20th century. Once-popular print magazines have moved <a href="https://www.forbes.com/sites/garyphillips/2019/04/30/espn-saying-goodbye-to-its-print-magazine/?sh=5dde00c2167c">entirely online</a> or are largely sustained by <a href="https://pressgazette.co.uk/media-audience-and-business-data/media_metrics/womens-interest-magazines-abcs-2022/">growing digital subscriptions</a>. </p>
<p>Elsewhere, internet media sites, of the type pioneered by <a href="https://www.buzzfeed.com/au">Buzzfeed</a> and its imitators, increasingly fulfil the need for diverse and distracting short-form writing. </p>
<p>The explosion of social media has also cut into the advertising market on which print magazines have traditionally depended. </p>
<p>Online audiences have come to expect new content daily or even hourly. Casual readers are less willing to wait for a weekly or monthly print magazine to arrive in the post or on a newsstand. The ready availability of free, or significantly cheaper, digital content may deter them from purchasing print subscriptions or individual issues. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/565365/original/file-20231212-15-90alox.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A pile of Vogue magazines on top of each other." src="https://images.theconversation.com/files/565365/original/file-20231212-15-90alox.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/565365/original/file-20231212-15-90alox.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/565365/original/file-20231212-15-90alox.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/565365/original/file-20231212-15-90alox.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/565365/original/file-20231212-15-90alox.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/565365/original/file-20231212-15-90alox.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/565365/original/file-20231212-15-90alox.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Global fashion magazine Vogue has maintained a loyal readership, both in print and online.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/lodz-poland-april-18-2020-stack-1707148741">Grzegorz Czapski/Shutterstock</a></span>
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<h2>Turning from screens to the page</h2>
<p>And yet print magazines refuse to die. Established periodicals, such as <a href="https://www.newyorker.com">the New Yorker</a> and <a href="https://www.vogue.com.au">Vogue</a>, stubbornly cling to a global readership in both print and digital formats. </p>
<p>New titles are emerging as well – 2021 saw the launch of <a href="https://www.mediapost.com/publications/article/369821/magazine-analyst-new-print-magazine-launches-more.html?edition=124786">122 new print magazines</a> in the United States alone. The number is smaller than some previous years, and this perhaps reflects the generally shrinking market for print media. </p>
<p>But given the accepted wisdom, it is remarkable there are any new periodicals at all.</p>
<p>In Australia, print magazines sales have <a href="https://www.afr.com/companies/media-and-marketing/physical-magazines-are-making-a-comeback-with-or-without-readers-20230818-p5dxo4">risen 4.1% in 2023</a> and previously axed publications – such as Girlfriend – are now receiving one-off, nostalgic <a href="https://www.beautydirectory.com.au/news/news/girlfriend-magazine-returns-for-a-special-one-off-print-edition">returns to print</a>. </p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/equal-social-rights-for-sexes-in-the-1930s-the-australian-womens-weekly-was-a-political-forum-212770">'Equal Social Rights For SEXES': in the 1930s, the Australian Women's Weekly was a political forum</a>
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</em>
</p>
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<p>The market for print magazines isn’t exactly thriving. But they haven’t vanished as quickly as anticipated. </p>
<p>Some commentators have attributed the enduring appeal of print magazines to the physical experience of reading. We absorb information differently from the page than from the screen, perhaps in a less frantic and distractable way.</p>
<p>“<a href="https://fortune.com/2023/05/25/tech-giants-have-gutted-publishing-now-digital-fatigue-is-giving-print-a-new-lease-on-life/">Digital fatigue</a>” from the years of the pandemic has arguably resulted in a small pivot back to print media. The revived interest in print magazines has also been attributed to the <a href="https://www.afr.com/companies/media-and-marketing/physical-magazines-are-making-a-comeback-with-or-without-readers-20230818-p5dxo4">“analog” preferences</a> of Gen Z readers. </p>
<p>As the writer <a href="https://catapult.co/dont-write-alone/stories/in-a-digital-age-why-still-read-print-magazines-hope-corrigan">Hope Corrigan has noted</a>, there is also something appealing about the aesthetics of print magazines. The care taken with layout, images and copy can’t always be replicated on as screen. Indeed, magazines with a significant focus on photography and visual design – such as fashion and travel magazines – are enduring in print. </p>
<p>Magazine expert Samir Husni <a href="https://www.fipp.com/news/why-it-might-be-time-to-think-again-about-print-mr-magazine-samir-husni-on-the-formats-remarkable-resilience">has observed</a> that emerging independent print magazines are more focused on targeting a niche readership. Advances in printing technology have made smaller print runs more cost-effective. This allows new magazines to focus on quality over quantity. </p>
<p>The new wave of print magazines tend to have a higher cover price and standard of production. They are also published less frequently, with quarterly or biannual schedules becoming <a href="https://www.sappipapers.com/insights/print-media/launches-print-magazines-2022">more common</a>. </p>
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Read more:
<a href="https://theconversation.com/the-magazine-that-inspired-rolling-stone-86910">The magazine that inspired Rolling Stone</a>
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</p>
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<h2>What was old is cool again?</h2>
<p>This trend moves away from the idea of magazines as cheap and disposable. Rather, it reframes them as a luxury product. </p>
<p>Print magazines cannot compete with digital media in providing constantly up-to-date content to a mass audience. But they can potentially maintain a dedicated readership with a meaningful and aesthetically pleasing publication. </p>
<p>This means print magazines may be spared some of the turbulence suffered by media websites that are solely dependent on digital advertising revenue. The past few years have seen staffing upheavals, mass resignations and shutdowns at popular magazine-style websites such as <a href="https://www.npr.org/2019/11/01/775548069/after-days-of-resignations-the-last-of-the-deadspin-staff-have-quit#:%7E:text=After%20Days%20Of%20Resignations%2C%20The%20Last%20Of%20The%20Deadspin%20Staff%20Has%20Quit&text=via%20Getty%20Images-,The%20entire%20writing%20and%20editing%20staff%20of%20Deadspin%20quit%20after,to%20%22stick%20to%20sports.%22">Deadspin</a>, the <a href="https://www.pajiba.com/miscellaneous/the-gutting-of-the-av-club-is-an-embarrassment-to-the-industry-and-a-horrible-sign-of-its-future.php">Onion AV Club</a>, the <a href="https://wolfsgamingblog.com/2023/11/07/the-escapist-looks-doomed-following-mass-staff-exodus-including-yahtzee-crowshaw-creator-of-zero-punctuation/#:%7E:text=Escapist%20staff%20members%20Darren%20Mooney,video%20team%20in%20the%20process.">Escapist</a> and <a href="https://www.theguardian.com/media/2023/nov/09/jezebel-news-shut-down-layoffs-go-media">Jezebel</a> (although the latter has since <a href="https://www.nytimes.com/2023/11/29/business/media/jezebel-resurrected-paste-magazine.html">returned</a>). The original vision and standards for these sites have arguably suffered from the constant drive to increase daily traffic and reduce costs. </p>
<p>Print magazines may also be seeing a revived interest from advertisers. <a href="https://mgmagazine.com/business/marketing-promo/defying-digital-the-resilience-of-print-advertising/">Recent research</a> indicates a strong preference for print advertising among consumers. Readers <a href="https://www.walsworth.com/blog/print-magazines-arent-dying-and-heres-why">are far more likely</a> to pay attention to a print advertisement and trust its content. By contrast, online advertising is <a href="https://perfectcommunications.com/thought-leadership/print-trustworthy">more likely</a> to be ignored or dismissed. </p>
<p>In a <a href="https://www.newyorker.com/culture/cultural-comment/what-are-magazines-good-for">2021 profile</a> of magazine collector Steven Lomazow, Nathan Heller writes: </p>
<blockquote>
<p>[…] what made magazines appealing in 1720 is the same thing that made them appealing in 1920 and in 2020: a blend of iconoclasm and authority, novelty and continuity, marketability and creativity, social engagement and personal voice. </p>
</blockquote>
<p>While the circulation and influence of print magazines may have reduced, they are not necessarily dead or even dying. They can be seen as moving into a smaller, but sustainable, place in the media landscape.</p><img src="https://counter.theconversation.com/content/217371/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Julian Novitz does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>As digital media took off in the 2010s, few believed magazines could survive. While the industry isn’t what is once was, magazines are still very much alive, but why?Julian Novitz, Senior Lecturer, Writing, Department of Media and Communication, Swinburne University of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2165922023-11-29T17:07:55Z2023-11-29T17:07:55ZTech startups with diverse founding teams are more likely to seek IPO or acquisition<figure><img src="https://images.theconversation.com/files/561608/original/file-20231124-15-d0f1q9.jpg?ixlib=rb-1.1.0&rect=62%2C35%2C5865%2C3925&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Immigrant entrepreneurship has a substantial positive impact on innovation in the high-tech sector. </span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><iframe style="width: 100%; height: 100px; border: none; position: relative; z-index: 1;" allowtransparency="" allow="clipboard-read; clipboard-write" src="https://narrations.ad-auris.com/widget/the-conversation-canada/tech-startups-with-diverse-founding-teams-are-more-likely-to-seek-ipo-or-acquisition" width="100%" height="400"></iframe>
<p>The importance of immigrant entrepreneurs and diversity in management has been <a href="https://doi.org/10.1002/smj.2976">widely demonstrated in academic literature</a>. When management teams are diverse, they are able to bring a variety of perspectives to the decision-making process.</p>
<p>Immigrant entrepreneurship has a <a href="https://doi.org/10.1257/mac.2.2.31">substantial positive impact on innovation</a> in the high-tech sector. Immigrant tech founders are known to <a href="https://innovationeconomycouncil.com/reports/relocation-nation/">boost Canadian innovation</a> and, as an <a href="https://www.forbes.com/sites/stuartanderson/2023/09/14/us-immigrant-entrepreneurs-also-lured-to-canada/?sh=1e05345a3fa2">immigration destination</a>, the effects of this should interest Canada.</p>
<p>Immigrants in the United States have similarly become a <a href="https://nfap.com/wp-content/uploads/2022/07/2022-BILLION-DOLLAR-STARTUPS.NFAP-Policy-Brief.2022.pdf">major driving force in the creation</a> of new, fast-growing technology startups. Studies <a href="https://doi.org/10.1111/j.1435-5957.2009.00271.x">in Germany</a> and <a href="https://doi.org/10.1177/0308518X16660085">England</a> have found the same. </p>
<p>While there is a wealth of evidence supporting the contributions of immigrant entrepreneurs, there is a lack of research on how diversity specifically impacts the strategy and performance of founding teams in high-tech startups. </p>
<p>Only one study has been done on this topic; it found that <a href="https://doi.org/10.1016/j.jbusvent.2006.07.004">new technology startups with at least one immigrant founder</a> were more likely to emphasize product innovation and encourage the exploration of new market opportunities. Filling this research gap is important, as it could significantly impact a variety of parties, including entrepreneurs, investors and policymakers.</p>
<h2>Exits in high-tech startups</h2>
<p>New technology startups and their investors often seek exit strategies that outline how investors or founders can cash out or divest their ownership. This can involve startups going public with an initial public offering (IPO) or by having another company acquire the venture.</p>
<p>A crucial factor in this decision is the stage a company is at when considering a potential exit. Is the startup just starting to generate revenues, or is it already in the phase of revenue growth? Founders must decide whether to exit early in the sales phase or stay with the company until it achieves broader market success.</p>
<p>Research shows <a href="https://doi.org/10.1016/j.jbusvent.2006.07.004">immigrant entrepreneurs are more likely</a> than their native-born counterparts to seek new growth options by entering new markets and developing new products. As a result, technology startups with immigrant founders are more likely to pursue an exit strategy for financial gains during the initial revenue stage — as opposed to waiting until the next stage — which is more profitable, but also more risky.</p>
<figure class="align-center ">
<img alt="Three people stand behing a glass wall covered in sticky notes. One of the people is writing on the glass wall with a whiteboard marker." src="https://images.theconversation.com/files/561187/original/file-20231122-23-5os4ob.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/561187/original/file-20231122-23-5os4ob.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/561187/original/file-20231122-23-5os4ob.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/561187/original/file-20231122-23-5os4ob.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/561187/original/file-20231122-23-5os4ob.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/561187/original/file-20231122-23-5os4ob.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/561187/original/file-20231122-23-5os4ob.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">New technology startups and their investors often seek exit strategies that outline how investors or founders can cash out or divest their ownership.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
</figcaption>
</figure>
<h2>Immigrants and exit strategies</h2>
<p>To address the previously mentioned research gap, <a href="https://doi.org/10.1177/10422587231211006">I conducted a study alongside fellow researchers</a> Ilanit Gavious and Orit Milo from Ben-Gurion University. We sought to understand how diversity in founder teams affects exit decisions in high-tech startups.</p>
<p>In our analysis, we considered factors like team size, the countries where founders were born, prior business experience, gender, prior experience abroad, prior startup experience, level of education, research and development investment, whether the CEO was a founder or not, the location of the venture and firm size. </p>
<figure class="align-center ">
<img alt="An ethnically diverse group of people have a conversation while looking at a computer screen." src="https://images.theconversation.com/files/561185/original/file-20231122-23-ejni3y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/561185/original/file-20231122-23-ejni3y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/561185/original/file-20231122-23-ejni3y.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/561185/original/file-20231122-23-ejni3y.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/561185/original/file-20231122-23-ejni3y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/561185/original/file-20231122-23-ejni3y.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/561185/original/file-20231122-23-ejni3y.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">New research could help entrepreneurs make better decisions about the composition of their startup leadership teams.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
</figcaption>
</figure>
<p>We also looked at different ways of measuring national cultural diversity. This included whether there was at least one immigrant founder, the percentage of immigrant founding team members and a diversity index. We defined immigrant founders as those who were born in another country, had a non-native surname and completed at least their undergraduate degree outside of Israel. </p>
<p>We studied 582 cases where Israeli tech startups were sold. We found that 65 of them had team members who were immigrants, while 517 did not. Our results strongly support the idea that having immigrants on the founding team substantially increases the chances of an exit strategy with an IPO or acquisition. This is notable, as it highlights the importance of diversity in founding teams for early investors in order to maximize the return on their investments. </p>
<h2>Insights for financial success</h2>
<p>Our research offers valuable insights for entrepreneurs, investors and policymakers in the startup ecosystem. Entrepreneurs can use our findings to make better decisions about the composition of the founding team in their ventures. Founders aiming for financial success through exit strategies should consider teaming up with founders from diverse cultural backgrounds. </p>
<p>Our study could help entrepreneurs make better decisions about the composition of the founding team in their ventures. Specifically, founders with IPO and acquisition exit strategies should make sure to collaborate with founders who come from different national cultures. </p>
<p>Investors, like angels and venture capitalists, can use our study’s insights to make better decisions about which startups to support and invest in. It can also provide insights into potential returns from investments. </p>
<p>Policymakers could use our findings in two ways. First, they should consider the diversity within founding teams when making decisions about loans and grant programs for startups. Second, they can use our insights when making decisions about accelerators and incubators, considering the impact of immigrants in the founding teams. </p>
<p>By directing resources towards incubators and accelerators that focus on startups with diverse founding teams, policymakers can increase the likelihood of future exits and improve the expected returns on government-supported startup programs.</p><img src="https://counter.theconversation.com/content/216592/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ramy Elitzur does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>New research has found that technology startups with immigrant founders are more likely to pursue an exit strategy during the initial revenue stage — which is more profitable, but also more risky.Ramy Elitzur, Professor, Rotman School of Management, University of TorontoLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2146182023-10-22T11:41:47Z2023-10-22T11:41:47ZCanada’s Start-Up Visa program is struggling to fill the shoes of its predecessor<figure><img src="https://images.theconversation.com/files/554378/original/file-20231017-17-80i15r.jpg?ixlib=rb-1.1.0&rect=24%2C346%2C5067%2C3222&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The Start-Up Visa program is designed to help foreign entrepreneurs gain permanent residence in Canada</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><iframe style="width: 100%; height: 100px; border: none; position: relative; z-index: 1;" allowtransparency="" allow="clipboard-read; clipboard-write" src="https://narrations.ad-auris.com/widget/the-conversation-canada/canadas-start-up-visa-program-is-struggling-to-fill-the-shoes-of-its-predecessor" width="100%" height="400"></iframe>
<p>To bolster its <a href="https://ised-isde.canada.ca/site/digital-technologies-ict/en/canadian-ict-sector-profile">rapidly-growing tech sector</a>, the Canadian government introduced the <a href="https://www.canada.ca/en/immigration-refugees-citizenship/news/2023/06/canadas-tech-talent-strategy.html">Tech Talent Strategy in June 2023</a> with the <a href="https://theconversation.com/canadas-new-tech-talent-strategy-aims-to-attract-workers-from-around-the-world-208810">aim of attracting workers and entrepreneurs</a>. As a part of this strategy, the government announced improvements to the <a href="https://www.canada.ca/en/immigration-refugees-citizenship/services/immigrate-canada/start-visa.html">Start-Up Visa program</a>.</p>
<p>The Start-Up Visa program is designed to help foreign entrepreneurs gain permanent residence in Canada. Initially introduced as a <a href="https://www.cbc.ca/news/canada/windsor/start-up-program-disappointment-laywer-says-1.3443956">five-year pilot project in 2013</a>, it was created to replace the longstanding Federal Entrepreneur Program that had been in operation since the 1970s.</p>
<p>However, the Start-Up Visa program has not proven to be a suitable replacement. Although the program has grown over the years, our analysis found that it’s still only half the size the Federal Entrepreneur Program was in 2010.</p>
<p>The Start-Up Visa program is falling short in a number of key areas, including job creation, global trade opportunities and the long-term viability of businesses.</p>
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<img alt="A line graph showing the decline of the Federal Entrepreneur Program and the introduction of the Start-Up Visa program" src="https://images.theconversation.com/files/553729/original/file-20231013-15-qjrny0.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/553729/original/file-20231013-15-qjrny0.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=349&fit=crop&dpr=1 600w, https://images.theconversation.com/files/553729/original/file-20231013-15-qjrny0.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=349&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/553729/original/file-20231013-15-qjrny0.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=349&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/553729/original/file-20231013-15-qjrny0.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=438&fit=crop&dpr=1 754w, https://images.theconversation.com/files/553729/original/file-20231013-15-qjrny0.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=438&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/553729/original/file-20231013-15-qjrny0.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=438&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The integration of the Start-Up Visa in Canada.</span>
<span class="attribution"><span class="source">(Government of Canada Open Data)</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
</figcaption>
</figure>
<h2>Job creation</h2>
<p>The primary concern with the Start-Up Visa program is its ability to create jobs. Unlike the Federal Entrepreneur Program, which required those coming to Canada <a href="https://www.torontomu.ca/content/dam/centre-for-immigration-and-settlement/tmcis/publications/workingpapers/2019_1_Wang_Shuguang_Hii_Rebecca_Influence_of_Immigration_Policies_on_Supply_of_Ethnic_Business_Entrepreneurs_in_Canada.pdf">to create at least one new job</a>, the Start-Up Visa program doesn’t have job creation requirements in its admission criteria.</p>
<p>Job creation is an important reason why Canada has expanded its pathways to permanent residency. Immigrants with a variety of professional experiences can contribute to Canada’s growing economy, and business immigration plays an important role in that growth. </p>
<p><a href="https://www150.statcan.gc.ca/n1/pub/11f0019m/11f0019m2019011-eng.htm">A 2019 study by Statistics Canada</a> found that immigrant-owned firms had a higher net job growth per firm than firms owned by the Canadian-born. While not all immigrant-owned businesses were founded by immigrants who came through the Federal Entrepreneur Program, they represented about <a href="https://www150.statcan.gc.ca/n1/pub/11f0019m/11f0019m2016375-eng.htm">21 per cent of all immigrant-owned businesses in 2010</a>.</p>
<h2>Innovation and internationalization</h2>
<p>Aside from job creation, the Start-Up Visa program has additional objectives to boost innovation and internationalization. However, the ability of the Start-Up Visa program to attract businesses that are innovative is still unclear.</p>
<p>Prior to the Start-Up Visa program, immigrant-led businesses in Canada proved to be innovative, although not to the degree suggested <a href="https://www.canada.ca/content/dam/ircc/migration/ircc/english/pdf/pub/e5-2015-suv-eng.pdf">by Immigration, Refugees and Citizenship Canada (IRCC)</a>. </p>
<p><a href="https://www150.statcan.gc.ca/n1/pub/11f0019m/11f0019m2020009-eng.htm">A study by Statistics Canada</a> using data from 2011, 2014 and 2017 revealed that immigrant-led businesses operating in Canada for over 20 years were more likely to implement innovations in processes, products or marketing, and use patents compared to similar Canadian-owned firms. This suggests that businesses from the Federal Entrepreneur Program were not necessarily underperforming.</p>
<p>While it’s anticipated that businesses entering through the Start-Up Visa program will exceed these results, the lack of data makes it difficult to determine whether this is actually the case. <a href="https://www.thestar.com/news/canada/this-program-aims-to-attract-startups-to-canada-critics-say-it-s-being-used-as/article_3e0381c9-8015-5bbc-b538-750f580768b4.html">Only a few applicants were endorsed by investors, and most were supported by incubators</a>, meaning applicants consist primarily of early-stage startups. While they might be innovative, they will likely face challenges in terms of survival and longevity.</p>
<p>While there is no concrete evidence to suggest businesses in the Start-Up Visa program are more innovative, there is evidence to suggest it has resulted in increased internationalization, <a href="https://www.canada.ca/en/immigration-refugees-citizenship/services/immigrate-canada/start-visa.html">another one of the program’s objectives</a>. Since the Start-Up Visa was introduced, <a href="https://www.forbes.com/sites/stuartanderson/2023/09/14/us-immigrant-entrepreneurs-also-lured-to-canada/">many immigrant entrepreneurs have moved to Canada from the United States</a>.</p>
<h2>Financing constraints and debt obligations</h2>
<p>Another area where the Start-Up Visa program falls short is direct foreign investment. While the <a href="https://canadagazette.gc.ca/rp-pr/p1/2015/2015-05-23/html/notice-avis-eng.html">ministerial instructions governing the program</a> don’t explicitly state capital should only come from Canadian investors, <a href="https://www.canada.ca/en/immigration-refugees-citizenship/services/immigrate-canada/start-visa/participate/designation.html">a significant number of designated organizations are based in Canada</a>. This suggests the program is focused on attracting foreign <em>entrepreneurs</em> to Canada, rather than attracting foreign <em>capital</em>. </p>
<p>Without specific requirements, the Start-Up Visa program is unlikely to attract significant foreign capital into the country, as <a href="https://ackahlaw.com/news/faqs-about-canadas-start-up-visa-program-for-foreign-entrepreneurs">foreign entrepreneurs are often required to secure funds from Canadian investors</a>.</p>
<p>In contrast, foreign entrepreneurs that came through the Federal Entrepreneur Program ended up bringing their own foreign capital with them. The program <a href="https://www.canadianimmigration.com/immigration-to-canada/investors-entrepreneurs-and-self-employed/federal-entrepreneur-program/">required these entrepreneurs to have a net worth of at least $300,000</a>. This approach resulted in them being <a href="https://www150.statcan.gc.ca/n1/en/pub/11f0019m/11f0019m2018404-eng.pdf?st=4Vi13al1">3.1 to 4.5 percentage points more likely to rely on personal finances and networks to startup their ventures</a> than their Canadian-born counterparts.</p>
<h2>Start-Up Visa applicants</h2>
<p>In the face of these criticisms, how necessary is the Start-Up Visa program exactly? Aside from instances of <a href="https://www.thestar.com/news/canada/this-program-aims-to-attract-startups-to-canada-critics-say-it-s-being-used-as/article_3e0381c9-8015-5bbc-b538-750f580768b4.html">fraudulent applications to the Start-Up Visa</a>, there are fundamental issues with the program. </p>
<p>One issue is whether the Start-Up Visa program is diverting potential applicants away from other programs. Another is whether it genuinely offers a route to permanent residency for those who are unlikely to succeed in other pathways.</p>
<p>Foreign entrepreneurs who come through the Start-Up Visa are <a href="https://www.canada.ca/content/dam/ircc/migration/ircc/english/pdf/pub/e5-2015-suv-eng.pdf">younger, more highly educated and have better knowledge of English or French</a> than those who came through the Federal Entrepreneur Program.</p>
<p><a href="https://www.canada.ca/en/immigration-refugees-citizenship/services/work-canada/hire-temporary-foreign/iec.html">These characteristics are similar to those arriving through other pathways</a>, with the crucial difference being that Start-Up Visa applicants bring entrepreneurial skills. But these applicants could easily use other routes like Express Entry or Provincial Nominee programs.</p>
<p>In terms of the individual quality of applicants, <a href="https://www.canada.ca/content/dam/ircc/migration/ircc/english/pdf/pub/e5-2015-suv-eng.pdf">the Start-Up Visa does not contribute significantly to the skill composition of immigration to Canada</a>. However, it does present an opportunity to invest in foreign startups — all these entrepreneurs need is an ecosystem that will help them thrive. But their prosperity largely depends on Canada’s startup ecosystem, which essentially makes the Start-Up Visa an instrument for investing in risky foreign startups.</p>
<h2>So what next?</h2>
<p>Whether a policy works depends on its evaluation. The Federal Entrepreneur Program was shut down because many foreign entrepreneurs started small, unscalable businesses, which were deemed unsuitable for Canada’s future economic landscape. However few, these businesses brought in foreign direct investment and created jobs.</p>
<p>As shown by many studies, most startups fail. About <a href="https://www.iincanada.ca/wp-content/uploads/2019/03/survival-rates-startups.pdf">half of all startups that have received angel investments fail within five years</a>. At what point do we say that the program may not be working?</p>
<p>Our policy recommendation is that IRCC should conduct a thorough evaluation of the Start-Up Visa program to measure its performance regarding its stated objectives of job creation, innovation and internationalization, as well as provide achievable targets for these objectives.</p>
<p>When IRCC closes a pathway to permanent residency and opens up a new one, Canadians should ask not just whether it aligns with our objectives, but also whether those objectives are clear, measurable goals that can be evaluated over time.</p><img src="https://counter.theconversation.com/content/214618/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Stein Monteiro receives funding from the Canada Excellence Research Chair in Migration and Integration. </span></em></p><p class="fine-print"><em><span>Bradley Bernard receives funding from the Canada Excellence Research Chair in Migration and Integration.</span></em></p>The Start-Up Visa program is falling short in a number of key areas, including job creation, global trade opportunities and the long-term viability of businesses.Stein Monteiro, Senior Research Associate, CERC Migration Program, Toronto Metropolitan UniversityBradley Bernard, PhD Student in Management, Toronto Metropolitan UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2135192023-09-25T21:37:11Z2023-09-25T21:37:11ZEntrepreneurs are facing a mental health crisis — here’s how to help them<figure><img src="https://images.theconversation.com/files/549670/original/file-20230921-22-bt79xv.jpg?ixlib=rb-1.1.0&rect=44%2C26%2C5935%2C3953&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Almost half of Canadian entrepreneurs are experiencing mental health challenges related to stress and finances.</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><iframe style="width: 100%; height: 100px; border: none; position: relative; z-index: 1;" allowtransparency="" allow="clipboard-read; clipboard-write" src="https://narrations.ad-auris.com/widget/the-conversation-canada/entrepreneurs-are-facing-a-mental-health-crisis-heres-how-to-help-them" width="100%" height="400"></iframe>
<p>Mental health is a pressing concern in the startup community. Entrepreneurs face a number of unique challenges, including securing funding and meeting gruelling performance targets — all while trying to achieve a work-life balance. These demands can take a significant toll on someone’s mental health.</p>
<p>According to a <a href="https://www.bdc.ca/en/about/mediaroom/news-releases/entrepreneurs-mental-health-has-decreased-significantly-compared-to-last-year-warns-new-survey-results-from-bdc">report from the Business Development Bank of Canada</a>, almost half of Canadian entrepreneurs are experiencing mental health challenges, mostly related to stress and finances.</p>
<p><a href="https://doi.org/10.1007/s11187-018-0059-8">Entrepreneurs are</a> twice as likely to report a lifetime history of depression, three times more likely to have bipolar disorder and three times more likely to experience substance abuse and addiction. They are also twice as likely to attempt suicide or be hospitalized in a psychiatric institution. </p>
<p>Despite this, many entrepreneurs have difficulty accessing mental health support. Cost is the biggest barrier, but the risk of being seen as too vulnerable is also an issue. Many entrepreneurs fear that being seen as too weak or timid could <a href="https://pitchbook.com/news/articles/vcs-founders-mental-health">jeopardize their chances of securing funding</a>. </p>
<p>Since <a href="https://www.oecd.org/cfe/leed/entrepreneurship.htm">entrepreneurship is the backbone of economic growth</a>, the importance of mental health support for entrepreneurs cannot be overstated. Recognizing and addressing mental health is not just a matter of compassion, but also an essential investment in society at large.</p>
<h2>The ‘founder’s dilemma’</h2>
<p>Steve Jobs, the founder of Apple, once likened starting a venture to <a href="https://www.businessinsider.com/steve-jobs-famous-quote-misunderstood-laurene-powell-2020-2">putting a dent in the universe</a>. In other words, it’s extremely difficult. Many are drawn to entrepreneurship, but <a href="https://www.investopedia.com/articles/personal-finance/040915/how-many-startups-fail-and-why.asp">few manage to thrive commercially</a>. And many quit for reasons they shouldn’t.</p>
<figure class="align-center ">
<img alt="A man sitting at a table in a dimly lit room rests his head against his hand" src="https://images.theconversation.com/files/549669/original/file-20230921-29-bvlp96.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/549669/original/file-20230921-29-bvlp96.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/549669/original/file-20230921-29-bvlp96.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/549669/original/file-20230921-29-bvlp96.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/549669/original/file-20230921-29-bvlp96.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/549669/original/file-20230921-29-bvlp96.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/549669/original/file-20230921-29-bvlp96.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Entrepreneurs often struggle to maintain a healthy work-life balance.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
</figcaption>
</figure>
<p>Noam Wasserman, dean of Yeshiva University’s business school, <a href="https://hbr.org/2008/02/the-founders-dilemma">wrote about the “founder’s dilemma” in 2008</a>. According to him, this dilemma revolves around the tension between accepting money from outside investors and resisting losing control over one’s company and, sometimes, being ousted altogether. </p>
<p>Fast forward 15 years, and things have changed in the startup space. Early investors are now able to secure generous stock option grants or loans from founders. Being in onerous debt amid financial uncertainty <a href="https://insight.kellogg.northwestern.edu/article/debt-crises-innovation">puts a firm’s flexibility and capacity for innovation at risk</a>. </p>
<p>Out of financial self-preservation, some founders fall into a cycle of constant fundraising to get them out of debt. The quixotic drive to balance short-term financing with long-term operational excellence can drive any entrepreneur into distress.</p>
<h2>Mounting pressure</h2>
<p>The pressure that startup founders face today is more intense than it has been for two decades. Entrepreneurs are now grappling with whether the hustle is still worth it.</p>
<p>First, their cash runway is a cliff face. <a href="https://pitchbook.com/news/reports/q2-2023-pitchbook-venture-first-look">During the first half of 2023</a>, global venture capital funding slid by 48 per cent compared to last year. In North America, second-quarter venture spending was the lowest in over three years.</p>
<p>Second, <a href="https://startupsmagazine.co.uk/article-uk-recruiters-struggle-access-talent-2023-skills-gap-widens">talent is scarce and expensive</a>. Third, exit opportunities for later-stage founders — through an initial public offering or a sale to a bigger firm — are vanishing. This leads to <a href="https://techcrunch.com/2023/09/19/tech-industry-layoffs-2023/">layoffs amid intensifying pressures to find a “path to profitability”</a> while <a href="https://techcrunch.com/2023/06/20/tiger-global-liquidity-latestage/">early financial backers seek to liquidate their investments</a>.</p>
<p><a href="https://news.crunchbase.com/ma/us-startup-acquisitions-lag-databricks/">According to <em>Crunchbase News</em></a>, mergers and acquisitions for venture capital-backed companies based in the United States this year are on course to be the slowest since 2013. Investments in what were only last year considered booming sectors, such as health technology, have shrunk dramatically.</p>
<p>In this high-interest rate, scarce money, no-exit environment, startup founders are facing a financial and mental health crisis.</p>
<h2>Addressing mental health challenges</h2>
<p><a href="https://cmha.ca/news/entrepreneurs-and-mental-health-study/">Past research on business and entrepreneurial mental health</a> can guide us toward promising new solutions. There are many potential low-cost or no-cost solutions to founders’ mental health troubles in this current investment climate.</p>
<p>First, outside investors in private ventures need to be qualified not only in terms of net income or net worth, but also on the basis of their commitment to population health in general, and mental health in particular. </p>
<p>This builds on the wisdom and research behind the <a href="https://www.founderpledge.com/">Founder Mental Health Pledge</a> pioneered by serial entrepreneurs Naveed Lalani and Brad Baum and supported by founders globally. The pledge aims to de-stigmatize mental health and treat it as a business expense, including therapy, coaching and group support.</p>
<figure class="align-center ">
<img alt="A group of people having a conversation around a conference table" src="https://images.theconversation.com/files/549671/original/file-20230921-15-nud0c8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/549671/original/file-20230921-15-nud0c8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/549671/original/file-20230921-15-nud0c8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/549671/original/file-20230921-15-nud0c8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/549671/original/file-20230921-15-nud0c8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/549671/original/file-20230921-15-nud0c8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/549671/original/file-20230921-15-nud0c8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">There are many potential low-cost or no-cost solutions to founders’ mental health troubles in the current investment climate.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
</figcaption>
</figure>
<p>Investors should acknowledge the importance of protecting a founder’s mental health by including the potential harms that may befall a startup on the term sheets. Practically, this could mean paying for more mental health benefits and memberships in peer support networks for founders. This strategy can build investor awareness and reduce the stigma surrounding mental health challenges.</p>
<p>Second, firms should establish expert advisory committees dedicated to protecting founders’ mental health. This would encourage founders to speak openly to the committee about hardships they encounter. This would be another important step in the uphill battle to de-stigmatize mental illness and steer founders toward mental health supports.</p>
<p>Perhaps the most important way we can help entrepreneurs is to send honest messages about both entrepreneurial hardship <em>and</em> hope. Nurturing a venture from birth to commercial maturity can be emotionally exhausting. And yet, with the right psychological supports, entrepreneurship can ignite passion, purpose and result in prosperity.</p><img src="https://counter.theconversation.com/content/213519/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Neil Seeman does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Recognizing and addressing the mental health struggles of entrepreneurs is not just a matter of compassion, but is also an essential investment in society at large.Neil Seeman, Senior Fellow, Institute of Health Policy, Management and Evaluation, University of Toronto, and Adjunct Professor, Dalla Lana School of Public Health, University of TorontoLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2043302023-09-20T23:22:12Z2023-09-20T23:22:12ZHow Canada can make its startup ecosystem more inclusive<figure><img src="https://images.theconversation.com/files/547896/original/file-20230912-17-kmo8yr.jpg?ixlib=rb-1.1.0&rect=57%2C45%2C6300%2C4265&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Increasing inclusivity in entrepreneurship will foster more equitable economic participation across the board.</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><iframe style="width: 100%; height: 100px; border: none; position: relative; z-index: 1;" allowtransparency="" allow="clipboard-read; clipboard-write" src="https://narrations.ad-auris.com/widget/the-conversation-canada/how-canada-can-make-its-startup-ecosystem-more-inclusive" width="100%" height="400"></iframe>
<p>The global pandemic caused devastating economic impacts, including <a href="https://theconversation.com/heres-how-the-coronavirus-is-affecting-canadas-labour-market-137749">high levels of unemployment</a>. As with the 2008 recession, self-employment has been encouraged as a pathway towards economic participation and <a href="https://www150.statcan.gc.ca/n1/pub/75-001-x/2010103/article/11138-eng.htm">boosting the labour market</a>.</p>
<p>Yet marginalized groups, including women and Indigenous people, continue to <a href="https://policyoptions.irpp.org/magazines/may-2023/immigrant-entrepreneurs-need-targeted-support/">face barriers to starting and growing a business</a>. In <a href="https://www150.statcan.gc.ca/n1/pub/11-621-m/11-621-m2022005-eng.htm">2022</a>, only 18 per cent of small and midsize businesses in Canada were majority women-owned, only 16 per cent were owned by visible minorities and only two per cent were Indigenous-owned.</p>
<p>According to the Organization for Economic Co-operation and Development, <a href="https://www.oecd-ilibrary.org/sites/71b7a9bb-en/index.html?itemId=/content/publication/71b7a9bb-en">helping marginalized groups start their own businesses</a> will result in significant economic and social benefits. </p>
<p>Women-led small and micro businesses, for example, <a href="https://www.weforum.org/agenda/2020/10/investing-women-small-micro-business-owners-smbs-economy-recovery-great-reset-gender-gap/">contribute to communities around the globe</a>. They use their resources to reinvest in the health, education and well-being of their families and neighbours. </p>
<p>For this reason, an emerging body of research is recognizing the importance of <a href="https://doi.org/10.5465/AMBPP.2021.15368symposium">startups that are born out of necessity, not profit</a>. Despite this, most entrepreneurial resources and support still primarily focus on high-growth entrepreneurship. </p>
<h2>Barriers to inclusivity</h2>
<p>The Kauffman Foundation, a private organization that supports and studies entrepreneurship, follows a “<a href="https://www.kauffman.org/entrepreneurship/reports/access-to-capital-for-entrepreneurs-removing-barriers/">zero barriers” mantra</a>. It asserts that when some groups face obstacles to entrepreneurship, the entire system is held back. This isn’t just an empty slogan — it’s one <a href="https://doi.org/10.3390/su12114540">supported by research</a>.</p>
<p>There are <a href="https://www.oecd-ilibrary.org/employment/the-missing-entrepreneurs-2021_71b7a9bb-en">three primary barriers to inclusivity in entrepreneurship</a>. The first is that many have a narrow view of entrepreneurship that focuses on tech, venture capital, profit and individual achievement. This approach often leads to support systems that exclude marginalized communities.</p>
<p>The second barrier is that there is unequal access to information about existing supports and resources for entrepreneurs. Lastly, there is insufficient support for marginalized communities, and a lack of trust and confidence in those providing assistance.</p>
<figure class="align-center ">
<img alt="Two women, one wearing a hijab, speak to a man at a table" src="https://images.theconversation.com/files/547897/original/file-20230912-23-nolzo7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/547897/original/file-20230912-23-nolzo7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/547897/original/file-20230912-23-nolzo7.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/547897/original/file-20230912-23-nolzo7.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/547897/original/file-20230912-23-nolzo7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/547897/original/file-20230912-23-nolzo7.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/547897/original/file-20230912-23-nolzo7.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">When some groups face obstacles to entrepreneurship, the entire system is held back.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
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</figure>
<h2>Effectively addressing obstacles</h2>
<p>Despite a widespread understanding of the broader barriers to inclusive entrepreneurship, there is a lack of understanding about the specific ones, which is needed to effectively address these obstacles.</p>
<p>For instance, how can information about entrepreneurial support be more accessible? How should these support systems be customized to meet the needs of marginalized people? How can we establish trust and credibility in the support being offered? What is a more inclusive way of supporting entrepreneurship?</p>
<p>These questions can only be effectively addressed at the systemic level. Studies show that <a href="https://doi.org/10.1007/s11365-018-0526-3">entrepreneurship increases when there are strong systems</a> — like incubators, accelerators, funding opportunities, networks, policy frameworks and market access — in place.</p>
<p>In other words, increasing entrepreneurship among marginalized people calls for the development of more inclusive entrepreneurial ecosystems.</p>
<h2>Transforming the system</h2>
<p>Creating a more inclusive entrepreneurship ecosystem involves transforming the existing one. Such a transformation calls for the involvement and collaboration of individuals and groups that support inclusive entrepreneurship. </p>
<p>Working on a larger scale will assist Canadian policymakers and organizations in helping people from diverse communities make the most of their economic and social potential through entrepreneurship.</p>
<p>Several key characteristics <a href="https://doi.org/10.1007/978-3-030-66603-3_6">define an inclusive entrepreneurial ecosystem</a>. First, it involves seeking input from entrepreneurs belonging to marginalized communities. These insights should shape policy decisions and public initiatives.</p>
<p>Another essential aspect is educating government officials and the media about a more inclusive definition of entrepreneurship that goes beyond typical high-growth ventures. By broadening their understanding, policymakers can develop more inclusive policies and allocate funding more equitably.</p>
<figure class="align-center ">
<img alt="A diverse group of people having a conversation around a table in an office" src="https://images.theconversation.com/files/547891/original/file-20230912-23-ngjxwa.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/547891/original/file-20230912-23-ngjxwa.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/547891/original/file-20230912-23-ngjxwa.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/547891/original/file-20230912-23-ngjxwa.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/547891/original/file-20230912-23-ngjxwa.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/547891/original/file-20230912-23-ngjxwa.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/547891/original/file-20230912-23-ngjxwa.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Inclusive entrepreneurship involves seeking input from entrepreneurs belonging to marginalized communities to understand their specific needs and preferences.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
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<p>Additionally, fostering grassroots initiatives that support entrepreneurs from marginalized communities is vital. These initiatives should be led by entrepreneurs from those communities, which will likely mean diverting resources from existing power players.</p>
<p>Ensuring everyone has access to affordable, culturally specific education that nurtures entrepreneurial skills is also fundamental. Understanding how trauma impacts startup aspiration and success, and taking a trauma-informed approach to supporting inclusive entrepreneurship, is equally important.</p>
<h2>Ecosystem builders</h2>
<p>Supporting <a href="https://www.kauffman.org/ecosystem-playbook-draft-3/scale/">entrepreneur ecosystem builders</a> is a pivotal way to create a more inclusive startup environment. Ecosystem builders are organizations that work to remove existing barriers in the startup system.</p>
<p>At <a href="https://www.macewan.ca/academics/centres-institutes/social-innovation-institute">MacEwan University’s Social Innovation Institute</a>, we are striving to be an ecosystem builder by holding roundtables with key groups. These groups include innovation authority Edmonton Unlimited, non-profits that support marginalized entrepreneurs, the government and financial institutions.</p>
<p>Participants are working to create a shared vision of inclusive entrepreneurship by identifying community strengths and barriers, and figuring out the steps needed to transform Edmonton’s startup ecosystem. A key aspect of this transformation involves joint efforts to influence and shape policy decisions.</p>
<p>Edmonton’s efforts to create an inclusive entrepreneurship ecosystem will not only benefit the local community, but also hopefully guide other cities in transforming their entrepreneurial ecosystems as well. By making these changes, we will foster more equitable economic participation across the board.</p><img src="https://counter.theconversation.com/content/204330/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Leanne Hedberg does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Increasing entrepreneurship among women and racialized people calls for the development of more inclusive entrepreneurial ecosystems.Leanne Hedberg, Director of Social Innovation Institute, Associate Professor of Entrepreneurship and Innovation, MacEwan UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2038322023-08-07T12:40:44Z2023-08-07T12:40:44ZWhat’s the difference between a startup and any other business?<figure><img src="https://images.theconversation.com/files/536333/original/file-20230707-19-h3ttvo.jpg?ixlib=rb-1.1.0&rect=0%2C45%2C5089%2C2743&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Between 2012 and 2021, funding to U.S. tech startups jumped to $344 billion.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/diverse-team-of-professional-businesspeople-meeting-royalty-free-image/1363104989?phrase=start+ups&adppopup=true">gorodenkoff/iStock via Getty Images</a></span></figcaption></figure><figure class="align-left ">
<img alt="" src="https://images.theconversation.com/files/281719/original/file-20190628-76743-26slbc.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/281719/original/file-20190628-76743-26slbc.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=293&fit=crop&dpr=1 600w, https://images.theconversation.com/files/281719/original/file-20190628-76743-26slbc.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=293&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/281719/original/file-20190628-76743-26slbc.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=293&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/281719/original/file-20190628-76743-26slbc.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=368&fit=crop&dpr=1 754w, https://images.theconversation.com/files/281719/original/file-20190628-76743-26slbc.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=368&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/281719/original/file-20190628-76743-26slbc.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=368&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<p><em><a href="https://theconversation.com/us/topics/curious-kids-us-74795">Curious Kids</a> is a series for children of all ages. If you have a question you’d like an expert to answer, send it to <a href="mailto:curiouskidsus@theconversation.com">curiouskidsus@theconversation.com</a>.</em></p>
<hr>
<blockquote>
<p><strong>What’s the difference between a startup and a business, and is one better than the other? – Aditya, age 16, Ranchi, Jharkhand, India</strong></p>
</blockquote>
<hr>
<p>All startups are businesses, but not every business is a startup.</p>
<p>Nearly <a href="https://www.uschamber.com/small-business/new-business-applications-a-state-by-state-view">100,000 new businesses</a> were formed each week in the United States in 2022. But what sets a startup apart? </p>
<p>As a professor of marketing and innovation who has worked at several startups, including Netflix in its early days, I can share some of the differences between a startup and a more traditional business.</p>
<h2>Startups are inventing something new</h2>
<p>A traditional business generally has an established solution to a known problem and has not developed anything particularly new. </p>
<p>For example, a new sushi restaurant in your neighborhood may be a new business, but it is by no means a startup. However, if a new local company had developed a device that automated sushi-making and tried to get sushi restaurants to try it, that would be a startup. The restaurant is simply trying to satisfy the neighborhood’s needs for sushi, whereas the device company is trying to change all sushi restaurants with its new method.</p>
<p>A startup is centered on an innovation that has never been brought to market before. This could be a product or service, a technology, a process, a brand, or even a new business model. Generally, they have big industry-changing goals about disrupting the market leader or current customer behavior. </p>
<p>Think Uber, an inventive startup that originally operated in San Francisco. It built off the time-tested taxi model – a business – and created a unique ride-sharing app that had never existed previously.</p>
<h2>The goals of startups</h2>
<p>Regardless of their product and location, the main focus of a startup is to figure out if there is a need for their product. </p>
<p>Startups are trying to find and optimize a <a href="https://www.coursera.org/articles/target-market">target market</a> for their new solution. Who would value and buy what they have developed? Startups often think they have a good picture of who would like what they are building, but they’re not always right. </p>
<p>For example, I headed marketing nearly a decade ago at relationship-focused tech startup <a href="https://techcrunch.com/2019/02/27/compass-acquires-contactually-a-crm-provider-to-the-real-estate-industry/">Contactually</a>. When Contactually began to promote its services, it aimed for small businesses in several industries, thinking that the product met needs equally across all of them. But subsequently we found out that our offering worked particularly well for real estate agents and brokers, and we started to put all efforts into meeting this group’s needs exclusively.</p>
<p>Part of identifying a target market is establishing a <a href="https://en.wikipedia.org/wiki/Product/market_fit">product/market fit</a> – the degree to which the innovation satisfies a market need. Startups know they may be on to something when customers from the target market purchase the new solution and are willing to share their positive experiences with others. </p>
<p>Once a startup has passed those stages, it <a href="https://www.investopedia.com/terms/s/scalability.asp">will try to scale</a>. This means successfully growing the startup so that it’s not limited by funding or staff. For example, once <a href="https://backlinko.com/netflix-users">Netflix launched its streaming platform</a> in 2010, it was able to scale around the globe in an easier and faster manner than if it had stayed with its original DVD-by-mail business model.</p>
<p>Finally, to accomplish the things that would enable it to scale, startups are generally focused on <a href="https://doi.org/10.1007/s13162-021-00197-w">spending time with and learning from their customers</a>. Once they reach a specific size, most businesses focus less on customer learning and more on making the company more efficient. </p>
<figure class="align-center ">
<img alt="A team works together in an office." src="https://images.theconversation.com/files/536329/original/file-20230707-17-lxpvfg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/536329/original/file-20230707-17-lxpvfg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/536329/original/file-20230707-17-lxpvfg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/536329/original/file-20230707-17-lxpvfg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/536329/original/file-20230707-17-lxpvfg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/536329/original/file-20230707-17-lxpvfg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/536329/original/file-20230707-17-lxpvfg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Research shows around 90% of startups will fail, while thousands begin each week.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/team-of-professionals-work-on-a-project-royalty-free-image/586970675?phrase=start+ups&adppopup=true">Kelvin Murray/Stone via Getty Images</a></span>
</figcaption>
</figure>
<h2>Transitioning into an established business</h2>
<p>Amazon, Netflix, Uber and Airbnb are global powerhouses that began as startups. Successfully growing a startup into a prosperous company is extremely hard. Industry data suggests that <a href="https://www.forbes.com/sites/neilpatel/2015/01/16/90-of-startups-will-fail-heres-what-you-need-to-know-about-the-10/">90% of startups will fail</a>.</p>
<p>Once established within their market, traditional businesses find themselves with a different challenge: <a href="https://sloanreview.mit.edu/article/the-hard-truth-about-business-model-innovation/">running more efficiently</a>. </p>
<p>Startups may be able to rely on funding from different kinds of outside investors while they gain their footing. But an established business needs to run smoothly to make a profit from what it’s selling.</p>
<p>Non-startup companies need to figure out how to manage workers better and run the business in a way that solves the customers’ problems while enabling the company to meet all of its goals. </p>
<p>For a non-startup business, specific goals could be how much money or profit the firm makes, how and where to expand to grow more or faster, how much time it takes to create a product, or how to make more products with the same or fewer resources.</p>
<p>While the focus of a startup is to determine if there is a demand for a new and innovative product, the primary goal of a traditional business is to create an efficient operation that can last far into the future. </p>
<p>With luck, a successful startup, like Uber or Netflix, will scale and grow, eventually evolving into a traditional business – one that some future startup may try to disrupt with a brand-new idea.</p>
<hr>
<p><em>Hello, curious kids! Do you have a question you’d like an expert to answer? Ask an adult to send your question to <a href="mailto:curiouskidsus@theconversation.com">CuriousKidsUS@theconversation.com</a>. Please tell us your name, age and the city where you live.</em></p>
<p><em>And since curiosity has no age limit – adults, let us know what you’re wondering, too. We won’t be able to answer every question, but we will do our best.</em></p><img src="https://counter.theconversation.com/content/203832/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Daughter works for Maven Clinic after working for CNBC and Morning Brew</span></em></p>Traditional businesses operate with an established solution to a known problem. Startups focus on a product or service no one else provides.Joel Mier, Lecturer of Marketing, University of RichmondLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1930682022-11-02T18:40:02Z2022-11-02T18:40:02ZWhy the job you apply for may not be the job you get<figure><img src="https://images.theconversation.com/files/492829/original/file-20221101-12-buf2vv.jpg?ixlib=rb-1.1.0&rect=10%2C30%2C6699%2C4426&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Sometimes job duties evolve between the time when an employer decides to hire someone and the actual hiring itself.</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><iframe style="width: 100%; height: 100px; border: none; position: relative; z-index: 1;" allowtransparency="" allow="clipboard-read; clipboard-write" src="https://narrations.ad-auris.com/widget/the-conversation-canada/why-the-job-you-apply-for-may-not-be-the-job-you-get" width="100%" height="400"></iframe>
<p>When most people apply for jobs, they expect the job description on postings to match the job that will be filled. However, our <a href="https://doi.org/10.1287/orsc.2021.1516">recently published study examining startup hiring</a> shows that this isn’t always the case. Sometimes the job someone applies for might not end up being the same job they are hired for.</p>
<p>Jobs can evolve between the time a decision is made to hire someone, and the actual hiring process itself. Hiring managers might change job duties, hire someone for a different job than the one they are applying for, or abandon the job search altogether. While this might be frustrating for job hunters, employers do this in response to uncertainties in the workplace.</p>
<p>At a time when <a href="https://www.cbc.ca/news/business/job-skills-shortage-1.6409237">employers are struggling to find employees</a> and <a href="https://www.cbc.ca/news/canada/canada-labour-worker-changes-charts-1.6556305">many people are making career changes</a>, knowing and understanding why this happens is crucial both to those hunting for new jobs and for people trying to fill some of the many jobs that have been vacated.</p>
<h2>Why jobs change between posting and hiring</h2>
<p>For our study on startup hiring, we interviewed more than 100 startup founders, managers and their employees, job seekers and experts from the startup community. We analyzed the interviews to understand how and why jobs changed in this period and found two main patterns.</p>
<p>We found that some employers deliberately use the hiring process to figure out the needs of their organization and define their new positions accordingly. In cases like this, employers know they need to hire someone, but they don’t yet have a clear idea of what that job will look like. </p>
<figure class="align-center ">
<img alt="A woman shaking a young man's hand over a table" src="https://images.theconversation.com/files/492827/original/file-20221101-14-uiy350.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/492827/original/file-20221101-14-uiy350.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=401&fit=crop&dpr=1 600w, https://images.theconversation.com/files/492827/original/file-20221101-14-uiy350.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=401&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/492827/original/file-20221101-14-uiy350.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=401&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/492827/original/file-20221101-14-uiy350.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/492827/original/file-20221101-14-uiy350.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/492827/original/file-20221101-14-uiy350.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Hiring managers may change the tasks in jobs, hire for entirely different jobs or abandon job searches altogether.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
</figcaption>
</figure>
<p>One startup in our study used the hiring process to define two new marketing positions. Instead of writing and posting a formal job description, the founders scoured their networks and brought two marketing candidates in for a non-traditional evaluation process. </p>
<p>The founders described their current marketing challenges and asked the job candidates to present their solutions. Based on the presentations, they designed two distinct marketing positions around the skills of the two candidates.</p>
<h2>Unplanned job changes</h2>
<p>In other cases, changes in job duties are not part of a planned process. Hiring managers might start with clear descriptions of the jobs they want to fill, fail to find candidates with the skills they’re looking for and end up redefining and reposting those jobs. </p>
<p>One CEO we interviewed did this after he received an overwhelming number of applications above the skill level needed for a personal assistant opening. He reposted the job as an office manager position, which required a higher credential, and quickly filled it. </p>
<p>Some managers also change their minds about what they want in the midst of the hiring process. </p>
<p>One startup in our study identified problems in their sales function in the middle of the hiring process, and ended up changing the job after applications had come in. They offered one candidate — who had applied for the original full-cycle sales manager position — the new job as a lead generator. He was promised that eventually he would move into the original sales job he had applied for. </p>
<p>Lastly, managers sometimes stumble across great candidates who fit different positions and fill those jobs instead. One startup in our study went to a job fair hoping to find a mid-level developer, and ended up hiring an entry-level developer and a marketing director instead. </p>
<h2>Positive and negative impacts</h2>
<p>We found that this evolution of job descriptions during the hiring process can have mixed consequences for both the hiring organizations themselves and new hires. </p>
<p>Some changes, like taking down and reposting jobs, can lead to positive consequences, like more stable jobs and incumbents who remain in the organizations. It can allow the organizations to learn, create a better organizational structure and even undertake new work.</p>
<p>This finding is consistent with <a href="https://doi.org/10.1108/S0733-558X20160000047016">past research</a> that found changes in job descriptions can allow organizations to adapt to a variety of situations by developing structures and strategies that fit the circumstances. </p>
<figure class="align-center ">
<img alt="A row of people in business attire sitting on chairs, presumably waiting for an interview" src="https://images.theconversation.com/files/492825/original/file-20221101-25191-ir7dg7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/492825/original/file-20221101-25191-ir7dg7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/492825/original/file-20221101-25191-ir7dg7.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/492825/original/file-20221101-25191-ir7dg7.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/492825/original/file-20221101-25191-ir7dg7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/492825/original/file-20221101-25191-ir7dg7.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/492825/original/file-20221101-25191-ir7dg7.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Some employers deliberately use the hiring process to figure out the needs of their organization and define their new positions accordingly.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
</figcaption>
</figure>
<p>However, we observed that most of the other types of job changes in our study resulted in negative consequences, like job instability, protracted conflict over job territory and the exit of the incumbent and dissolution of the job.</p>
<p>For example, the job candidate mentioned earlier who was offered a job different from the one he applied for ended up in a conflict with the sales director, and his job never transitioned to the full-cycle sales job he had been promised at hiring. He was gone within a year and his position was not filled.</p>
<p>This finding is consistent with <a href="https://doi.org/10.2307/2392908">past research</a> that found that changing jobs around individual job holders can result in bias, favoritism, low morale and undesirable and unpredictable power struggles. </p>
<h2>Hiring inequality</h2>
<p>The dynamic nature of job descriptions has the potential to produce inequality in the hiring process, since not all job applicants understand that jobs can change between posting and hiring. Those who do understand will have a distinct advantage over those who don’t because they know to apply for jobs even when their preferences and qualifications don’t line up with the job posting. This knowledge may align with individual demographics.</p>
<p>This may be particularly bad for women and members of other under-represented groups who are less comfortable applying for jobs where they do not fit the stated qualifications. Prior evidence has shown that <a href="https://www.bi.team/blogs/women-only-apply-when-100-qualified-putting-received-wisdom-to-the-test/">women tend to apply for the jobs they are already well-qualified for</a> while men apply to the jobs they aspire to be qualified for. </p>
<p>Women also may be less likely than men to apply for jobs with the expectation that the jobs will evolve to fit their skills and preferences. If more women are aware of the results from our study, it could result in more applying for jobs that seem outside their area of expertise.</p><img src="https://counter.theconversation.com/content/193068/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Lisa Cohen receives funding from SSHRC. </span></em></p><p class="fine-print"><em><span>Sara Mahabadi does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A recent study about hiring practices sheds light on why some jobs change between when a decision is made to hire someone, and the actual hiring process itself.Lisa Cohen, Associate Professor, Business Administration, McGill UniversitySara Mahabadi, Assistant Professor, Alberta School of Business, University of AlbertaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1843712022-06-27T15:35:48Z2022-06-27T15:35:48ZMarket research is essential for entrepreneurs who want their businesses to succeed<figure><img src="https://images.theconversation.com/files/467208/original/file-20220606-14-lklz5d.jpg?ixlib=rb-1.1.0&rect=7%2C4%2C991%2C661&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Secondary market research is the first key step in developing good marketplace intelligence.</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><p>According to the U.S. research and consulting firm <a href="https://www.cbinsights.com/research/start-up-failure-reasons-top/">CB Insights</a>, most entrepreneurs fail because they lack sufficient financing. The second reason they fail is because the market for their product is too small.</p>
<p>Yet many entrepreneurs and coaching professionals continue to reject the market research phase in favour of a “fail fast, pivot quickly” approach. Launching companies this way — even if it means having to adapt to customer feedback later — is very trendy, especially in the world of startups.</p>
<p>However, as the bitter experience of Canadian entrepreneur Tom Zaragoza demonstrates, “learning by doing” is no guarantee that a business will gain traction in the marketplace. In 2017, after months of effort, Zaragoza launched his site Gymlisted to connect private gyms with users, only to find out that there was <a href="https://www.failory.com/interview/gymlisted">no demand for such a service</a>.</p>
<p>Through my activities as a professor in entrepreneurial marketing, I unfortunately meet an increasing number of entrepreneurs who are convinced they have the idea of the century, but who do not take time to study the market in a structured way. Market research remains an essential step for entrepreneurs for the simple reason that if the owner is not a market expert, who is?</p>
<h2>Two misconceptions about market research</h2>
<p>Contrary to the story about the intuitive and visionary entrepreneur, and in a context where modern society applauds action over reflection, it turns out that market research is both essential and relevant — as long as two misconceptions that work against its adoption are removed.</p>
<p><strong>First misconception:</strong> Market research is a linear and rational process that is not compatible with a company’s launch phase.</p>
<p>In reality, it is a set of methods and tools, the goal of which is to create a continuous learning loop by alternating phases of reflection with phases of experimentation. Whatever the size of the company, the approach is much more iterative (achieved through repetition), inductive and diversified than one might think.</p>
<p>As demonstrated by the “<a href="https://www.d-eship.com/en/who-is-bill-aulet">disciplined approach</a>” proposed by Bill Aulet, a professor at MIT, it is actually possible to study a market in a way that is structured and agile. The 24-step process starts with the study of the market fundamentals, an essential first step to understand the market structure and, above all, the different customer segments. Once the target customer is identified, the process unfolds by moving back and forth frequently between research and field studies.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/448631/original/file-20220225-32360-1b0i8eo.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="pictorial representation of the 24 steps of a disciplined approach" src="https://images.theconversation.com/files/448631/original/file-20220225-32360-1b0i8eo.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/448631/original/file-20220225-32360-1b0i8eo.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=587&fit=crop&dpr=1 600w, https://images.theconversation.com/files/448631/original/file-20220225-32360-1b0i8eo.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=587&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/448631/original/file-20220225-32360-1b0i8eo.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=587&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/448631/original/file-20220225-32360-1b0i8eo.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=737&fit=crop&dpr=1 754w, https://images.theconversation.com/files/448631/original/file-20220225-32360-1b0i8eo.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=737&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/448631/original/file-20220225-32360-1b0i8eo.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=737&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">A disciplined, 24-step approach for structured and agile market research.</span>
<span class="attribution"><a class="source" href="https://www.d-eship.com/">('Disciplined Entrepreneurship,' by Bill Aulet)</a>, <span class="license">Fourni par l'auteur</span></span>
</figcaption>
</figure>
<p><strong>Second misconception:</strong> Market research is simply about having large samples answer questionnaires.</p>
<p>The truth is, <a href="https://www.bdc.ca/en/articles-tools/marketing-sales-export/marketing/creating-questionnaire">surveys</a> are not a substitute for market research. Contrary to what some business sites advise, a good survey involves using complex methods that require specialized knowledge. The use of free online solutions, such as Google Forms, by inexperienced entrepreneurs often produces biased results that may not be very useful.</p>
<p>In view of these two misconceptions, it would be more appropriate to use the term “market intelligence,” which better translates the two key steps of a pragmatic and agile process adapted to the context of creation.</p>
<h2>The two key steps to develop good market intelligence</h2>
<p><strong>Step 1: Do secondary market research to know your market</strong></p>
<p><a href="https://www.cleverism.com/how-to-perform-insightful-secondary-market-research/">Secondary market research</a> involves exploiting all existing knowledge.</p>
<p>A quick and efficient way to do this is to contact organizations such as <a href="https://www.moremontreal.com/eetp/associationsp.html">professional associations</a>, sector committees or even chambers of commerce. These institutions have the mission of collecting, synthesizing and making accessible relevant and credible information on a given sector or market, often at a very reasonable cost.</p>
<p>This approach allows entrepreneurs to quickly acquire the knowledge they need to start structuring the first hypotheses of their <a href="https://www.desjardins.com/ca/co-opme/business/tip-sheets/market-research-key-step/index.jsp">business model</a>: What are the different customer profiles? What are their expectations and buying habits? What are the competing offers already on the market?</p>
<p><strong>Step 2: Conduct qualitative studies to validate and adjust your business model</strong>.</p>
<p>The next step involves testing and exploring the marketplace on the ground by using <a href="https://www.questionpro.com/blog/qualitative-market-research/">qualitative methods</a>. This type of study takes the form of individual or group interviews, or even simple observations, and makes it possible to deepen the hypotheses put forward following the research phase by directly interviewing those in the field.</p>
<p>Take the example of <a href="https://www.hotel-uniq.com/en">the UNIQ Hotel</a>, an “ephemeral” accommodation launched in 2020.</p>
<p>Initially, studying the reports of the <a href="https://veilletourisme.ca/?lang=en">Tourism Intelligence Network</a> of the Transat Chair of Tourism at the Université du Québec à Montreal and those of <a href="https://www.campingquebec.com/en">Camping Québec</a> showed that this product might interest those who liked “glamping” and wanted both nature and comfort. Indeed, UNIQ offers yurts that can be set up and dismantled in different locations.</p>
<p>During the second phase, it makes sense to do individual or group interviews to understand the customer, their habits, their expectations and any possible obstacles.</p>
<p>This exploration phase makes it possible to understand which services are essential and which booking methods are commonly used.</p>
<p>This type of qualitative research would be an important step in completing the <a href="https://www.youtube.com/watch?v=dgI_aqjH3FQ">value proposition design</a>, a tool that helps illustrate why the idea will meet the market’s expectations. The information also makes it possible to draw up a precise profile of the expected clientele using a “<a href="https://www.socialmediatoday.com/news/what-is-a-buyer-persona-and-why-is-it-important/507404/">buyer persona</a>,” a method for summarizing the main characteristics of future buyers.</p>
<p>Once this exploration phase is complete, one can wrap up with a test to ensure that there is demand for this type of accommodation. This can be done by applying <a href="https://mixwithmarketing.com/2021/09/what-is-concept-testing-with-definition-examples/">concept testing</a>. This simple and inexpensive process consists of submitting a printed or video description of the proposal to the target clientele to study their reactions and their level of intention to make a purchase.</p>
<p>These few good practices do not cover everything, and not all market research methods are applied to every creative context. But as many scientific studies have shown, knowing your market is a key factor of success for any company.</p><img src="https://counter.theconversation.com/content/184371/count.gif" alt="La Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Philippe Massiera ne travaille pas, ne conseille pas, ne possède pas de parts, ne reçoit pas de fonds d'une organisation qui pourrait tirer profit de cet article, et n'a déclaré aucune autre affiliation que son organisme de recherche.</span></em></p>The market research stage is often criticized as useless and inappropriate, but it’s essential to success in business.Philippe Massiera, Professeur agrégé en Marketing Management, Université du Québec à Montréal (UQAM)Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1855412022-06-24T10:55:23Z2022-06-24T10:55:23ZThe untold story of Canada’s journalism startups<figure><img src="https://images.theconversation.com/files/470368/original/file-20220622-34601-35c970.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C4013%2C3024&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The Conversation Canada is celebrating its fifth anniversary. It's one of dozens of digital news organizations that has found a niche in the changing media landscape in Canada.</span> <span class="attribution"><span class="source">(THE CONVERSATION)</span>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><iframe style="width: 100%; height: 100px; border: none; position: relative; z-index: 1;" allowtransparency="" allow="clipboard-read; clipboard-write" src="https://narrations.ad-auris.com/widget/the-conversation-canada/the-untold-story-of-canada-s-journalism-startups" width="100%" height="400"></iframe>
<p>The fifth anniversary of the launch of <em>The Conversation Canada</em> is an opportunity to reflect on an untold story of the Canadian news media.</p>
<p><em>The Conversation Canada</em> is one of more than 120 novel English-language digital-born journalism organizations to launch since 2000. That’s more than the number of daily newspapers that populated the country in the latter part of the 20th century. </p>
<p>In reflecting on the past five years <a href="https://theconversation.com/its-time-to-start-the-conversation-in-canada-79877">as co-founders</a> and journalism researchers, we locate <em>The Conversation Canada</em> as part of <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3621685">an emergent journalism infrastructure</a> populated by a new group of vital contributors who range from cottage industry to larger-sized established organizations. </p>
<p>These players — such as <em><a href="https://thelogic.co/">The Logic</a></em>, <a href="https://mediaindigena.com/"><em>MediaIndigena</em></a>, <a href="https://thenarwhal.ca/"><em>The Narwhal</em></a>, <em><a href="https://www.sprawlcalgary.com/">The Sprawl</a></em>, <em><a href="https://thetyee.ca/">The Tyee</a></em> and <em><a href="https://www.villagemedia.ca/">Village Media</a></em> — are shaping what it means to be a journalist and what journalism could and should do in this country. They have taken advantage of low barriers to entry online and the potential of a digital space that affords a place to experiment with diverse approaches. </p>
<p>Yet the decline of legacy, commercial media has been a singular focus of policymakers and journalism coverage even as these new digital-born journalism organizations are winning recognition at industry awards and filling gaps in news coverage.</p>
<h2>Tackling critical issues</h2>
<p>Our research for the past two years has focused on identifying and understanding this wave of digital-born entrants. We’ve found that the majority of the new digital news organizations are still up and running, even though many startups fail in their first few years. Like <em>The Conversation Canada</em>, more than half have launched since 2015.</p>
<figure class="align-center ">
<img alt="Climate activists holding up a variety of signs demonstrate in downtown Calgary" src="https://images.theconversation.com/files/470671/original/file-20220623-52182-2w9vtx.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/470671/original/file-20220623-52182-2w9vtx.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/470671/original/file-20220623-52182-2w9vtx.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/470671/original/file-20220623-52182-2w9vtx.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/470671/original/file-20220623-52182-2w9vtx.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/470671/original/file-20220623-52182-2w9vtx.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/470671/original/file-20220623-52182-2w9vtx.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Some of the new digital news organizations in Canada have focused coverage on specific issues like the climate crisis.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Jeff McIntosh</span></span>
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</figure>
<p>A majority of the new journalism organizations are located in British Columbia and Ontario, although they are largely in non-urban centres. Some 40 per cent have a national and/or international outlook in their coverage, which is a surprise given the fears about the loss of local news.</p>
<p>Many of these new organizations are consciously mission-driven, with some acknowledging their roles as a response to urgent global concerns and living in a settler-colonial nation state. Some take explicit stances on harms and fault lines in legacy media reporting including justice for Indigenous peoples, racial injustice, the climate crisis, the economy and more.</p>
<p>Just under two-thirds of the new digital-born news media were started by a mix of veteran and emerging journalists, and the rest by media makers, business people or activists. </p>
<p>This new system is, however, not without its challenges such as sustainability, scale, living wages, attracting audiences and the influence of funders, to name just a few. </p>
<p>The increase in the past two decades in the number and range of journalism entrepreneurs and owners is important because there is evidence the concentration of ownership has contributed to a limited diversity of perspectives and types of organizations that could and have engaged in journalism in Canada. </p>
<h2>Trend towards not-for-profits</h2>
<p>Our research shows a shift to not-for-profit organizations doing journalism in the past two decades, including <em>The Conversation Canada</em>. </p>
<p>The evolution in types of ownership and business models is significant given the highly concentrated nature of Canadian journalism ownership, which has been a concern since the first government committee <a href="https://publications.gc.ca/Pilot/LoPBdP/BP/prb9935-e.htm#A.%20The%20Daveytxt">explored the issue in 1970</a>. </p>
<p>Contemporary Canadian journalism has also had a largely commercial orientation, despite the important presence of a public service broadcaster, with <a href="https://www.cambridge.org/core/books/comparing-media-systems/B7A12371782B7A1D62BA1A72C1395E43">professional ideals of objectivity and independence</a>.</p>
<p>These elements have contributed to a widely shared and relatively homogenous perception of journalistic roles among public and legacy media. Largely, described as “<a href="https://www.cambridge.org/core/journals/canadian-journal-of-political-science-revue-canadienne-de-science-politique/article/abs/is-there-a-distinct-quebec-media-subsystem-in-canada-evidence-of-ideological-and-political-orientations-among-canadian-news-media-organizations/835FC4D4BDAAF96976B53F28D0A05619">monitorial</a>,” journalism roles in Canada have focused on a five-point “<a href="https://www.cambridge.org/core/journals/canadian-journal-of-political-science-revue-canadienne-de-science-politique/article/abs/changes-in-canadian-journalists-views-about-the-social-and-political-roles-of-the-news-media-a-panel-study-19962003/535827D9F0BF053D9BA3D17A59E50FC3">creed</a>”: “accurately reporting the views of public figures, getting information to the public quickly, giving ordinary people a chance to express their views, investigating activities of government and public institutions, and providing analysis and interpretation of complex problems.”</p>
<h2>‘A single newspaper agenda’</h2>
<p>Such professional commercial logics span Canada’s anglophone and francophone media systems. A recent study by scholars in Québec found the perception of similar content focus in Canadian media. These scholars suggest this finding validates prior research that there is “<a href="https://web.archive.org/web/20210428185800id_/https:/www.cambridge.org/core/services/aop-cambridge-core/content/view/835FC4D4BDAAF96976B53F28D0A05619/S0008423920000189a.pdf/div-class-title-is-there-a-distinct-quebec-media-subsystem-in-canada-evidence-of-ideological-and-political-orientations-among-canadian-news-media-organizations-div.pdf">a single newspaper agenda in Canada</a>,” with the caveat that this agenda is “beyond Québec-specific issues.” </p>
<figure class="align-center ">
<img alt="People walk by two newspaper boxes in downtown Toronto" src="https://images.theconversation.com/files/470457/original/file-20220623-51459-5mozlo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/470457/original/file-20220623-51459-5mozlo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=401&fit=crop&dpr=1 600w, https://images.theconversation.com/files/470457/original/file-20220623-51459-5mozlo.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=401&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/470457/original/file-20220623-51459-5mozlo.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=401&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/470457/original/file-20220623-51459-5mozlo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=504&fit=crop&dpr=1 754w, https://images.theconversation.com/files/470457/original/file-20220623-51459-5mozlo.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=504&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/470457/original/file-20220623-51459-5mozlo.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=504&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">As legacy newsrooms in Canada have struggled and downsized, a new crop of digital-born organizations have launched across the country.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Kevin Frayer</span></span>
</figcaption>
</figure>
<p>These are important considerations because there is evidence the relationship between journalists’ professional ideology in Canada and perception of partisanship and politicization is paradoxical. While journalists ascribe to neutrality, audiences perceive them as partisan.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/canadians-trust-in-the-news-media-hits-a-new-low-184302">Canadians' trust in the news media hits a new low</a>
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<p>This paradox is timely as it coincides with a <a href="https://www.cem.ulaval.ca/wp-content/uploads/2022/06/dnr22_can_eng.pdf">decline in public trust</a> in the news media. Anglophones’ trust in journalism has dropped to a low of 39 per cent compared to 55 per cent in 2016 and to 47 per cent from 55 per cent over the same period among francophones.</p>
<p>Perceptions of trust are related to “<a href="https://theconversation.com/canadians-trust-in-the-news-media-hits-a-new-low-184302">perceived lack of diversity in media ownership</a>”, as well as concerns about the media’s independence from political or business influence.</p>
<h2>What journalism can be</h2>
<p>The fifth anniversary of <em>The Conversation Canada</em> is an opportunity to express our deep gratitude to the many individuals, including its editors, who have contributed to its success — and to its <a href="https://www.taylorfrancis.com/chapters/edit/10.4324/9781003140399-6/university-giant-newsroom-alfred-hermida-lisa-varano-mary-lynn-young">meaningful contributions to journalism in Canada</a>, from the coverage of <a href="https://theconversation.com/ca/topics/covid-19-82431">COVID-19</a> to the podcast <em><a href="https://dont-call-me-resilient.simplecast.com/">Don’t Call Me Resilient</a></em>. </p>
<p>Our goal in co-founding <em>The Conversation Canada</em> was to explore how non-commercial journalism values affect what journalism could and should do in this country. (We are both tenured professors at the University of British Columbia and we have not earned any revenue from <em>The Conversation Canada</em> or our roles in it.)</p>
<p>It was an initiative to see what journalism could be if written by experts in their fields and edited by journalists, deliberately welcoming those critical studies and perspectives from scholars who have been excluded and/or had to operate on the margins of the media. </p>
<p>Our approach sought to address established power relations in journalism, extending how the newsroom and its presence within a commercial landscape, <a href="https://oxford.universitypressscholarship.com/view/10.1093/oso/9780190067076.001.0001/oso-9780190067076">largely created by white professional journalists</a> in Canada, has been habitually conceptualized, understood and practised. </p>
<p>Canada is not alone in trying to decide on policy responses to legacy journalism economic challenges while seeing the rise of newer players all trying to survive alongside the dominance of platforms such as Facebook and Google. Countries such as Australia, Belgium and others are grappling with how best to support quality journalism today to various degrees of success.</p>
<p>Our research is ongoing as part of <a href="https://journalisminnovation.ca/about">a number of related studies</a> in Canada and Australia about the impact and use of <em>The Conversation</em> content nationally and globally, funded by a Canadian federal government research grant. </p>
<p>The evidence is clear that national social, economic and political conditions have an impact on the nature of our media systems. The question for Canadians is what choices they have or should have about the kinds of journalism that are available to them, now and in the future.</p><img src="https://counter.theconversation.com/content/185541/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mary Lynn Young receives funding from the Social Science and Humanities Research Council. She is co-founder and a former member of the board of The Conversation Canada.</span></em></p><p class="fine-print"><em><span>Alfred Hermida receives funding from the Social Science and Humanities Research Council. He is co-founder and a member of the board of directors of The Conversation Canada.</span></em></p>Canada is home to a growing number of new digital-born journalism organizations, even though government policy aimed at helping the news industry has focused mostly on the decline of legacy media.Mary Lynn Young, Professor, School of Journalism, Writing and Media, University of British ColumbiaAlfred Hermida, Professor, School of Journalism, Writing, and Media, University of British ColumbiaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1725852021-12-07T15:26:54Z2021-12-07T15:26:54ZEntrepreneurship learning: All university students can benefit<figure><img src="https://images.theconversation.com/files/435157/original/file-20211201-27-av94cd.jpg?ixlib=rb-1.1.0&rect=145%2C839%2C4947%2C2550&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Learning to create value in environments of uncertainty with limited resources is something that can help all young people build their futures, especially amid the uncertainty of COVID-19. </span> <span class="attribution"><span class="source">(Telfer School of Management, University of Ottawa)</span>, <span class="license">Author provided</span></span></figcaption></figure><p>Entrepreneurs, their associated startups and the subsequent growth of their companies have a vital impact on the health of our economy. In Canada, <a href="https://www.bdc.ca/en/about/mediaroom/news_releases/pages/bdc-small-business-week-2019-presents-new-face-of-canadian-entrepreneurship.aspx">young adults have demonstrated</a> a growing interest in entrepreneurship. </p>
<p>Entrepreneurship has historically been narrowly associated with business schools and traditional startups. But as the World Economic Forum has noted, “<a href="https://elimindset.com/wp-content/uploads/2020/05/WEF-Report-Educating-NextWave-Entrepreneurs.pdf">school systems must prepare students to work in a dynamic, rapidly changing entrepreneurial and global environment</a>. This requires a complete paradigm shift for academia, including changing the fundamentals of how schools operate and their role in society.”</p>
<p><a href="https://doi.org/10.1080/08276331.2010.10593508">Students from all faculties</a> can and should benefit from entrepreneurial skills, <a href="https://doi.org/10.1111/jsbm.12023">classically defined</a> as learning to create value in environments of uncertainty, and with limited resources. Doing so will ensure our next generations are able to meet the challenges of tomorrow. This has never been truer than now, as we navigate effects of the COVID-19 pandemic. How the pandemic will interact with <a href="https://www.weforum.org/projects/future-of-work">the changing landscape of work</a> remains to be seen. </p>
<h2>Entrepreneurship at universities</h2>
<p>My team at the Telfer School of Management at the University of Ottawa conducted a review in summer 2021, <a href="https://telfer.uottawa.ca/assets/documents/Entrepreneurship_Education_in_Canada_2021_Review.pdf">now published in both English</a> <a href="https://telfer.uottawa.ca/assets/documents/Bilan_2021_Formation__lentrepreneuriat_au_Canada.pdf">and French</a>, of entrepreneurship activities at the largest 27 universities in Canada.</p>
<p>We set out to uncover the number and type of entrepreneurship courses available, the opportunities for students to learn this valuable skill set outside the classroom and the current practices in supporting student startups. We found some encouraging information and opportunities for improvement.</p>
<p>Surprisingly, we uncovered an average of 22 entrepreneurship-focused courses per institution. Examined together, these courses spanned many faculties (including engineering, science, arts and social science) and levels of study, from undergraduate to doctoral and post-doctoral studies.</p>
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<img alt="A student at a computer." src="https://images.theconversation.com/files/435883/original/file-20211206-21-1jcf4j5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/435883/original/file-20211206-21-1jcf4j5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/435883/original/file-20211206-21-1jcf4j5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/435883/original/file-20211206-21-1jcf4j5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/435883/original/file-20211206-21-1jcf4j5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/435883/original/file-20211206-21-1jcf4j5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/435883/original/file-20211206-21-1jcf4j5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">A survey of 27 universities in Canada found entrepreneurship-focused courses running in faculties like engineering, science, arts and social science.</span>
<span class="attribution"><span class="source">(Telfer School of Management, University of Ottawa)</span></span>
</figcaption>
</figure>
<p>This is a dramatic increase in the number of entrepreneurship courses offered at institutions in the last decade. A similar <a href="https://heqco.ca/wp-content/uploads/2020/03/Entrepreneurship-report.pdf">2014 review</a> of entrepreneurship courses in 20 Ontario universities revealed an average of only 5.7 entrepreneurship courses per institution. <a href="https://publications.gc.ca/site/eng/384292/publication.html">In 2010</a>, most institutions offered between one and five entrepreneurship courses.</p>
<h2>Beyond business schools</h2>
<p>Entrepreneurship is no longer strictly the domain of business schools. Many faculties are recognizing the importance of this skill set for students, and on average, 3.5 faculties per university teach entrepreneurship. </p>
<p>Our review found positive indicators related to the number and type of entrepreneurship courses available. </p>
<p>Most have moved beyond business planning courses as a default entrepreneurship offering. There are now courses that focus on the early stages of new ventures such as creativity, generating ideas, identifying opportunities and how to validate early ideas by talking to customers. </p>
<h2>New ventures, social entrepreneurship</h2>
<p>Universities are finding ways to customize traditional “big business” topics for brand-new ventures. Such approaches recognize that new ventures launched by students aren’t beginning with the money, staff or resources that larger firms have, in courses about marketing for entrepreneurs, entrepreneurship law and financing new ventures. </p>
<p>Additionally, courses that have not been traditionally taught outside of Engineering programs are emerging in other faculties. Examples include courses about design thinking and new product development, software venturing, making a prototype and others. </p>
<p>The course titles most often added in the last few years include those associated with <a href="https://doi.org/10.1177/0149206318793196">social entrepreneurship</a> — startups that seek to help solve societal problems and aren’t focused on just making a profit. Students from all faculties are looking to solve real-world problems with unique business models. </p>
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<iframe width="440" height="260" src="https://www.youtube.com/embed/tJGUWo_kbd4?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">RBC Fast Pitch Competition showcasing top teams from two courses in entrepreneurial thinking at the Haskayne School of Business.</span></figcaption>
</figure>
<p>Traditional classroom study isn’t the only way educational institutions are able to influence students’ learning. Examples include experiential programming such as <a href="https://haskayne.ucalgary.ca/hunter-centre/student-opportunities/rbc-fast-pitch">competitions</a> where students can pitch ideas and meet possible business co-founders; <a href="https://www2.uottawa.ca/current-students/career-experiential-learning/entrepreneurship-hub/programs">skills training workshops</a> (available at most schools); <a href="https://www.legacycan.ca/">student-run conferences</a>; <a href="https://enactus.ca/">student clubs</a> promoting entrepreneurship in a variety of contexts and disciplines — from those selling art, starting a counselling practice or commercializing a health science discovery. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/how-to-help-artists-and-cultural-industries-recover-from-the-covid-19-disaster-149815">How to help artists and cultural industries recover from the COVID-19 disaster</a>
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</em>
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<h2>Learning by doing</h2>
<p>Providing students with experiential learning opportunities allows for experimentation, application of skills and valuable networking. These <a href="https://doi.org/10.1016/j.ijme.2014.06.005">learning-by-doing activities</a> have been found to trigger the development of many important entrepreneurial competencies. </p>
<p>Other encouraging non-credit learning programs exist, such as opportunities for students to hear from external entrepreneurs. Our data showed that between summer 2020 and summer 2021, co-op work terms where students could work in their own start-ups gained popularity. In 2020, only 43 per cent of schools we reviewed offered this kind of work placement, but in 2021, 70 per cent of schools are doing so.</p>
<p>The prevalence of support for student start-ups is encouraging. Each year <a href="https://www.bdc.ca/en/about/mediaroom/news_releases/pages/bdc-small-business-week-2019-presents-new-face-of-canadian-entrepreneurship.aspx">a growing number</a> of students start their ventures while also pursuing their academic studies. </p>
<h2>Creating value</h2>
<p>Almost all universities offer some sort of <a href="https://entrepreneurs.utoronto.ca/for-entrepreneurs/u-of-t-accelerators/">incubator services</a>
— programs that offer <a href="https://www.bdc.ca/en/articles-tools/entrepreneur-toolkit/templates-business-guides/glossary/business-incubators">students access to mentorship, investors and other support to help them establish their very early stage companies</a>. Most offer more than one such program. Beyond mentorship, support for students may include consultation services, funding, training and space to work from.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/phd-students-can-benefit-from-non-academic-mentors-outside-perspectives-140988">PhD students can benefit from non-academic mentors' outside perspectives</a>
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<p>Many <a href="https://brainstation.io/magazine/canadian-students-found-the-most-startups-in-the-world">student entrepreneurs</a> are selling valuable products and services in our communities and beyond and creating jobs: For example, in 2018, the University of Toronto reported that its nine incubators and accelerators at three campuses <a href="https://www.utoronto.ca/news/canada-leader-student-founded-startups-oecd-working-paper">helped produce more than 150 companies over the preceding five years, and generated more than $500 million in investment</a>. Students involved in such successful ventures are graduating into their <a href="https://ucalgary.ca/news/ucalgary-top-startup-creator-amongst-research-institutions-canada">existing businesses</a>, and rather than looking for a job upon graduation, are creating their own.</p>
<h2>Expanding access to all students</h2>
<p>Student interest, donor funding and economic imperatives continue to drive both entrepreneurial interest and activity in universities, and there are some very good practices. </p>
<p>Still, much work remains for many institutions to ensure all students, regardless of their faculty or career aspirations, have access to <a href="https://elimindset.com/wp-content/uploads/2020/05/WEF-Report-Educating-NextWave-Entrepreneurs.pdf">essential entrepreneurship skills</a>. </p>
<p>Universities must continue to look to redefine who they teach, establish what they teach and finally, improve how they teach.</p><img src="https://counter.theconversation.com/content/172585/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Stephen Daze does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A study of entrepreneurship activity at 27 universities in Canada showed an increased interest in co-op work terms where students could work in their own start-up.Stephen Daze, Dom Herrick Entrepreneur in Residence and Visiting Professor, L’Université d’Ottawa/University of OttawaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1669222021-09-14T12:12:09Z2021-09-14T12:12:09ZWhat are microschools? 5 questions answered<figure><img src="https://images.theconversation.com/files/420821/original/file-20210913-15-qj83x1.jpg?ixlib=rb-1.1.0&rect=53%2C0%2C6000%2C3961&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Microschools gained in appeal to some parents during the pandemic.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/group-of-diverse-students-in-school-building-royalty-free-image/1272598525?adppopup=true">Complexio/E+ via Getty Images</a></span></figcaption></figure><p><em>Since COVID-19, some parents in search of educational alternatives for their children have <a href="https://www.nytimes.com/2020/10/14/education/learning/pods-microschools-pandemic.html">turned to microschools</a>. Here, Barnett Berry, a research professor in education at the University of South Carolina, explains what makes microschools distinct from other schools.</em></p>
<h2>1. What are microschools?</h2>
<p>As their name suggests, microschools, which serve K-12 students, are very small schools that typically serve 10 to 15 students, but sometimes as many as 150. They can have very different purposes but tend to share common characteristics, such as more personalized and <a href="https://theconversation.com/project-based-learning-deepens-science-knowledge-for-3rd-graders-in-michigan-155711">project-based learning</a>. They also tend to have closer adult-child relationships in which teachers serve as facilitators of student-led learning, not just deliverers of content.</p>
<p>Michael Horn, a fellow and co-founder at Clayton Christensen Institute for Disruptive Innovation, <a href="https://www.educationnext.org/rise-micro-schools/">aptly noted</a>: “Think one-room schoolhouse meets blended learning and home schooling meets private schooling.” </p>
<p>Microschools can be found inside public schools, such as in <a href="https://www.ednc.org/connecting-student-data-to-student-futures-reimagining-accountability-with-ibm-in-edgecombe-county/">North Phillips School of Innovation</a> in Edgecombe County, North Carolina. But they can also be found in the private sector as well, such as the <a href="https://microschools.com/school-finder/?uid=54">MYSA Micro School</a> in Washington. They can operate almost anywhere – from living rooms and storefronts to churches, libraries and offices.</p>
<p>Horn reported that <a href="https://www.educationnext.org/rise-micro-schools/">QuantumCamp</a>, founded in 2009, was a microschool established “out of a dare that one couldn’t teach quantum physics in a simple way.” <a href="https://www.actonacademy.org">Acton Academy</a> operates more than 180 microschools in the United States and abroad.</p>
<p>Microschools are often associated with ed-tech and efforts to privatize public education. For example, <a href="https://www.getschoolhouse.com/">SchoolHouse</a> – a New York-based ed tech startup – reportedly <a href="https://news.crunchbase.com/news/schoolhouse-microschools-startup-funding/">raised $8.1 million as of 2021</a> to take its model nationwide.</p>
<p>It is difficult to know just how many microschools there are throughout the U.S. State rules and regulations <a href="https://www.microschoolrevolution.com/founder-article/establishing-your-microschool/">differ considerably</a>, and there is no one national accreditation agency for microschools. </p>
<h2>2. How are they funded?</h2>
<p>The <a href="https://files.eric.ed.gov/fulltext/ED609716.pdf">cost of attending</a> a privately operated microschool varies widely. It can range from <a href="https://files.eric.ed.gov/fulltext/ED609716.pdf">$4,000 to $25,000</a> per academic year.</p>
<p>These private microschools tend to serve families who can afford them – a <a href="https://bellwethereducation.org/publication/toward-equitable-access-and-affordability-how-private-schools-and-microschools-seek">2019 survey</a> found that the majority of microschools serve few low-income students.</p>
<p>Some models are funded through school voucher programs. In Florida, about 1 in 3 students at the <a href="http://www.bbinternationalpreschool.org/">BB International School</a> draw on the <a href="https://www.heritage.org/education/report/lets-get-small-microschools-pandemic-pods-and-the-future-education-america">state’s private choice programs</a> to finance their microschool education.</p>
<p>Microschools can have much lower overhead than public schools, which can in turn reduce the typical per-pupil expenditure. But they also cannot provide the depth of extracurricular opportunities, such as sports, drama, band and more that <a href="https://bealearninghero.org/research/">parents seek</a> in a more holistic education experience for their children. </p>
<h2>3. Are they more effective than regular schools?</h2>
<p>There is very little, if any, substantive evidence on the effectiveness of microschools compared to regular public schools. However, most research shows <a href="https://www.publicschoolreview.com/blog/charter-schools-vs-traditional-public-schools-which-one-is-under-performing">little difference</a> in student outcomes between charter, private and public schools. This suggests there might be wide variation in the quality of microschools as well. </p>
<h2>4. Has the pandemic played a role in their popularity?</h2>
<p>In the wake of the pandemic, some parents – frustrated with their child’s schools’ response to online learning – have turned microschools and learning pods. For example, The New York Times <a href="https://www.nytimes.com/2020/10/14/education/learning/pods-microschools-pandemic.html">reported in 2020</a> that the <a href="https://www.facebook.com/groups/pandemicpodsf/">Pandemic Pods Facebook page</a> had more than 41,000 members, suggesting interest in the concept, although the number had shrunk to 38,000 as of September 2021. Yet it is worth noting that, historically, private schools have <a href="https://files.eric.ed.gov/fulltext/ED602594.pdf">served only about 10%</a> of the nation’s students.</p>
<p>The pandemic appears to have played a role in the uptick of interest in microschools, but a <a href="https://pdkpoll.org/wp-content/uploads/2021/09/Poll53_final.pdf">2020 poll</a> showed that 2 in 3 parents have given their local public school an A or B grade in response to the pandemic. </p>
<h2>5. Do microschools and public schools work together?</h2>
<p>Microschools do work inside the public school system and can be viewed as an extension of the <a href="https://news.stanford.edu/news/2002/march20/smallschools-320.html">small schools movement</a>.</p>
<p>In 2017, the North Phillips School of Innovation, mentioned earlier in this article, was <a href="https://www.ednc.org/connecting-student-data-to-student-futures-reimagining-accountability-with-ibm-in-edgecombe-county/">established to address poor academic performance, high student absenteeism and frequent discipline problems</a>. Students and parents wanted more personalized learning that connected to their life in the community. During the pandemic, the district used their experience with microschooling to create <a href="https://www.wtmacademy.com/learning-pods/">learning pods</a> and has been able to <a href="https://www.edweek.org/leaders/2021/nurturing-talent-at-home-to-revive-a-struggling-region">more effectively</a> personalize learning for students and their families. </p>
<p>In addition, during pandemic-induced school closures, the <a href="https://www.education.nh.gov/who-we-are/commissioner/recovering-bright-futures">New Hampshire Department of Education</a> developed their version of <a href="https://learningpodseducation.nh.gov/">learning pods</a> to create small multi-age groupings of students – anywhere from five to 10 students – to help up to 500 students who had been struggling with academic and social and emotional setbacks. </p>
<p>Finally, the microschool concept aligns with <a href="https://www.teacherpowered.org">Teacher Powered Schools</a> — intentionally small schools inside of the public education system – where teachers have more autonomy to lead as well as teach. </p>
<p>Perhaps the pandemic can spur new public-private partnerships that lead to more equitable and personalized learning in which microschools play an important role.</p>
<p>[<em>Get the best of The Conversation, every weekend.</em> <a href="https://theconversation.com/us/newsletters/weekly-highlights-61?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=weeklybest">Sign up for our weekly newsletter</a>.]</p><img src="https://counter.theconversation.com/content/166922/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Barnett Berry currently receives funding from the Carnegie Corp of New York and Stuart Foundation as well as National University and the Learning Policy Institute in support of research and development of whole child education and the advancement of the teaching profession. </span></em></p>Microschools might be an attractive alternative to regular public schools that are wrestling with the pandemic, but they are mostly out of reach for low-income students, a researcher says.Barnett Berry, Reseach Professor of Education and founding director, ALL4SC, University of South CarolinaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1630032021-06-25T02:30:03Z2021-06-25T02:30:03ZMore older New Zealanders are starting businesses — and they’re motivated by more than just money<figure><img src="https://images.theconversation.com/files/407805/original/file-20210623-21-k9wnu7.jpg?ixlib=rb-1.1.0&rect=22%2C0%2C7315%2C3790&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">www.shutterstock.com</span></span></figcaption></figure><p>You’re never too old to become your own boss, it seems. All over the world there has been an increase in people aged 50 and over setting up their own businesses.</p>
<p>In the United States, the highest rate of business start-up activity is among those aged 55-64. Japan is reporting people aged 60-plus now comprise over one third of new entrepreneurs. In the UK, “third age” entrepreneurs are responsible for over a quarter of new start-ups.</p>
<p>Similar trends have been observed in Australia, and there is also evidence businesses started by so-called “senior entrepreneurs” may have a higher survival rate than those started by younger people. Why is this happening?</p>
<p>New Zealand lacks comparable detailed data, but similar patterns are evident. To find out more about what’s happening here we drew on 20 in-depth interviews with people who had started new businesses after the age of 50. </p>
<p>Conducted as part of Massey University’s “Maximising Workforce Participation for Older New Zealanders” <a href="https://www.massey.ac.nz/massey/fms/Colleges/College%20of%20Humanities%20and%20Social%20Sciences/Psychology/HART/publications/reports/HART_Case_Study_2_Report.pdf">programme</a>, our interviews suggest people’s motivations don’t fall neatly into the categories proposed in the existing literature.</p>
<p>The conventional view has been people are either “pushed” into entrepreneurship through redundancy, age discrimination or forced retirement, or “pulled” by the prospect of business opportunities, potential profitability, greater freedom and flexibility.</p>
<p>This is too simplistic and doesn’t reflect the diversity of people’s experience. Motives are often mixed, complex and overlapping. But there were some consistent themes. </p>
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<h2>Many motivations</h2>
<p>We identified five broad “entrepreneurial orientations” to describe the process of starting a business for the first time later in life.</p>
<p><strong>Opportunity takers:</strong> for this largest group of interviewees, opportunities arose in different ways but often reflected their backgrounds and work histories. </p>
<p>Some created their own opportunities, while others were offered an opportunity they embraced. This could be almost accidental — being offered a business loan, or meeting someone with complementary skills.</p>
<p><strong>Difference makers:</strong> those in the second largest group were characterised by a vision of the impact and contribution they wanted to make. </p>
<p>Starting a business was not an end in itself, rather they were motivated by a desire to help others, save the planet or contribute to the public good. For example, a highly experienced nurse aimed to offer self-help workshops for women; an engineer became interested in developing green energy technology.</p>
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Read more:
<a href="https://theconversation.com/how-business-accelerators-can-help-new-startups-succeed-after-covid-19-157025">How business accelerators can help new startups succeed after COVID-19</a>
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<p><strong>Direction changers:</strong> people in this group recognised they wanted change in their work. All had been in professional roles but a combination of self-awareness, insight and life-stage factors had them asking, “do I want to be doing this for the foreseeable future?”.</p>
<p>A new business offered the opportunity to use their skills and experience in fresh fields. A theatre nurse retrained as a counsellor; a man who had experienced business failure and redundancy resurrected his interest in painting and is a successful artist at the age of 70.</p>
<p><strong>Needs must:</strong> this group had faced unsatisfactory work situations and creating a business seemed the best option to generate income. Factors such as redundancy, office politics and health setbacks triggered the decisions.</p>
<p>Even if they’d never before contemplated being entrepreneurs, starting a business, while challenging, was a silver lining and offered new prospects.</p>
<p><strong>Investors:</strong> members of this small group had backgrounds in business. Their primary driver for establishing new enterprises was financial, building on their acquired skills and knowledge. </p>
<p>Unlike the others interviewed, they undertook extensive risk analysis and professional advice before pursuing their business opportunity.</p>
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<h2>Encouraging older entrepreneurship</h2>
<p>Our interviewees do not exhibit the recognised “entrepreneurial” motivations of innovation, growth and maximising profits. Many were not purely economically driven, but often motivated more by personal well-being and altruism.</p>
<p>We feel there are both social and economic benefits in the trend towards senior entrepreneurship. Meaningful and appropriate work is beneficial to personal well-being. For individuals, it provides a sense of self-worth, accomplishment and social inclusion. </p>
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Read more:
<a href="https://theconversation.com/ending-furlough-will-hit-older-workers-hard-heres-how-to-soften-the-blow-162879">Ending furlough will hit older workers hard – here's how to soften the blow</a>
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<p>And there are benefits to society when older people have the opportunity to contribute their skills and experience as entrepreneurs and mentors, helping to break down ageism.</p>
<p>Increasing economic opportunities for older people will also contribute to economic and business growth, and better investment in human capital and institutional knowledge in mixed-age workforces. </p>
<p>It can also help offset the costs of an ageing population through increasing tax revenue and reducing older people’s need for support services.</p>
<p>As a society, we need to encourage and support this trend towards more older people starting businesses as we increasingly live longer and healthier lives.</p>
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<p><em>Geoff Pearman, managing director of Partners in Change and Associate Researcher at Massey University’s Health and Ageing Research Team, co-authored this article.</em></p><img src="https://counter.theconversation.com/content/163003/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Judith Davey receives funding through a contract with Massey University. This work is part of a research programme funded by the Ministry of Business, Employment and Innovation</span></em></p>There’s a global trend towards ‘third age entrepreneurship’, but the motivations behind these senior start-ups might surprise.Judith Davey, Senior Associate, Institute for Governance and Policy Studies , Te Herenga Waka — Victoria University of WellingtonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1570252021-06-20T13:11:02Z2021-06-20T13:11:02ZHow business accelerators can help new startups succeed after COVID-19<figure><img src="https://images.theconversation.com/files/406563/original/file-20210615-15-jmmqcq.jpg?ixlib=rb-1.1.0&rect=40%2C0%2C6669%2C4466&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Innovation and entrepreneurs will be essential for economies to recover and build resiliency following the pandemic. Business accelerators, a mechanism to support and grow new ventures, will need to evolve to help them survive and thrive.</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><p>The COVID-19 pandemic resulted in the loss of <a href="https://www.ctvnews.ca/health/coronavirus/225-million-jobs-were-lost-worldwide-in-2020-thanks-to-the-pandemic-report-finds-1.5281152">225 million</a> jobs around the world.</p>
<p>Younger people have been significantly affected, particularly in industries stalled due to restrictions caused by the pandemic. Many businesses did not survive <a href="https://www.forbes.com/sites/maneetahuja/2021/06/17/covids-entrepreneur-explosion/?sh=21f2854de782">and unemployment is expected to push more people into entrepreneurship</a>. </p>
<p>These entrepreneurs will need support to survive and thrive after the pandemic. <a href="https://obj.ca/article/ey-ottawa-Expert-Blog-sponsored-preserving-innovation-will-be-key-helping-canada-build-back-better?li_fat_id=de86fc23-1085-4102-a726-e6084f437f65">Innovation and entrepreneurship</a> will be essential for economies to recover and build resiliency. Therefore, how these entrepreneurs and their new ventures are supported is important. </p>
<p>Business accelerators, a mechanism to support and grow new ventures, will need to evolve post-pandemic to support new entrepreneurs.</p>
<h2>What are business accelerators?</h2>
<p>Also called seed accelerators or accelerator programs, business accelerators support the growth of new ventures. Though they differ from <a href="https://www.draperuniversity.com/blog/what-is-a-business-incubator">business incubators</a> in several ways, hybrid and evolving business acceleration models abound.</p>
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Read more:
<a href="https://theconversation.com/corporate-accelerators-bringing-together-startups-and-large-firms-to-foster-innovation-93892">Corporate accelerators: bringing together startups and large firms to foster innovation</a>
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<p>Accelerators emerged in the early 2000s with the launch of <a href="https://www.ycombinator.com/">Y Combinator</a> in the United States, considered the most successful accelerator. <a href="https://timreview.ca/article/656">Accelerators</a> are generally for-profit and often hold equity in their client’s firms. Accelerators use a time-limited, cohort-based approach to focus on accelerating the growth of selected technology-based startups from a broad range of industries. </p>
<p>For instance, <a href="https://b4c.ventures">B4C</a> is a social venture accelerator, while the <a href="https://canadiancreativeaccelerator.com/#home">Canadian Creative Accelerator</a> aims to increase the scope and global reach of Canadian television, film, music and new media production firms. Business accelerators are becoming increasingly popular in the startup ecosystem of many countries. There are currently <a href="https://betaboom.com/blog/best-startup-accelerators/">more than 3,000 accelerators worldwide</a>.</p>
<h2>Why accelerators must evolve</h2>
<p>COVID-19 has resulted in reduced customer demand, lack of employee availability and disrupted supply chains, all of which have threatened business survival. </p>
<p>Amid such uncertainty, starting a new venture is more challenging. Turning an idea into a viable and sustainable business model is more complex. Funding might become scarce and investors more risk-averse. Some industry sectors may no longer be considered attractive. </p>
<p>That said, <a href="https://www.europeanbusinessreview.com/20-business-ideas-coming-out-of-covid-19-pandemic-small-business-edition/">new opportunities</a> are emerging from COVID-19 for innovative entrepreneurs. Consider for instance health-care needs, the accelerated use of digital technologies and opportunities related to the work-from-home trend. Accelerators must evolve their business models to support their portfolio of startups now and post-pandemic. </p>
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<img alt="A hand holds a seedling." src="https://images.theconversation.com/files/407085/original/file-20210617-13-7am6kn.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/407085/original/file-20210617-13-7am6kn.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=337&fit=crop&dpr=1 600w, https://images.theconversation.com/files/407085/original/file-20210617-13-7am6kn.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=337&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/407085/original/file-20210617-13-7am6kn.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=337&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/407085/original/file-20210617-13-7am6kn.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/407085/original/file-20210617-13-7am6kn.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/407085/original/file-20210617-13-7am6kn.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Business accelerators must evolve to help startups grow and succeed.</span>
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<p>A three-step approach to deal with COVID-19 promoted by the <a href="https://www.oecd.org/coronavirus/policy-responses/a-systemic-resilience-approach-to-dealing-with-covid-19-and-future-shocks-36a5bdfb/">Organisation for Economic Co-operation and Development</a> is applicable to accelerators. </p>
<p>First and foremost, rapid response, recovery and resilience are necessary. Accelerators worldwide had to quickly undertake rapid response as a first step during the pandemic given restrictions related to social distancing and health guidelines. For example, Canadian Creative Accelerator went entirely online.</p>
<h2>Easily replicated model</h2>
<p><a href="https://journalmbr.net/index.php/mbr/article/view/630">In an article</a> published in the <em>Multidisciplinary Business Review</em>, a colleague and I proposed a post-pandemic accelerator model for South America, focusing on the recovery and resilience steps. This model can easily be replicated elsewhere in the world.</p>
<p>The model considers the impact of COVID-19 on startups, accelerator processes and services in three areas:</p>
<p><strong>Global environment</strong>: Governments worldwide have developed policies and measures to reopen their economies and support recovery. With their intimate knowledge of their own entrepreneurial ecosystems, accelerator managers can support government efforts to spur rapid recovery and growth. This enhanced advocacy role is particularly important since many government programs are designed for established firms in specific industry sectors rather than for startups aiming to capitalize on opportunities in sectors emerging from the pandemic. </p>
<p>Accelerators therefore must ensure the sustainability and performance of these firms to secure funding. They will likely need to seek new sources of funding, particularly because governments have amassed large deficits. Accelerators should also put more emphasis on seeking new international partnerships to reduce costs, access new funding sources and create synergies. </p>
<p><strong>Startups</strong>: Post-pandemic, emerging trends will generate potential entrepreneurship opportunities. Healthcare, IT solutions, online services, digitalization, enhanced cyber security services and opportunities emerging from the accelerated deployment of 5G infrastructure are examples. Accelerators might have to revise their startup selection criteria to identify the most promising industries.</p>
<p><strong>Accelerator processes</strong>: The first step of the three-step model aimed at dealing with COVID-19 — rapid response — resulted in accelerators moving online and staff working remotely. <a href="https://wtenterprisecenter.com/2019/11/11/what-is-demo-day/#:%7E:text=Demo%20Day%20is%20an%20accelerator,depending%20on%20the%20accelerator%20program.">Demo days</a>, hallmarks of accelerator programs, went online, were pushed back or cancelled. Some of these modified processes might become permanent and turn into positives. For instance, online processes can save time and facilitate more introductions among investors, founders and mentors. More foreign startups could be accepted in remote programs. With more online activity, accelerator managers will need to foster close collaboration among stakeholders and seek rapid feedback on proposed changes to their business models.</p>
<p><strong>Accelerator services</strong>: The pandemic has provided an opportunity to revamp the services accelerators offer. For instance, startups will need crisis and risk management training to foster resilience and techniques to identify and pursue new market opportunities. Entrepreneurial approaches <a href="https://innovationenglish.sites.ku.dk/model/sarasvathy-effectuation/">like effectuation</a> <a href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7183981/">and bricolage</a> will become more critical post-pandemic. Both emphasize flexibility and improvisation of existing resources to deal with an unpredictable future. New programs tailored for woman entrepreneurs might be developed because more <a href="https://www150.statcan.gc.ca/n1/daily-quotidien/210526/dq210526a-eng.htm?HPA=1">women lost their jobs than men</a> during the pandemic, and <a href="https://theconversation.com/covid-19-may-turn-back-the-clock-on-womens-entrepreneurship-139961">more women entrepreneurs</a> were affected.</p>
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<img alt="A garment worker walks through a clothing factory" src="https://images.theconversation.com/files/406561/original/file-20210615-3832-octxf6.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C3000%2C1980&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/406561/original/file-20210615-3832-octxf6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=401&fit=crop&dpr=1 600w, https://images.theconversation.com/files/406561/original/file-20210615-3832-octxf6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=401&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/406561/original/file-20210615-3832-octxf6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=401&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/406561/original/file-20210615-3832-octxf6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/406561/original/file-20210615-3832-octxf6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/406561/original/file-20210615-3832-octxf6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">A garment worker walks through a clothing factory in Montréal at the beginning of the pandemic. More women than men lost their jobs during the crisis.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Graham Hughes</span></span>
</figcaption>
</figure>
<h2>Challenges will remain in place</h2>
<p>The pandemic created a litany of entrepreneurship challenges, and they’ll remain in place even after the crisis has passed.</p>
<p>More than ever, entrepreneurs and business accelerators must ensure they share the same goals and objectives when they decide to work together.</p>
<p>In particular, entrepreneurs should pay close attention to the <a href="https://timreview.ca/article/656">selection and exit policies</a> of accelerators, the nature and extent of services provided and what might be more or less efficient in post-pandemic world. They need to diligently assess the quality and availability of their partners. In turn, accelerators can recover and become resilient by following the suggestions from the post-pandemic accelerator model.</p><img src="https://counter.theconversation.com/content/157025/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Diane A. Isabelle does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>New entrepreneurs borne of the pandemic will need support to survive and thrive after the crisis. Here’s how business accelerators need to change in order to help them succeed post-pandemic.Diane A. Isabelle, Associate Professor of International Business, Carleton UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1599062021-04-28T06:16:13Z2021-04-28T06:16:13ZContrary to popular belief, middle-aged entrepreneurs do better<figure><img src="https://images.theconversation.com/files/397469/original/file-20210428-16-1atz3f1.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C4857%2C2501&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">insta_photos/Shutterstock</span></span></figcaption></figure><p>Bill Gates was 21 when he and Paul Allen registered Microsoft. Steve Jobs was 22 when he and Steve Wozniak launched Apple. Mark Zuckerberg started Facebook in his Harvard dormitory.</p>
<p>The biographies of these tech billionaires who achieved great success in their twenties has helped cement the perception that entrepreneurship is a young person’s game. </p>
<p>Not true. Such stories are the exception rather than the norm.</p>
<p>Starting young can have some clear advantages. For one thing, it gives you much more time to fail the several times most enterprenuers do before they put it all together and succeed. </p>
<p>But overall, the research suggests, older age is associated with higher levels of entrepreneurial success.</p>
<p>That’s an important policy point for governments that want people to keep working (and paying taxes) longer even though employment prospects for job seekers <a href="https://theconversation.com/being-good-at-your-job-wont-stop-age-discrimination-149954">decline significantly</a> from about the age of 45. </p>
<p>Rather than just putting money into “job ready” programs or subsidies to employers to hire older workers, more should be invested into programs to support the demographic with the best chance of successfully starting new businesses.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/employers-need-more-than-money-to-hire-older-workers-41490">Employers need more than money to hire older workers</a>
</strong>
</em>
</p>
<hr>
<h2>Mature-aged enterprise growing</h2>
<p><a href="https://journals.sagepub.com/eprint/YUFEMDJMGNNWDZDFZBMC/full">My research</a> with
Bronwyn Eager (University of Tasmania) and Saskia De Klerk (University of Sunshine Coast) suggests mature-aged entrepreneurship – after the age of 50 – is growing faster than among any other age group in Australia. </p>
<p>Mature-aged entrepreneurs run about a third of all businesses that are less than three years old. (All up, mature-aged entrepreneurs have started about 380,000 businesses with a turnover of about A$12 billion a year.)</p>
<p>Younger entrepreneurs do have some advantages. As a group, they are healthier and tend to have fewer family obligations. They may be less risk averse, often because they have less to lose. The may also benefit from others’ positive perceptions of them as “youthful”.</p>
<p>But mature-aged entrepreneurs have three key advantages: human capital, social capital and financial capital. </p>
<p>Our research involved surveying more than 1,000 mature entrepreneurs and correlating the results to other studies on entreprenuers. Our findings indicate older entreprenuers have accumulated business and life experience, knowledge and skills, social networks and resources that better equip them for success. They tend to have better social skills, and are better able to regulate their emotions, than those younger. </p>
<p>They do have a lower risk tolerance than younger entrepreneurs, but that is offset by other factors, such as confidence in their abilities and experience. Their fear of failure is thus less than their younger counterparts.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/keeping-mature-age-workers-on-the-job-85678">Keeping mature-age workers on the job</a>
</strong>
</em>
</p>
<hr>
<h2>The numbers are with them</h2>
<p>Our research supports previous studies finding no evidence to suggest younger entrepreneurs are more likely to succeed than those in middle age.</p>
<p>MIT Sloan School of Management professor Pierre Azoulay and colleagues, for example, <a href="https://www.kellogg.northwestern.edu/faculty/jones-ben/htm/Age%20and%20High%20Growth%20Entrepreneurship.pdf">analysed the data</a> on 2.7 million founders of US companies between 2007 and 2014 that went on to employ at least one person. The average age at founding was 41. For the “1 in 1,000” highest-growth ventures, the average age was 45.</p>
<p>The authors conclude “all evidence points to founders being especially successful when starting businesses in middle age or beyond, while young founders appear disadvantaged”.</p>
<p>Indeed, they found the “batting average” for creating successful firms rose dramatically with age. A 50-year-old founder was 1.8 times more likely to achieve “upper-tail growth” than a 30-year-old founder. Those in their early 20s had the lowest likelihood of success. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/most-successful-entrepreneurs-are-older-than-you-think-95402">Most successful entrepreneurs are older than you think</a>
</strong>
</em>
</p>
<hr>
<h2>How government can help</h2>
<p>Entrepreneurship may therefore be a viable alternative to mature-aged unemployment. </p>
<p>There is, however, compelling evidence that aspiring mature-aged entrepreneurs require specialised government support and incentives, both to start their businesses and grow their businesses. </p>
<p>Government initiatives such as the <a href="https://business.gov.au/grants-and-programs/entrepreneurs-programme">Entrepreneur’s Program</a> (formerly the Entrepreneurship Infrastructure Program) and <a href="https://www.dese.gov.au/entrepreneurship-facilitators/entrepreneurship-facilitators-contacts">Entrepreneurs Facilitators</a>, for example, could be better designed to account for the specific needs of mature-aged entrepreneurs.</p>
<p>Such support will both enhance the success of these businesses – and employment prospects for young and old.</p><img src="https://counter.theconversation.com/content/159906/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Alex Maritz does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Young and successful entrepreneurs get the attention, but they are the exception, not the norm.Alex Maritz, Professor of Entrepreneurship, La Trobe Business School, La Trobe UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1508302021-03-30T18:47:35Z2021-03-30T18:47:35ZAyn Rand-inspired ‘myth of the founder’ puts tremendous power in hands of Big Tech CEOs like Zuckerberg – posing real risks to democracy<figure><img src="https://images.theconversation.com/files/392144/original/file-20210329-19-1hredf9.jpg?ixlib=rb-1.1.0&rect=250%2C189%2C5380%2C3638&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Ayn Rand compares entrepreneurs to Atlas, the Greek god who holds up the world. </span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/RockefellerCenter/804aeaab821647b7992a59be5246aabd/photo?Query=Rockefeller%20center%20statue&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=68&currentItemNo=39">AP Photo/Richard Drew</a></span></figcaption></figure><p>Coinbase’s <a href="https://www.pymnts.com/news/ipo/2021/coinbase-ipo-pushed-april/">plan to go public in April</a> highlights a troubling trend among tech companies: Its founding team will maintain voting control, making it mostly immune to the wishes of outside investors. </p>
<p>The <a href="https://www.bloomberg.com/opinion/articles/2021-03-02/coinbase-ipo-coin-the-crypto-exchange-is-a-100-billion-cult?sref=Hjm5biAW">best-known U.S. cryptocurrency</a> exchange is doing this by <a href="https://www.sec.gov/Archives/edgar/data/0001679788/000162828021004939/coinbaseglobalincs-1a1.htm#i86a9d9b35e45447ea6eb369e5dcf1e6a">creating two classes of shares</a>. One class will be available to the public. The other is reserved for the founders, insiders and early investors, and will wield 20 times the voting power of regular shares. That will ensure that after all is said and done, the <a href="https://finance.yahoo.com/finance/news/coinbase-ipo-7-key-takeaways-154321846.html">insiders will control 53.5% of the votes</a>. </p>
<p>Coinbase <a href="https://www.cii.org/dualclass_stock">will join dozens of other publicly traded tech companies</a> – many with household names such as Google, Facebook, Doordash, Airbnb and Slack – that have <a href="https://www.bloomberg.com/quicktake/dual-class-shares?sref=Hjm5biAW">issued two types of shares</a> in an effort to retain control for founders and insiders. The reason this is becoming increasingly popular has a lot to do with <a href="https://www.nytimes.com/2017/07/13/business/ayn-rand-business-politics-uber-kalanick.html">Ayn Rand</a>, <a href="https://www.theguardian.com/books/2017/apr/10/new-age-ayn-rand-conquered-trump-white-house-silicon-valley">one of Silicon Valley’s favorite authors</a>, and the “myth of the founder” her writings have helped inspire. </p>
<p><a href="https://www.sec.gov/news/speech/fleming-dual-class-shares-recipe-disaster">Engaged investors</a> and governance experts <a href="https://digitalcommons.law.seattleu.edu/sulr/vol39/iss2/13/">like me</a> generally loathe dual-class shares because they undermine executive accountability by making it harder to rein in a wayward CEO. I first stumbled upon this method executives use to limit the influence of pesky outsiders while working on my <a href="https://doi.org/10.2307/2393275">doctoral dissertation on hostile takeovers</a> in the late 1980s.</p>
<p>But the risks of this trend are greater than simply entrenching bad management. Today, given the role tech companies play in <a href="https://knightfoundation.org/digitalcitizenship/technology/">virtually every corner of American life</a>, it poses a threat to democracy as well. </p>
<h2>All in the family</h2>
<p>Dual-class voting structures have been around for decades. </p>
<p>When Ford Motor Co. went public in 1956, its founding family used the arrangement to <a href="https://www.nasdaq.com/articles/63-years-later-what-can-investors-learn-fords-1956-ipo-2019-01-16">maintain 40% of the voting rights</a>. <a href="https://www.washingtonpost.com/business/why-dual-class-shares-catch-on-over-investor-worries/2021/03/04/38ac326a-7d14-11eb-8c5e-32e47b42b51b_story.html">Newspaper companies</a> like <a href="https://www.casehero.com/new-york-times-co/">The New York Times</a> and <a href="https://media.terry.uga.edu/documents/finance/howell_dual_class_share.pdf">The Washington Post</a> often use the arrangement to protect their journalistic independence from Wall Street’s insatiable demands for profitability.</p>
<p>In a typical dual-class structure, the company will sell one class of shares to the public, usually called class A shares, while founders, executives and others retain class B shares with enough voting power to maintain majority voting control. This allows the class B shareholders to determine the outcome of matters that come up for a shareholder vote, such as who is on the company’s board. </p>
<p>Advocates see a dual-class structure as a way to fend off short-term thinking. In principle, this insulation from investor pressure can allow the company to <a href="http://dx.doi.org/10.2139/ssrn.3183517">take a long-term perspective</a> and make tough strategic changes even at the expense of short-term share price declines. Family-controlled businesses often view it as a way to preserve their legacy, which is why Ford remains a family company after more than a century.</p>
<p>It also makes a company <a href="https://doi.org/10.2307/2393275">effectively immune from hostile takeovers</a> and the whims of activist investors.</p>
<p><iframe id="jBE9l" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/jBE9l/3/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<h2>Checks and balances</h2>
<p>But this insulation comes at a cost for investors, who lose a crucial check on management. </p>
<p>Indeed, dual-class shares essentially short-circuit <a href="https://doi.org/10.1146/annurev.soc.31.041304.122249">almost all the other means that limit executive power</a>. The board of directors, elected by shareholder vote, is the ultimate authority within the corporation that oversees management. Voting for directors and proposals on the annual ballot are the main methods shareholders have to ensure management accountability, other than simply selling their shares.</p>
<p><a href="https://doi.org/10.1111/j.1540-6261.2009.01477.x">Recent research shows</a> that the value and stock returns of dual-class companies are lower than other businesses, and they’re more likely to overpay their CEO and waste money on expensive acquisitions.</p>
<p>Companies with dual-class shares <a href="https://site.warrington.ufl.edu/ritter/ipo-data/">rarely made up more than 10% of public listings</a> in a given year until the 2000s, when tech startups began using them more frequently, according to data collected by University of Florida business professor Jay Ritter. The dam began to break after Facebook went public in 2012 with a <a href="https://www.nytimes.com/2009/11/25/technology/internet/25facebook.html">dual-class stock structure</a> that kept founder Mark Zuckerberg firmly in control – <a href="https://www.vox.com/technology/2018/11/19/18099011/mark-zuckerberg-facebook-stock-nyt-wsj">he alone controls almost 60% of the company</a>. </p>
<p>In 2020, over 40% of tech companies that went public did so with two or more classes of shares with unequal voting rights. </p>
<p>This has alarmed <a href="https://corpgov.law.harvard.edu/2019/06/28/dual-class-shares-governance-risks-and-company-performance/">governance experts</a>, <a href="https://www.cii.org/dualclassenablers">some investors</a> and <a href="https://corpgov.law.harvard.edu/2017/04/24/the-untenable-case-for-perpetual-dual-class-stoc">legal scholars</a>. </p>
<figure class="align-center ">
<img alt="Facebook CEO Mark Zuckerberg speaks into a microphone at a House committee hearing in 2019" src="https://images.theconversation.com/files/392147/original/file-20210329-25-19izq9b.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/392147/original/file-20210329-25-19izq9b.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/392147/original/file-20210329-25-19izq9b.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/392147/original/file-20210329-25-19izq9b.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/392147/original/file-20210329-25-19izq9b.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/392147/original/file-20210329-25-19izq9b.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/392147/original/file-20210329-25-19izq9b.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Zuckerberg controls almost 60% of Facebook through class B shares.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/FacebookAustraliaPowerPlay/007f1af98e314913aaf70e88a4b54a93/photo?Query=zuckerberg&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=2388&currentItemNo=4">AP Photo/Andrew Harnik</a></span>
</figcaption>
</figure>
<h2>Ayn Rand and the myth of the superhuman founder</h2>
<p>If the dual-class structure is bad for investors, then why are so many tech companies able to convince them to buy their shares when they go public?</p>
<p>I attribute it to Silicon Valley’s mythology of the founder –- what I would dub an “Ayn Rand theory of corporate governance” that credits founders with superhuman vision and competence that merit deference from lesser mortals. Rand’s novels, most notably “Atlas Shrugged,” portray an America in which <a href="https://www.businessinsider.com/atlas-shrugged-business-advice-2013-10">titans of business hold up the world</a> by creating innovation and value but are beset by moochers and looters who want to take or regulate what they have created.</p>
<p>Perhaps unsurprisingly, Rand has a strong following among <a href="https://www.theguardian.com/books/2017/apr/10/new-age-ayn-rand-conquered-trump-white-house-silicon-valley">tech founders</a>, whose <a href="https://onezero.medium.com/the-philosophy-that-explains-why-so-many-silicon-valley-ceos-are-always-playing-victim-8dafeccb71f7">creative genius may be “threatened”</a> by any form of outside regulation. <a href="https://www.maavens.com/m/elon-musk">Elon Musk</a>, Coinbase founder <a href="https://www.maavens.com/m/brian-armstrong">Brian Armstrong</a> and even the late <a href="https://www.maavens.com/m/steve-jobs">Steve Jobs</a> all have recommended “Atlas Shrugged.” </p>
<figure class="align-center ">
<img alt="Ayn Rand sits with her arms folded outside Grande Central Terminal in New York City" src="https://images.theconversation.com/files/392360/original/file-20210329-15-rcl59s.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/392360/original/file-20210329-15-rcl59s.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=470&fit=crop&dpr=1 600w, https://images.theconversation.com/files/392360/original/file-20210329-15-rcl59s.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=470&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/392360/original/file-20210329-15-rcl59s.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=470&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/392360/original/file-20210329-15-rcl59s.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=590&fit=crop&dpr=1 754w, https://images.theconversation.com/files/392360/original/file-20210329-15-rcl59s.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=590&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/392360/original/file-20210329-15-rcl59s.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=590&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The writings of Ayn Rand are revered by many tech titans.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/BooksAynRand/533cbfabe6cc40b5913741a2f72034b5/photo?Query=ayn%20AND%20rand&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=6&currentItemNo=0">AP Photo</a></span>
</figcaption>
</figure>
<p>Her work is also celebrated by the venture capitalists who typically finance tech startups – <a href="https://www.cbinsights.com/research/founders-best-venture-capitalist-investors/">many of whom were founders themselves</a>. </p>
<p>The basic idea is simple: Only the founder has the vision, charisma and smarts to steer the company forward. </p>
<p>It begins with a powerful founding story. <a href="https://corporate.delltechnologies.com/en-us/about-us/who-we-are/timeline.htm">Michael Dell</a> and Zuckerberg created their multibillion-dollar companies <a href="https://www.insider.com/companies-started-by-teenagers-2019-10">in their dorm rooms</a>. Founding partner pairs Steve Jobs and Steve Wozniak and Bill Hewlett and David Packard built their first computer companies <a href="https://www.theguardian.com/technology/2014/dec/05/steve-wozniak-apple-starting-in-a-garage-is-a-myth">in the garage</a> – Apple and Hewlett-Packard, respectively. Often the stories are true, but sometimes, as in Apple’s case, less so. </p>
<p>And from there, founders face a gantlet of rigorous testing: recruiting collaborators, gathering customers and, perhaps most importantly, attracting multiple rounds of funding from venture capitalists. Each round serves to <a href="https://the-realignment.simplecast.com/episodes/ep-98-balaji-srinivasan-the-coming-decentralization-of-everything-V_zTV5Hk">further validate the founder’s leadership competence</a>. </p>
<p>The Founders Fund, a venture capital firm that has backed dozens of tech companies, including Airbnb, Palantir and Lyft, is one of the biggest proselytizers for this myth, as <a href="https://foundersfund.com/the-future/">it makes clear in its “manifesto.”</a> </p>
<p>“The entrepreneurs who make it have a near-messianic attitude and believe their company is essential to making the world a better place,” it asserts. True to its stated belief, the fund says it has “never removed a single founder,” which is why it has been a big supporter of dual-class share structures. </p>
<p>Another venture capitalist <a href="https://www.businessinsider.com/entrepreneurship-startup-founders-success-overconfidence-andreessen-horowitz-scott-kupor-2019-6">who seems to favor</a> giving founders extra power is Netscape founder <a href="https://a16z.com/portfolio/">Marc Andreessen</a>. His venture capital firm Andreessen Horowitz is Coinbase’s <a href="https://www.sec.gov/Archives/edgar/data/0001679788/000162828021005373/coinbaseglobalincs-1a2.htm">biggest investor</a>. And most of the <a href="https://a16z.com/portfolio/">companies in its portfolio</a> that have gone public also used a dual-class share structure, according to my own review of their securities filings.</p>
<h2>Bad for companies, bad for democracy</h2>
<p>Giving founders voting control disrupts the checks and balances needed to keep business accountable and can lead to big problems. </p>
<p><a href="https://www.newyorker.com/magazine/2020/11/30/how-venture-capitalists-are-deforming-capitalism">WeWork founder Adam Neumann</a>, for example, demanded “unambiguous authority to fire or overrule any director or employee.” As his behavior became increasingly erratic, the company hemorrhaged cash in the lead-up to its ultimately canceled initial public offering. </p>
<p>Investors forced out Uber’s Travis Kalanick in 2017, but <a href="https://www.nytimes.com/2017/06/21/technology/uber-ceo-travis-kalanick.html">not before he’s said to have created a workplace culture</a> that allegedly allowed sexual harassment and discrimination to fester. When Uber finally went public in 2019, <a href="https://www.sec.gov/Archives/edgar/data/1543151/000119312519103850/d647752ds1.htm">it shed its dual-class structure</a>. </p>
<p>There is <a href="https://www.nber.org/books-and-chapters/measuring-entrepreneurial-businesses-current-knowledge-and-challenges/are-founder-ceos-good-managers">some evidence</a> that founder-CEOs are less gifted at management than other kinds of leaders, and their companies’ performance can suffer as a consequence.</p>
<p>But investors who buy shares in these companies know the risks going in. There’s much more at stake than their money. </p>
<p>What happens when powerful, unconstrained founders control the <a href="https://theconversation.com/big-techs-swift-reaction-to-capitol-rioters-reveals-new-face-of-corporate-political-power-and-a-threat-to-american-democracy-153061">most powerful companies in the world</a>? </p>
<p>The tech sector is <a href="https://journals.sagepub.com/doi/10.1177/2631787721995198">increasingly laying claim</a> to central command posts of the U.S. economy. Americans’ access to news and information, financial services, social networks and even groceries is mediated by a handful of companies controlled by a handful of people. </p>
<p>Recall that in the wake of the Jan. 6 Capitol insurrection, the CEOs of Facebook and Twitter <a href="https://theconversation.com/big-techs-swift-reaction-to-capitol-rioters-reveals-new-face-of-corporate-political-power-and-a-threat-to-american-democracy-153061">were able to eject former President Donald Trump</a> from his favorite means of communication – <a href="https://www.washingtonpost.com/technology/2021/01/14/trump-twitter-megaphone/">virtually silencing him overnight</a>. And <a href="https://www.nytimes.com/2021/01/09/technology/apple-google-parler.html">Apple, Google and Amazon cut off Parler</a>, the right-wing social media platform used by some of the insurrectionists to plan their actions. Not all of these companies have dual-class shares, but this illustrates just how much power tech companies have over America’s political discourse.</p>
<p>One does not have to disagree with their decision to see that a form of political power is becoming increasingly concentrated in the hands of companies with limited outside oversight.</p>
<p>[<em>Deep knowledge, daily.</em> <a href="https://theconversation.com/us/newsletters/the-daily-3?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=deepknowledge">Sign up for The Conversation’s newsletter</a>.]</p><img src="https://counter.theconversation.com/content/150830/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jerry Davis does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Tech companies’ use of dual-class share structures to keep control in the hands of founders and other insiders gives a handful of people power over enormous swaths of American life.Jerry Davis, Fellow at the Center for Advanced Study in the Behavioral Sciences at Stanford and Professor of Management and Sociology, University of MichiganLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1492532020-12-01T16:24:41Z2020-12-01T16:24:41ZCanadian startups need to focus on corporate governance to grow and thrive<figure><img src="https://images.theconversation.com/files/372090/original/file-20201130-17-1ytc9ka.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C4010%2C2299&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Good governance is critical for growth. But Canadian startups haven't yet got a handle on the importance of governance when seeking investors.</span> <span class="attribution"><span class="source">(Ravi Roshan/Unsplash)</span></span></figcaption></figure><p>To help recover from our current economic crisis, Canada needs to develop the next generation of world-leading technology corporations. </p>
<p>The <a href="https://www.theglobeandmail.com/business/article-venture-capital-industry-lobbies-ottawa-for-new-funds-to-prevent/">venture capital (VC) industry is seeking more government support</a>, including direct funding, for early-stage technology corporations. Unfortunately, any potential increased financing will not help the vast majority of entrepreneurs.</p>
<p>That’s because most entrepreneurs don’t understand how to structure their corporations to attract VC financing. This is partly due to a lack of respect for the needs of investors, and an associated weak understanding about corporate governance matters.</p>
<h2>VC frustrations</h2>
<p>Venture capitalists are specialized intermediaries who raise money from institutions to invest in technology-oriented corporations. <a href="http://www.angelblog.net/Angel_Investors_VCs_and_Entrepreneurs_Gaps_in_Understanding.html">VCs become frustrated</a> when entrepreneurs do not put in the time required to learn about, and implement, effective governance practices before launching their startups. </p>
<p>They complain that entrepreneurs often expect them to spend multiple hours learning about their business before making an investment, even though the entrepreneurs have neglected to take the time to learn about investor needs. Investors in early-stage corporations are active, and want to be heavily involved when key decisions are being made.</p>
<p>VCs, and other startup investors, review hundreds of potential companies a year in order to make a handful of investments. Early-stage investors will spend an average of <a href="https://docsend.com/view/p8jxsqr">under five minutes</a> reviewing an entrepreneur’s pitch deck, and will use that time to see if there are any critical flaws in the startup’s plans.</p>
<figure class="align-center ">
<img alt="A man looks at a tablet as another man sits behind him in an outdoor setting." src="https://images.theconversation.com/files/372087/original/file-20201130-21-vph74q.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/372087/original/file-20201130-21-vph74q.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/372087/original/file-20201130-21-vph74q.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/372087/original/file-20201130-21-vph74q.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/372087/original/file-20201130-21-vph74q.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/372087/original/file-20201130-21-vph74q.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/372087/original/file-20201130-21-vph74q.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Potential investors will pore over a startup’s plans before deciding to invest.</span>
<span class="attribution"><span class="source">(Unsplash)</span></span>
</figcaption>
</figure>
<p><a href="https://www.creativedestructionlab.com/locations/calgary/">In a specialized program at the Haskayne School of Business at the University of Calgary</a>, we’ve noticed that when investors identify a potentially interesting opportunity, the entrepreneur will be asked to provide two sets of detailed corporate information: a list of all shareholders and key governance documents. </p>
<p>If entrepreneurs have been too generous, or too miserly, in the distribution of shares, this will lessen their ability to grow a strong leadership team, will reflect poorly on the entrepreneur’s skills and is a big red flag for investors. </p>
<h2>Complex governance challenges</h2>
<p>Most entrepreneurs don’t appreciate that the <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3352203">governance challenges of a startup</a> are in many ways more complex than those of an established corporation. The type of securities used to raise financing, for example, and the arrangements negotiated between entrepreneurs and investors can be quite complicated.</p>
<p>That means specialized governance mechanisms are needed that can be put into place at a relatively low cost during the early years of a startup. Once a corporation has developed past a certain point, any governance deficiencies may be impossible to correct or may require too much time and money, scaring away potential investors. </p>
<p>An investor’s time is valuable and is better spent helping a startup move forward as opposed to helping an entrepreneur clean up past mistakes. Taken together, the failure to attract investors and to build a strong management team have been identified as the <a href="https://www.cbinsights.com/research/startup-failure-reasons-top/">second and third most important reasons for startup failure</a> — and together they add up to a higher value than the first reason: no market need for the startup’s product or service. </p>
<p>There is information available that can help entrepreneurs learn how to work with investors. Canadian sources include the <a href="https://www.nacocanada.com/cpages/entrepreneur-resources">National Angel Capital Organization (NACO)</a> and the <a href="https://www.cvca.ca/research-insight/model-legal-documents/">Canadian Venture Capital Association (CVCA)</a>. </p>
<p>Unfortunately, however, much of the governance information on these types of sites is highly technical and it takes experience to understand which governance practices are reasonable. An entrepreneur is encouraged to seek out experienced practitioners to assist in making this determination. </p>
<p>Since this is such a specialized area, the number of such practitioners is limited. Even seasoned lawyers and directors who have spent their careers working with large publicly traded firms can struggle when dealing with the governance issues faced by startups.</p>
<h2>A solution for the governance gap</h2>
<p>Drawing upon academic research, and insights from leading governance practitioners, researchers at the Haskayne School developed and delivered <a href="https://haskayne.ucalgary.ca/future-students/executive-education/programs-board-directors/enhancing-private-equity-governance">Canada’s first governance course specifically designed to meet the needs of early-stage start-ups</a> this year. </p>
<p>Six months post-program, several entrepreneurs discussed how they had effectively restructured their share ownership to make their corporation more investable, while others indicated that they had been able to attract significant capital after the course. </p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/372085/original/file-20201130-19-1bdo24v.jpg?ixlib=rb-1.1.0&rect=0%2C14%2C4603%2C1968&q=45&auto=format&w=1000&fit=clip"><img alt="A collection of Canadian and American bills." src="https://images.theconversation.com/files/372085/original/file-20201130-19-1bdo24v.jpg?ixlib=rb-1.1.0&rect=0%2C14%2C4603%2C1968&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/372085/original/file-20201130-19-1bdo24v.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=260&fit=crop&dpr=1 600w, https://images.theconversation.com/files/372085/original/file-20201130-19-1bdo24v.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=260&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/372085/original/file-20201130-19-1bdo24v.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=260&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/372085/original/file-20201130-19-1bdo24v.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=326&fit=crop&dpr=1 754w, https://images.theconversation.com/files/372085/original/file-20201130-19-1bdo24v.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=326&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/372085/original/file-20201130-19-1bdo24v.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=326&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Venture capitalists want to invest their money in startups that are well-managed.</span>
<span class="attribution"><span class="source">(John McArthur/Unsplash)</span></span>
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</figure>
<p>One director participant indicated that he was able to provide valuable direction as an angel investor and mentor to a startup that increased the confidence of the startup’s CEO, and its advisory board, in their fund-raising efforts.</p>
<p>Entrepreneurs provided with guidance at critical stages of their corporation’s development have a much higher chance of success. Developing strong governance practices will increase an entrepreneur’s ability to attract this support. </p>
<p>Good business requires good governance, and startups require a particular kind of governance to help them grow and prosper. Ensuring effective governance at Canadian technology startups needs to be part of any solution aimed at accelerating the development of these corporations.</p><img src="https://counter.theconversation.com/content/149253/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michael Robinson does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Good business requires good governance, and startups require a particular kind of governance to help them grow and prosper. That’s why it’s so important for startups to get governance right early on.Michael Robinson, Professor and Chen Fong Fellow in Entrepreneurial Finance, University of CalgaryLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1419202020-07-28T21:04:01Z2020-07-28T21:04:01ZStartup founders help each other weather the COVID-19 crisis<figure><img src="https://images.theconversation.com/files/349749/original/file-20200727-33-1fx7vyh.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C5184%2C3888&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Staying in touch with other entrepreneurs via video calls during COVID-19 builds a sense of community among startup founders, research has shown.</span> <span class="attribution"><span class="source">(Chris Montgomery/Unsplash)</span></span></figcaption></figure><p>Anna (a pseudonym), a startup founder in the Montréal area, went through an emotional rollercoaster ride that’s familiar to us all since the onset of the COVID-19 pandemic. At first she tried to stay positive and keep a stiff upper lip. And then she slumped, and thought to herself: “Oh my God, this is horrible; this is never going to end.”</p>
<p>The pandemic has had a devastating impact on small businesses. <a href="https://www.cfib-fcei.ca/sites/default/files/2020-07/COVID-19-survey-results-June15.pdf">A June survey by the Canadian Federation of Independent Business</a> finds that 49 per cent of Canadian small businesses are either fully closed or only partially open, 46 per cent are making half or less of their normal sales and a third are using half or less of their staff. </p>
<p>For entrepreneurs like Anna who were just getting their businesses off the ground — developing their product, looking for investors and finding their first customers — the challenges are even more daunting. </p>
<p>So how are new startups weathering the storm?</p>
<h2>Building a sense of community</h2>
<p>For the past three months as part of <a href="https://www.researchgate.net/project/Entrepreneurial-pivoting-during-the-Covid-19-pandemic">a larger study</a>, our team has organized bi-weekly group conversations on Zoom with a dozen entrepreneurs. </p>
<p>These conversations have led to an exchange of information, but equally importantly, we found they helped entrepreneurs build a sense of community. As Anna said in our interview: </p>
<blockquote>
<p>“Talking to fellow founders, hearing the trials and tribulations, it’s just good to vent some of this out … so people can have a sense of community and support.” </p>
</blockquote>
<p>In our conversations, entrepreneurs discussed new challenges they were facing, which Benoit (a pseudonym) described as “going back to square one.” For some, online retail was the only way to save their businesses, but they lacked e-commerce experience. </p>
<p>How do you hire a photographer to take pictures of your products under a lockdown? How do you replace in-person customer training with educational videos? What are the best channels for advertising your product? And how do you do all of this while reducing your operating expenses? </p>
<p>We also found that entrepreneurs needed information about new opportunities. For example, in response to the pandemic, the Canadian government has implemented a number of programs for the startup sector, including <a href="https://www.cbc.ca/news/politics/trudeau-covid19-mar27-business-1.5512151">financial support for small businesses</a>. In our group conversations, entrepreneurs readily shared information about what programs were available, how to apply and who to contact. </p>
<p>Entrepreneurs also had concerns about managing their teams when the traditional office life is, for now anyway, a thing of the past. How do you bring on new hires when you cannot meet with them in person? How do you maintain team morale when everyone is working remotely? How do you organize collaboration online? </p>
<h2>Sharing expertise</h2>
<p>Information sharing was not the only benefit entrepreneurs derived from group conversations. We noticed that even entrepreneurs who said, in interviews, that they hadn’t derived much new information from meetings seemed to enjoy sharing their expertise with others, and still occasionally dropped into our Zoom chats.</p>
<p>We found that our group conversations about the experience of going through this exceptional time together helped entrepreneurs feel less alone. One participant, Rodrigo (a pseudonym), was “very happy to see how [other entrepreneurs] are doing and that they’re keeping up and they’re hanging in there; that’s always very inspiring.”</p>
<p>Nina (a pseudonym) said she found it “useful to see that there are actually some startups that are in the same boat as us …. Because we look at social media and there are some industries that are booming and it doesn’t make you feel very good when you’re not.”</p>
<figure class="align-center ">
<img alt="A woman with a laptop participates in a video conference meeting" src="https://images.theconversation.com/files/349748/original/file-20200727-63428-1scldlp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/349748/original/file-20200727-63428-1scldlp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/349748/original/file-20200727-63428-1scldlp.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/349748/original/file-20200727-63428-1scldlp.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/349748/original/file-20200727-63428-1scldlp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/349748/original/file-20200727-63428-1scldlp.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/349748/original/file-20200727-63428-1scldlp.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Connecting over video conference with fellow entrepreneurs about their challenges during COVID-19 helped them feel less alone.</span>
<span class="attribution"><span class="source">(Pixabay)</span></span>
</figcaption>
</figure>
<p>Through the interviews, we realized that group conversations originally intended to share information about the rapidly changing business landscape had in fact created openings for deeper interpersonal interactions between members. Following meetings, entrepreneurs described reaching out to their peers for followup advice and guidance, and sometimes just to offer personal encouragement. </p>
<h2>Creating trust</h2>
<p>Why were our group conversations able to evolve from an information exchange to a community-building platform? </p>
<p>For starters, entrepreneurs came from different industries and were not directly competing with each other. This made them feel less constrained in giving advice and in openly discussing the challenges they were facing. </p>
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<em>
<strong>
Read more:
<a href="https://theconversation.com/social-networks-play-a-key-role-when-entrepreneurs-cut-ties-to-their-companies-139290">Social networks play a key role when entrepreneurs cut ties to their companies</a>
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<p>Another important reason was that all entrepreneurs personally knew the group facilitator, <a href="https://www.linkedin.com/in/renjiebutalid/">Renjie Butalid</a>, and many had previously participated in programs at <a href="https://www.mcgill.ca/dobson/">McGill’s Dobson Centre for Entrepreneurship</a>. In this way, the groups’ success was predicated on the pre-existing face-to-face relationships that helped foster trust.</p>
<p>While our study continues, our results point so far to the important role peer relationships play in helping entrepreneurs get through the current crisis. They also suggest that universities can help entrepreneurs build peer relationships. And these relationships play a critical role in building a resilient entrepreneurial ecosystem.</p>
<p><em>Renjie Butalid, co-founder of the Montreal AI Ethics Institute, contributed to this article.</em></p><img src="https://counter.theconversation.com/content/141920/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Elena Obukhova works for McGill University. She has received funding from the McGill University's Center for Strategy Studies in Organizations. </span></em></p><p class="fine-print"><em><span>Daphne Demetry works for McGill University. She has received funding from the McGill University's Center for Strategy Studies in Organizations.</span></em></p>How are startup entrepreneurs getting through the COVID-19 pandemic? Talking to each other to offer tips, expertise and a sympathetic ear is helpful, according to an ongoing study.Elena Obukhova, Assistant Professor, Strategy and Organization, McGill UniversityDaphne Demetry, Assistant Professor, Strategy and Organization, McGill UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1365602020-05-03T15:26:52Z2020-05-03T15:26:52ZA survival guide for startups during the coronavirus pandemic<figure><img src="https://images.theconversation.com/files/331113/original/file-20200428-110748-12mhkq6.jpg?ixlib=rb-1.1.0&rect=14%2C0%2C4977%2C3525&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The coronavirus pandemic is affecting businesses differently and startups are especially vulnerable.</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><p>Until the COVID-19 pandemic is over, survival has to be the imperative focus for startups. In this brief survival guide, we provide several tips for startups and their owners and managers to help them get through the crisis and stay in control of their companies.</p>
<p>The pandemic is very different from the financial crisis in 2008. Not all firms are losing out, with the value of some companies increasing on the <a href="https://www.axios.com/netflix-stock-massive-q1-subscriber-increases-92b7796a-2434-4caa-ae33-f434793dc5a1.html">stock market and certain businesses experiencing more demand than they were prepared for</a>. In fact, some companies are hiring. </p>
<p>In contrast, many businesses cannot use their <a href="https://www.thestar.com/business/2020/03/25/some-businesses-struggle-under-covid-19-while-others-can-barely-keep-up-with-demand.html">traditional supply and distribution channels and have temporarily closed or are facing reduced demand</a>.</p>
<h2>Challenge No. 1: Cash management</h2>
<p>First, the biggest issue most startups face is cash management. Many estimates suggest that it’s likely to take 12 to 18 months (in a positive scenario) until a vaccine is found and approved, although the <a href="https://www.theguardian.com/world/2020/apr/19/coronavirus-vaccine-when-will-we-have-one">post-crisis effects may continue for longer</a>. Such thoughts give rise to a fundamental question: how can startups survive during this period? </p>
<p>Companies need to prepare for <a href="https://www.express.co.uk/news/world/1264413/coronavirus-news-china-henan-hubei-wuhan-covid-19-pandemic-second-wave-lockdown">further lockdowns</a>. Preserving cash for this period is crucial for several reasons. While most investors honour deals, <a href="https://drive.google.com/file/d/1WuZo1g9hzu3S7I4Sk84FBCf3iE-rgS40/view?hss_channel=tw-168857946">some may not</a>. </p>
<p>Furthermore, the market for investments has also shifted. Valuations are down significantly, so getting money into the business is, and will be, increasingly difficult. Even for companies operating in sectors with high demand (such as health care), if the product-market fit is likely to be more than one year away, investors will be more cautious. Additionally, certain opportunities for generating cash short-term have frozen up. </p>
<p>On the upside, cash-poor startups are less likely to be distracted from their end goals by engaging too much in side-shows and can focus on evolving their core business model. For the next 18 months, the goal is to make sure they can stay afloat.</p>
<h2>Challenge No. 2: Changing valuations</h2>
<p>A second challenge in this market involves changing valuations so business owners need to have realistic expectations. The stock market has already crashed, <a href="https://www.forbes.com/sites/kenrapoza/2020/04/20/three-reasons-why-the-stock-market-has-further-to-fall/#470051755de1">but may go further down</a>. </p>
<p>Startup valuations have become more conservative as well. It is harder to attract funding and companies trying to raise money likely lose even more equity. One reality for investors in times of crisis is that their expected returns are often much higher than in “normal times.” During the financial crisis, <a href="https://drive.google.com/file/d/1WuZo1g9hzu3S7I4Sk84FBCf3iE-rgS40/view?hss_channel=tw-168857946">returns were typically more than double in comparison to less volatile periods</a>. If possible, it may be worth waiting until the market has cleared the impact of the pandemic before raising money again.</p>
<h2>Challenge No. 3: Leadership complexities</h2>
<p>Third, leadership has become more complex. Transparency and honesty about the situation is key to <a href="https://ceocoachinginternational.com/boeing-transparency">building, establishing and deepening trust between management and employees</a>. Excitement comes second. Dealing with emotions is as important as showing empathy and making people feel connected. It is important to stay true to values and vision. </p>
<p>Business leaders should consider not only having mentors, but a coach who is not involved in the company and understands the reality of your job. Coaching can contribute to <a href="https://doi.org/10.1080/17439760902992456">well-being, prompt self-reflection for business leaders and help in making balanced decisions</a>. </p>
<p>Having to lay off key employees is a traumatic experience. The labour market for top talent is still active. This crisis is selective, affecting some companies hard while others thrive. Laying off top talent makes it likely they will find a good offer somewhere else and not come back when the crisis is over. This is a further reason for startups to act very strategically in cash management for the next year.</p>
<h2>Challenge No. 4: Changing space needs</h2>
<p>Fourth, the disassociation from physical work spaces, and in particular, <a href="https://doi.org/10.1016/j.jbusres.2020.03.033">co-working spaces and incubators</a>, might truncate social interaction. Startups depend on intense personal and social exchanges to stimulate creativity and experimentation; less opportunities for direct communication and spontaneous encounters might endanger respective startups’ growth. </p>
<p>Meeting virtually is particularly effective for drawing on existing social ties, and integrating and taking advantage of this digitalization movement will help startups emerge strengthened from this crisis. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/331107/original/file-20200428-110785-1t78s5l.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/331107/original/file-20200428-110785-1t78s5l.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/331107/original/file-20200428-110785-1t78s5l.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/331107/original/file-20200428-110785-1t78s5l.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/331107/original/file-20200428-110785-1t78s5l.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/331107/original/file-20200428-110785-1t78s5l.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/331107/original/file-20200428-110785-1t78s5l.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/331107/original/file-20200428-110785-1t78s5l.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">When startups are unable to meet in physical spaces, they lose much of the opportunity for the types of creative or spontaneous interactions that inform startup development and growth.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
</figcaption>
</figure>
<h2>Challenge No. 5: Consider pivoting</h2>
<p>Fifth, pivoting your business model is something to consider during these changing times. Several startup firms in various sectors are changing the way they offer value to different customer groups during this crisis, for example by going online. Thinking about locking in existing customers and offering value to new customers with possibly different characteristics is a key to success. </p>
<p>A further consideration is whether to collaborate with complementary rivals, and whether to combine resources to launch new products that may be in greater demand. We have seen 3D printers being reused for protective equipment and <a href="https://eatnorth.com/eat-north/comprehensive-list-canadian-distilleries-producing-sanitizer-during-covid-19-crisis">distilleries producing hand sanitzers</a>.</p>
<p>It is during crisis that responsible management practices and fair stakeholder treatment is especially visible. Making decisions quickly, transparently and equitably will go a long way.</p><img src="https://counter.theconversation.com/content/136560/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The coronavirus pandemic is an exceptionally challenging time for start-ups. Here’s a guide to help new businesses survive.Felix Arndt, John F. Wood Chair in Entrepreneurship, University of GuelphDavid Crick, Paul Desmarais Professor of International Entrepreneurship and Marketing, L’Université d’Ottawa/University of OttawaRicarda B. Bouncken, Professor, Chair for Strategic Management and Organization, Bayreuth International Graduate School of African StudiesLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1326152020-04-22T10:07:20Z2020-04-22T10:07:20ZHow business support can boost startup diversity in uncertain times<figure><img src="https://images.theconversation.com/files/320606/original/file-20200315-50519-119mpk1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Stronger together.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/group-diverse-hands-together-joining-concept-344201303">Shutterstock</a></span></figcaption></figure><p>Business accelerators are programmes which offer various types of support, including training, mentorship, access to workspaces and investment, <a href="https://www.gov.uk/government/publications/business-incubators-and-accelerators-the-national-picture">to early-stage businesses</a> with the aim of helping them through the fragile early stages of growth. They may play a vital role in the post-COVID-19 recovery.</p>
<p><a href="https://www.gov.uk/government/publications/the-impact-of-business-accelerators-and-incubators-in-the-uk">In a recent study</a>, funded by the UK government, we found evidence that participating in one particular accelerator (which will remain anonymous) was associated with an increase in business survival rates, investment raised and growth in the number of people employed. This could be vital as new businesses struggle to thrive in increasingly uncertain economic times.</p>
<p>On <a href="https://www.gov.uk/government/publications/business-incubators-and-accelerators-the-national-picture">our last count</a> there were a total of 163 accelerators in the UK. The majority of these were created with the aim of encouraging innovation within a particular industry or promoting local economic growth.</p>
<p>Increasingly, however, accelerators are being set up with the goal of tackling the issue that, while being <a href="https://www.verdict.co.uk/uk-tech-startup-scene-europe/">the fastest-growing in Europe</a>, the UK startup scene is far from diverse. Only a quarter of startups in the UK have a female in their founding team and just 13% of investment in 2018 <a href="https://about.beauhurst.com/wp-content/uploads/2019/12/Female-Entrepreneurs-2019-WEB.pdf?utm_campaign=Bulletin&utm_source=hs_email&utm_medium=email&utm_content=82722371&_hsenc=p2ANqtz-8GWanSu5Tq_HYLR-Li25rPLfWq1ORTE5jlJ9xtYUzMKKyfsuq_u2F0XHqa9D1bfrOlNJk7UqTpIPXoqAkKKXq4fdc8f33eT3M6upm-x1TgjeEUoX0&_hsmi=82722371">went to female-founded businesses</a>. Furthermore, it is estimated that just 5% of small and medium-sized enterprises (SMEs) <a href="https://www.gov.uk/government/statistics/small-business-survey-2018-businesses-with-employees">are minority ethnic group led</a>.</p>
<p>The underrepresentation of these (and other) groups is unacceptable not only from a moral perspective but also economically. Studies show that diverse founding teams are more innovative and <a href="https://www.forbes.com/sites/annapowers/2018/06/27/a-study-finds-that-diverse-companies-produce-19-more-revenue/">bring better financial results</a>.</p>
<p>To put this in monetary terms, <a href="https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/784324/RoseReview_Digital_FINAL.PDF">The Rose Review</a> estimated that if the UK were to achieve the same average share of women entrepreneurs as countries which excel at supporting female entrepreneurship (Canada, the US, the Netherlands and Australia), this would add £200 billion of new value to the UK economy. This unrealised potential is huge and cannot be ignored, especially at the moment.</p>
<h2>New directions</h2>
<p>Some accelerator programmes have been set up with the chief aim of supporting entrepreneurs from underrepresented groups. <a href="https://femalefounders.london/">Hatch’s Female Founders Accelerator</a>, in south London, is a six-month programme, specifically aimed at supporting BAME female-led businesses, with backing from Natwest, law firm Weil, Gotshal & Manges and BlackRock Investment.</p>
<p><a href="https://blog.techhub.com/techhubaccelerate/">The TechHub Accelerate programme</a> in east London, with partners including Google for Startups, supports BAME, female, LGBTQI+ and founders with disabilities, giving them access to workspaces, meeting rooms, mentoring sessions and events for up to a year.</p>
<p>And <a href="https://www.weinsocialtech.co.uk/">The We in Social Tech growth accelerator</a>, also in London, is a six-month programme aimed at social tech businesses led by women. It is delivered by not-for-private-profit enterprise agency Nwes and supported by Deutsche Bank.</p>
<p>Although the barriers to starting a business that different groups face are varied and complex, <a href="https://www.enterpriseresearch.ac.uk/wp-content/uploads/2018/07/Under-represented-entrepreneurs-Revised-10.18.pdf">it has been suggested that some challenges,</a> such as access to finance, access to relevant entrepreneurship advice, and a lack of business skills and experience, are common to most.</p>
<p>While accelerators may not directly address the structural factors that ultimately give rise to these barriers, <a href="https://www.gov.uk/government/publications/the-impact-of-business-accelerators-and-incubators-in-the-uk">our research suggests</a> that accelerators may be able to help founders overcome them by directly offering funding or introducing them to investors, matching them with a mentor and providing business support and training.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/320607/original/file-20200315-50519-1q0uvkg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/320607/original/file-20200315-50519-1q0uvkg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=383&fit=crop&dpr=1 600w, https://images.theconversation.com/files/320607/original/file-20200315-50519-1q0uvkg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=383&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/320607/original/file-20200315-50519-1q0uvkg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=383&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/320607/original/file-20200315-50519-1q0uvkg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=481&fit=crop&dpr=1 754w, https://images.theconversation.com/files/320607/original/file-20200315-50519-1q0uvkg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=481&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/320607/original/file-20200315-50519-1q0uvkg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=481&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Diversity is good for the economy.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/diverse-people-working-startup-business-concept-210979942">Shutterstock</a></span>
</figcaption>
</figure>
<p><a href="https://www.british-business-bank.co.uk/wp-content/uploads/2019/02/British-Business-Bank-UK-Venture-Capital-and-Female-Founders-Report.pdf">Research by the British Business Bank</a> found “minor signs of potential bias” against female founders in investment decision-making. But it also indicated that underrepresentation of women in industries that are most attractive to investors (for example, software) and women typically being less well-connected to investors’ networks were equally, if not more, significant barriers to female entrepreneurs accessing funding.</p>
<p>Alongside this, <a href="https://onlinelibrary.wiley.com/doi/abs/10.1002/smj.3135%23.XkP5fXHFbv4.twitter">recent academic research</a>, has highlighted the particularly important part role models play in inspiring underrepresented groups to launch startups.</p>
<p>By improving survival rates for startups with underrepresented founders, accelerators can help bolster support networks, change perceptions of what it means to be a successful founder, and produce more relatable role models, potentially helping to create more diverse businesses in the longer term.</p>
<h2>The goal</h2>
<p>Given the large amount of public funding already going to fund business accelerators in the UK <a href="https://www.gov.uk/government/publications/business-incubators-and-accelerators-the-national-picture">(we estimate this to be £20-30 million per year)</a>, there is an obligation to make sure everyone is able to benefit from them. This isn’t just about backing those few programmes with a particular focus on underrepresented groups but also ensuring all publicly funded accelerators have ambitious and proactive diversity and inclusion policies.</p>
<p>While ensuring that accelerator intake is diverse is essential, in order to be truly inclusive it is also important that accelerators are accessible to businesses that are oriented towards the real needs of the communities they are trying to support. This may not always mean the high-tech, high-growth firms which accelerators typically support, and which <a href="https://www2.census.gov/ces/wp/2019/CES-WP-19-29.pdf">can themselves exacerbate inequalities</a>.</p>
<p>While funding accelerators is just <a href="https://sifted.eu/articles/diversity-tech-initiatives-europe-list/">one of many tools available to policymakers</a> promoting entrepreneurship, it is a tool for which there is now good evidence. But past research has not focused on the specific impact accelerator programmes can have on improving diversity in startups.</p>
<p>Future research that disentangles the effectiveness of accelerators at tackling the lack of diversity in startups, compared to other initiatives with the same goal <a href="https://sifted.eu/articles/diversity-tech-initiatives-europe-list/">(for example, events, networks, funds)</a>, and offers a better understanding of how to design accelerator programmes to achieve this goal would be of great value.</p>
<p>A more diverse startup environment is better for everyone. And while building diversity takes time and a multi-pronged approach, I believe the great work done by the accelerators mentioned here, and others which aim to support entrepreneurs from underrepresented groups, plays an important role in achieving this goal.</p><img src="https://counter.theconversation.com/content/132615/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jonathan Bone is a Senior Researcher in Nesta's Policy, Analysis and Research Team. Nesta's recent research on the impact of accelerators was funded by Department for Business, Energy & Industrial Strategy and was conducted in collaboration with Dr Henry Lahr (The Open University), Dr Juanita Gonzalez-Uribe (The London School of Economics) and Beauhurst.
</span></em></p>Only a quarter of UK startups have a female in their founding team and just 5% of SMEs are minority ethnic group led.Jonathan Bone, Senior Researcher, New Technology and Startups, NestaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1356552020-04-14T15:12:40Z2020-04-14T15:12:40ZCoronavirus bailouts won’t save startup workers from layoffs<figure><img src="https://images.theconversation.com/files/327338/original/file-20200412-8893-1v8wjax.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C4752%2C3144&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">With millions newly unemployed, it's unclear what the prospects of former startup employees will be.</span> <span class="attribution"><span class="source">(James Yarema/Unsplash)</span></span></figcaption></figure><p>As financial markets tumble, investors are pulling funding from startups. Sales for anything but bare essentials have evaporated, while progress on product development and market testing has halted for work that requires in-person collaboration.</p>
<p>Many existing bailout plans are targeted for larger enterprises in industries like aviation and tourism. While limited resources are explicitly earmarked <a href="https://www.bdc.ca/en/about/mediaroom/public_statements/pages/statement-regarding-eligibility-criteria-business-credit-availability-program-bcap.aspx">for startups</a> and other <a href="https://www.cfib-fcei.ca/en/small-business-resources-dealing-covid-19#govt">small enterprises</a>, they come with stringent criteria and complex and slow application processes.</p>
<p>Many startups already function without cash reserves and lines of credits. Unlike larger resource-rich companies, startups are unable to make pledges to avoid layoffs. This confluence of events means that startups and the jobs within them <a href="https://www.forbes.com/sites/briannegarrett/2020/03/20/small-business-relief-tracker-funding-grants-and-resources-for-business-owners-grappling-with-coronavirus/#1c764094dd4c">are vanishing</a> and at a pace that likely exceeds job dissolution in larger, more established firms.</p>
<h2>An abrupt ending</h2>
<p>The CEO of <a href="https://www.researchgate.net/project/Beyond-Warm-Bodies-The-Unintended-Consequences-of-Hiring">a startup I’ve been studying for more than two years</a> was forced to cut costs by 50 per cent at the request of a cash-strapped investor. He accomplished this by slashing his own salary to nothing, eliminating positions in the management and sales teams, closing a physical office and severing outsourcing arrangements.</p>
<p>Days later, his major investor said these cuts were inadequate. The CEO explored alternatives, including cutting back to a skeletal staff and seeking government funding to help get through this time. His company fell through the cracks of any bailout schemes. Cutting back staff would halt any progress in product development and the ability to complete desperately needed sales.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/327334/original/file-20200412-32369-w7lp7d.jpg?ixlib=rb-1.1.0&rect=80%2C0%2C9000%2C5955&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/327334/original/file-20200412-32369-w7lp7d.jpg?ixlib=rb-1.1.0&rect=80%2C0%2C9000%2C5955&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/327334/original/file-20200412-32369-w7lp7d.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/327334/original/file-20200412-32369-w7lp7d.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/327334/original/file-20200412-32369-w7lp7d.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/327334/original/file-20200412-32369-w7lp7d.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/327334/original/file-20200412-32369-w7lp7d.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/327334/original/file-20200412-32369-w7lp7d.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Startup founders are being forced to shutter their companies.</span>
<span class="attribution"><span class="source">(Tim Mossholder/Unsplash)</span></span>
</figcaption>
</figure>
<p>He shuttered the company 10 days after making his first round of cuts, leaving more than 30 employees without jobs. He’s working with investors to offer former employees up to a month’s severance. He and another member of the management team are on WhatsApp and email offering support to former employees as they work through the end of the organization and formulate plans to help them enter an extremely challenging labour market.</p>
<p>For months before the coronavirus hit, many of the employees were already concerned about whether the company would ever find the right market fit. Yet, the investors remained prepared to keep investing to bring a fully developed product to market until the pandemic.</p>
<h2>Hastening the demise</h2>
<p>Versions of this story are unfolding in startups and small enterprises globally. Some are limping by with <a href="https://www.nytimes.com/2020/04/03/your-money/for-small-business-owners-hard-decisions-become-personal.html">pay cuts, furloughs, layoffs</a> and other cost-cutting measures. For many others, the coronavirus has brought about their demise. </p>
<p>The specific circumstances vary. Acquisitions fall through. Startups fail to find product market fit. Their technologies never reach their full potential.</p>
<p>Funding for some startups may have been <a href="https://www.forbes.com/sites/monicamelton/2020/03/25/startups-failure-coronavirus-hit-and-venture-capital-slowed/#1d8eb6e467cd">drying up already</a>. Other startups may have been on the road to closure for some time with the coronavirus simply accelerating the inevitable. We’ll never know if the startups that failed might have made it through in other circumstances.</p>
<p>Working for startups is a <a href="https://doi.org/10.1177/0019793917747240">risky proposition</a> for employees in the best of times. Over the past four years, <a href="https://www.researchgate.net/project/Beyond-Warm-Bodies-The-Unintended-Consequences-of-Hiring">my team and I have conducted more than 200 interviews</a> with people seeking jobs and working in startups and those doing the hiring.</p>
<h2>The tradeoffs of working for startups</h2>
<p>Most of them recognize the tradeoffs inherent to working for a startup. They accept lower levels of stability, salary, career opportunities and resources in exchange for being able to have a larger effect on the direction of the business and greater flexibility in their roles. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/327336/original/file-20200412-32369-a6vjoc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/327336/original/file-20200412-32369-a6vjoc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=405&fit=crop&dpr=1 600w, https://images.theconversation.com/files/327336/original/file-20200412-32369-a6vjoc.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=405&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/327336/original/file-20200412-32369-a6vjoc.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=405&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/327336/original/file-20200412-32369-a6vjoc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=508&fit=crop&dpr=1 754w, https://images.theconversation.com/files/327336/original/file-20200412-32369-a6vjoc.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=508&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/327336/original/file-20200412-32369-a6vjoc.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=508&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Startup workers often accept tradeoffs in order to have more say and greater flexibility.</span>
<span class="attribution"><span class="source">(Unsplash)</span></span>
</figcaption>
</figure>
<p>When asked what they would do if their organization failed, many said that they would seek a similar role in another startup.</p>
<p>This risk-taking made sense in a thriving ecosystem where startups were scrambling to find talent and a new job was often just days away. Yet it’s not clear how well <a href="https://doi.org/10.1177/0019793919852919">startup experience transfers to more established companies</a>. In tight labour markets, it may be valued. When millions are newly unemployed, it is less clear what the prospects of former startup employees will be.</p>
<h2>Not the same for everyone</h2>
<p>This is just one of the many ways that the effects of the coronavirus are unequal. The disease itself has not hit jurisdictions, countries, continents or demographic groups at an even pace. The economic costs of coping with the disease are not equal for already impoverished communities and those with deeper resources. </p>
<p>Jobs are also vanishing for those working in brick-and-mortar retail and restaurants, and for many gig workers who were rarely in the best paying, most secure jobs to begin with. Nor are the <a href="https://doi.org/10.5465/amj.2016.0054">lingering after-effects</a> of this crisis likely to be felt in the same way by all.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/327337/original/file-20200412-1397-v815lg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/327337/original/file-20200412-1397-v815lg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=457&fit=crop&dpr=1 600w, https://images.theconversation.com/files/327337/original/file-20200412-1397-v815lg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=457&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/327337/original/file-20200412-1397-v815lg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=457&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/327337/original/file-20200412-1397-v815lg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=574&fit=crop&dpr=1 754w, https://images.theconversation.com/files/327337/original/file-20200412-1397-v815lg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=574&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/327337/original/file-20200412-1397-v815lg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=574&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Bricks-and-mortar stores have also shut down, leading to massive layoffs.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Jonathan Hayward</span></span>
</figcaption>
</figure>
<p>Still some are predicting a renaissance boom following this pandemic with a wave of innovations leading to the founding of new startups.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-coronavirus-crisis-a-catalyst-for-entrepreneurship-135005">The coronavirus crisis: A catalyst for entrepreneurship</a>
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<p>After all, the original Renaissance <a href="https://www.bbvaopenmind.com/en/humanities/sociology/the-black-death-turning-point-and-end-of-the-middle-ages/">followed the Black Death</a>. <a href="https://www.theatlantic.com/national/archive/2009/07/innovation-and-economic-crises/20576/">Crises of many varieties</a> may plant the seeds of innovation. </p>
<p>But little is known about what a new renaissance would look like — and who will reap its benefits.</p><img src="https://counter.theconversation.com/content/135655/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Lisa Cohen receives funding from SSHRC. </span></em></p>Employees working in startups may disproportionately suffer in the wake of the pandemic as their employers cut back to skeletal staffs or shutter their companies altogether.Lisa Cohen, Associate Professor, Business Administration, McGill UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1319622020-02-27T14:31:59Z2020-02-27T14:31:59ZSustainable start-ups should consider corporate venture capital first<figure><img src="https://images.theconversation.com/files/316313/original/file-20200220-10985-vp454j.jpg?ixlib=rb-1.1.0&rect=0%2C8%2C5760%2C3819&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Sustainable ventures can markedly contribute to Canada’s economy and employment with the right investor strategies to help them grow to medium and large size.</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><p>Urgent issues like the climate crisis, environmental degradation threatening millions of species, social inequality and other challenges mean that the <a href="https://doi.org/10.1016/j.jclepro.2015.07.133">global economy needs to immediately transform</a> itself <a href="https://doi.org/10.1016/j.jclepro.2016.03.176">to become sustainable</a>. </p>
<p><a href="https://doi.org/10.1007/s10551-010-0656-1">Sustainable start-ups</a> are showing us the way with <a href="https://doi.org/10.1016/j.jclepro.2012.08.013">smart business models</a> having economic, social and environmental value. </p>
<p>Toronto’s <a href="http://ripplefarms.ca/">Ripple Farms</a> is an example demonstrating the power of aquaponics to sustainably produce organic greens and seafood throughout the year. To connect urbanites with the land, the company’s business model combines product offerings with education on urban agriculture. </p>
<p>Similarly, <a href="https://waterlooenergy.com/about-sustainable-living-centre.html">Waterloo Energy Products</a> sells a full range of residential and commercial renewable energy designs including geothermal, solar, LED lighting equipment, water treatment solutions and much more. By offering a one-stop shop at its Sustainable Living Centre, they have made renewable energy choices much easier for consumers. </p>
<p>Both firms bundle products and services in different ways with a potential to <a href="https://doi.org/10.1080/14693062.2016.1197094">expand internationally</a>. </p>
<p><a href="https://doi.org/10.1080/24694452.2018.1523001">Many companies</a> <a href="https://doi.org/10.1016/j.eneco.2018.07.015">in Canada’s sustainable sector</a> have similar potential to export Canadian products and expertise around the world.</p>
<h2>Finding the right investor</h2>
<p>But Canada needs these <a href="https://doi.org/10.1007/s11365-018-0498-3">firms to grow rapidly and substantially</a> so they can create jobs that other unsustainable businesses are shedding as they become obsolete. <a href="https://doi.org/10.1016/j.jbusvent.2015.10.002">Investors are key</a> <a href="https://doi.org/10.1086/321301">to accelerating</a> this urgently needed start-up growth in Canada’s sustainable sector.</p>
<p>According to the United Nations’ seminal <a href="https://sustainabledevelopment.un.org/content/documents/5987our-common-future.pdf">Brundtland Report</a>, sustainable development should meet the needs of current generations without compromising the capacity of future generations, ensuring a balance between economic growth, care for the environment and social well-being.</p>
<p>These <a href="https://doi.org/10.1007/s11187-011-9401-0">three main components of sustainable development</a> are considered together, not as separate goals. <a href="https://doi.org/10.1111/acfi.12599">Good governance</a> is required to ensure and oversee all three of them.</p>
<p>In this complex business environment, finding investors to scale up new companies and, even more importantly, finding the <a href="https://doi.org/10.1016/j.frl.2019.101321">right investors</a>, is challenging. Start-up ventures burn through cash rapidly as they aim for a sale of the company — usually to other larger firms or on the stock market through an initial public offering.</p>
<p>Raising funds to grow start-up companies is an <a href="https://doi.org/10.1016/j.ejor.2015.10.051">ongoing challenge</a> that pulls management away from running the business. By finding <a href="https://doi.org/10.1016/j.jclepro.2016.08.080">knowledgeable, committed investors who understand the business</a>, a firm can ease the constant stress of raising capital while legitimizing the company to consumers, clients and stock markets.</p>
<p>Unfortunately, <a href="https://doi.org/10.1016/j.jclepro.2013.11.039">sustainable ventures face additional challenges</a> when it comes to investors compared to purely for-profit firms because they appear to have multiple competing goals. </p>
<h2>Stiff competition</h2>
<p>Sustainable firms often face powerful well-established competitors — renewable energy firms, for example, must overcome obstacles in <a href="https://www.taylorfrancis.com/books/e/9781351280204/chapters/10.4324/9781351280204-11">a world entrenched in oil and gas</a>. </p>
<p><a href="https://doi.org/10.1016/S0160-791X(02)00062-3">People are hesitant about new technology</a> even if it improves their lives. The choice between fossil fuels and renewables is not unlike trading a typewriter in for a laptop. This <a href="https://doi.org/10.1016/j.enpol.2012.06.009">fear of uncertainty</a> gives traditional firms market advantages that <a href="https://doi.org/10.1016/j.respol.2015.11.005">new companies must overcome</a>.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/316870/original/file-20200224-24690-1qhm3ep.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/316870/original/file-20200224-24690-1qhm3ep.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/316870/original/file-20200224-24690-1qhm3ep.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/316870/original/file-20200224-24690-1qhm3ep.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/316870/original/file-20200224-24690-1qhm3ep.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/316870/original/file-20200224-24690-1qhm3ep.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/316870/original/file-20200224-24690-1qhm3ep.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Renewable energy firms must often overcome obstacles in an oil-and-gas world.</span>
<span class="attribution"><span class="source">(Thomas Richter/Unsplash)</span></span>
</figcaption>
</figure>
<p>Many sustainable industries still in technological development stages are also <a href="https://doi.org/10.1016/j.jclepro.2016.08.080">capital-intensive</a>, meaning that they need a lot of capital upfront before they can demonstrate viability. </p>
<p>In addition to their unfamiliarity to potential stakeholders, some have experienced highly publicized failures, such as <a href="https://www.wired.com/2012/01/ff_solyndra/">Solyndra</a>, along the way to technological maturity. <a href="https://doi.org/10.1016/j.jclepro.2017.04.108">This can scare off investors</a>.</p>
<h2>Advice for sustainable companies</h2>
<p>My colleague Dave Valliere and I recently <a href="https://www.tandfonline.com/doi/abs/10.1080/00472778.2019.1681880">tested a quantitative model</a> using data on 184 entrepreneurial ventures. The analysis found that sustainable start-ups are better off choosing a different type of investor, one with aligned interests <a href="https://doi.org/10.1177%2F1476127004040913">who can lend it legitimacy</a> so that others will have confidence in it. </p>
<p>Perhaps surprisingly, it’s not so much <a href="https://doi.org/10.1080/136910699295965">angel investors</a> as <a href="https://doi.org/10.1016/j.jbusvent.2015.04.006">corporate venture capital</a> that can help these firms grow. In this model, the corporation usually sets up a separate division that looks for investments of interest to it.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/corporate-venture-capital-can-pay-but-only-if-you-get-the-structure-right-58215">Corporate venture capital can pay, but only if you get the structure right</a>
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</em>
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<p>The problem for most investors is that the <a href="https://www.econlib.org/library/Enc/bios/Akerlof.html">quality of a new venture is uncertain</a> until after it has grown to a point where it is steadily increasing revenues and generating healthy profits. </p>
<p>A new venture <a href="https://doi.org/10.1002/smj.2589">needs to be novel enough to have a competitive advantage while familiar enough to be understood and accepted</a>. As a result, many investors look for signs of the hidden potential of a venture. An example could be the <a href="https://doi.org/10.1287/mnsc.49.8.1003.16399">quality of existing stakeholders in the venture, such as successful, high-profile members on the board of directors</a> or the presence of professional investors. </p>
<p>Our study indicates that angel investors, venture capitalists and investment banks do not create confidence in sustainable ventures. It found that investment banks can even have adverse consequences for businesses in the sustainable sector that are seeking legitimacy. </p>
<h2>Try a different strategy</h2>
<p><a href="https://www.theguardian.com/business/2012/aug/09/financial-crisis-anniversary-trust-in-banks">A lack of confidence in bankers since the 2008 financial crisis</a> could be playing a part. Usually, new ventures begin with angel investors and move on to venture capital and other types of more sophisticated financiers who can further develop and market the firm. Instead, we advise sustainable firms to use a different strategy and seek out corporate venture capital as it is uniquely more helpful to sustainable ventures.</p>
<p>The usual investment <a href="https://doi.org/10.5465/amr.2013.0496">life cycle progression of a new venture</a> — moving from angels to venture capital and then to more sophisticated types of investors — may not always hold. </p>
<p>A venture attracts additional capital by meeting an investor’s screening criteria, but the most recent investors matter too. Current investors <a href="https://doi.org/10.1509%2Fjmkg.72.4.058">can lend legitimacy</a> to attract other investors. According to our findings, the sustainable sector gains that legitimacy with corporate venture capital over other types of investors.</p>
<p>This result suggests that the credibility of corporate venture capital plays an important role in the development of sustainable businesses.</p>
<p>A corporate venture capital firm may choose to invest in a venture with promising technology, even if the company has weak management or an unlikely strategy; sometimes, they just want to <a href="https://doi.org/10.1016/j.respol.2005.01.017">learn from another’s technology</a> to help them make strategic choices about future technological options.</p>
<h2>Positive reputation</h2>
<p>If they’re interested in the venture as a whole, a corporate venture capital firm can replace the management and/or the strategy of the new venture after acquisition. While the corporation offers its target more resources and strategic guidance, it also <a href="https://doi.org/10.1016/j.indmarman.2013.10.005">gains due to</a> the <a href="https://doi.org/10.1016/j.indmarman.2010.02.020">positive reputation</a> of the new venture.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/316876/original/file-20200224-24685-kqrfxr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/316876/original/file-20200224-24685-kqrfxr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/316876/original/file-20200224-24685-kqrfxr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/316876/original/file-20200224-24685-kqrfxr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/316876/original/file-20200224-24685-kqrfxr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/316876/original/file-20200224-24685-kqrfxr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/316876/original/file-20200224-24685-kqrfxr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Acquiring a startup can energize an otherwise stagnant, bureaucratic company.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
</figcaption>
</figure>
<p>Overall, a corporate venture capital endorsement of a new venture and its potential acquisition suggests to the market that the company is poised to be a <a href="https://doi.org/10.1016/j.jbusvent.2014.07.012">disruptive winner in the industry</a>. Corporate venture capital cuts through the noise that often accompanies sustainability goals. Change is in the wind for an industry, and others want to jump on the upward trajectory.</p>
<p><a href="https://doi.org/10.1080/09654313.2019.1648385">Sustainable ventures can markedly contribute to Canada’s economy</a> <a href="https://doi.org/10.3390/su11143963">and employment</a> with the right investor strategies to help them grow to medium and large size. Some of these startups are exciting in many ways. Most significantly, they will <a href="https://yorkspace.library.yorku.ca/xmlui/handle/10315/36913">improve Canadians’ lives</a> and ensure we have a healthier environment.</p><img src="https://counter.theconversation.com/content/131962/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Deborah de Lange has received funding from SSHRC and Ryerson University.</span></em></p><p class="fine-print"><em><span>Dave Valliere has received funding from SSHRC and Ryerson University.</span></em></p>Sustainable start-ups are better off choosing an investor with aligned interests that can lend them legitimacy.Deborah de Lange, Associate Professor, Global Management Studies, Toronto Metropolitan UniversityDave Valliere, Professor, Entrepreneurship and Strategy, Toronto Metropolitan UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1299582020-01-27T17:36:29Z2020-01-27T17:36:29ZCo-working demystified: Behind the working world revolution<figure><img src="https://images.theconversation.com/files/310064/original/file-20200114-151862-giyuj0.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C1343%2C667&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Co-working spaces have become an innovative way to work away from a central office without necessarily being alone at home.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/">(Shutterstock)</a></span></figcaption></figure><p>Co-working spaces have been growing in all the world’s major cities for 15 years. But what makes them so popular? Why and when did they appear? Who are their members?</p>
<p>New technologies such as artificial intelligence and robots are leading employers to rethink the way they work. At the same time, workers want more autonomy and flexibility. Many have chosen self-employment to escape organizational constraints and to determine where and when they will work. </p>
<p>The <a href="https://www.puq.ca/catalogue/livres/repenser-travail-2799.html">aspirations of workers as well as the expectations of employers</a> have therefore changed significantly in recent years. Many employees want to work from home; others want to work outside company headquarters but with other people.</p>
<p>As a specialist in human resources management and sociology of work, I have been researching co-working spaces for the past five years and have identified the main sources of interest and success of these places.</p>
<h2>A neutral and open place</h2>
<p>Co-working areas, fab labs and living labs are also called <a href="https://books.google.ca/books/about/The_Great_Good_Place.html?id=0aOjHGdSKLMC">third places</a>. The American sociologist Ray Oldenburg defines them as workplaces outside the office or usual place of work, but also outside the home, as is often the case with teleworking.</p>
<p>A third place is neutral (neither at home nor at the employer’s office), open to all, with free and unrestricted access (especially with regard to activities). It should facilitate conversations and meetings and should also provide meeting rooms and space for coffee breaks, lunch and dinner. Ideally, the space should be regularly used by the same users.</p>
<h2>Spaces for co-creation</h2>
<p>The first co-working space was created in 2005, in San Francisco, to allow users to develop their creativity, innovation and ideas. The total number of co-working spaces <a href="http://www.deskmag.com/en/coworking-space-members-how-when-why-are-people-working-in-coworking-spaces-statistics-market-report">now exceeds 14,000</a>. Some spaces disappear while others are created. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/308931/original/file-20200108-107219-1lj817a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/308931/original/file-20200108-107219-1lj817a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/308931/original/file-20200108-107219-1lj817a.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/308931/original/file-20200108-107219-1lj817a.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/308931/original/file-20200108-107219-1lj817a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=565&fit=crop&dpr=1 754w, https://images.theconversation.com/files/308931/original/file-20200108-107219-1lj817a.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=565&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/308931/original/file-20200108-107219-1lj817a.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=565&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The first co-working space appeared in 2005 in San Francisco’s Silicon Valley.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
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</figure>
<p>A co-working space allows its users to share the same place with the type of equipment that can be found in an office (photocopier, printer, scanner). Workers can use this equipment and share expenses in exchange for weekly or monthly rental fees.</p>
<p>Offices may be in an open area to facilitate chance meetings. This is preferred by many self-employed workers, but small businesses or start-ups often prefer closed offices for more confidentiality. Both types of offices can be located in a co-working space, which helps to reduce isolation <a href="https://journals.openedition.org/tem/4200">through the presence of a kitchen or coffee corner, where workers meet</a>.</p>
<p>In this way, the co-working space has become an innovative solution to the desire to work away from a central office, without necessarily being alone at home. It is also attractive for self-employed workers who prefer to work in a space where there are other workers.</p>
<h2>Facilitating networking</h2>
<p>Ideally, a co-working space should go beyond cost-sharing or offering services. It should also be a place to share ideas and network, and allow members to develop professional co-operation.</p>
<p>Some co-working spaces bring together particular categories of workers, in the same sector or with professional links. The principle of a co-working space is to rent working space, which helps to reduce costs, but also to encourage networking and exchange of ideas.</p>
<p>To develop this collaboration, people must find a common interest to encourage exchanges. Some spaces emphasize proximity of mission or vocation (all social economy enterprises, for example), which can increase members’ interest and desire to collaborate with each other.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/308935/original/file-20200108-107249-1c8c8pb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/308935/original/file-20200108-107249-1c8c8pb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/308935/original/file-20200108-107249-1c8c8pb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/308935/original/file-20200108-107249-1c8c8pb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/308935/original/file-20200108-107249-1c8c8pb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/308935/original/file-20200108-107249-1c8c8pb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/308935/original/file-20200108-107249-1c8c8pb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Planners create shared places in co-working spaces with the aim to encourage meetings.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
</figcaption>
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<p>By working together in the same space, users can find common solutions to facilitate knowledge sharing and face an increasingly competitive environment. Even though some self-employed workers prefer to work alone, they still have people to share coffee breaks and lunch with, and sometimes ideas and contacts to support their activity and exchanges.</p>
<p>There is not always an explicit strategy to encourage interaction, but many spaces have a facilitator whose role is precisely to ensure that people get to know each other and end up co-operating on projects.</p>
<p>Our research underscores the importance of available financial, material and human resources, particularly in terms of facilitation resources. A space created without these resources is less likely to encourage knowledge sharing, <a href="https://www.cairn.info/revue-journal-of-innovation-economics-2019-0.htm">collaboration and may even have some difficulty surviving</a>.</p>
<h2>Diverse realities</h2>
<p>Co-working has become popular all over the world, but it refers to diverse realities. Indeed, depending on the city or region where it appears, one will find more individuals, self-employed workers or, on the contrary, small businesses or start-ups, <a href="https://www.puq.ca/catalogue/livres/tiers-lieux-3590.html">with different objectives in setting up there</a>.</p>
<p>Co-working spaces can be used by people who want a more professional business address than a home to receive their clients. In addition, they can often have a large meeting room, providing a more formal setting for meetings.</p>
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À lire aussi :
<a href="https://theconversation.com/workers-in-the-gig-economy-feel-lonely-and-powerless-127188">Workers in the gig economy feel lonely and powerless</a>
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<p>Some <em>co-workers</em> may use a space primarily for benefits such as cost reduction, sharing of human resources (administrative support) or equipment (printer, photocopier, meeting rooms), or simply for comfort and services (common kitchen, good coffee maker, comfortable sofas and chairs).</p>
<h2>Fear of competition</h2>
<p>It can sometimes be difficult to interact with colleagues in the same field. Some people may perceive these people as competitors who might steal their customers. Some co-working spaces refuse to accept people who could be seen as competitors of other members.</p>
<p>Collaboration does not always happen in a co-working space. Indeed, although it has often been presented as an advantage, no study has so far clearly demonstrated the advantage of co-working spaces to foster more collaboration. This remains to be documented.</p>
<p>Indeed, physical proximity does not necessarily lead to professional proximity, as some people prefer to work in isolation. For example, we have observed spaces that have wanted to specialize in a sector, such as the cultural or social economy sector, but that in fact got very few or no workers in this field.</p>
<p>Even if the discourse or objective is sometimes different, most managers of co-working spaces end up accommodating all categories of workers. Recent studies have shown that without this inclusive vision, there may not be enough clients to keep the space active, especially in small towns or outside the city.</p>
<p>A co-working space can stimulate creativity, innovation, initiative and a sense of belonging to the same community, but this is not always the case. In fact, exchanges and collaboration seem to be easier between self-employed workers than with employees of the same company, who sometimes tend to stay with each other in a co-working space. On the other hand, exchanges can often be helped by the presence of a facilitator.</p>
<p>Co-working spaces are therefore diversified and create opportunities for collaboration, but also certain challenges (profitability, development of exchanges). In any case, interest in this type of space is present in all major cities in the world and also in many small regional towns. This is clearly a new way of working, with the possibility of fostering exchanges, collaboration and networking.</p><img src="https://counter.theconversation.com/content/129958/count.gif" alt="La Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Diane-Gabrielle Tremblay receives funding from the Social Sciences and Humanities Research Council. </span></em></p>Co-working spaces have become popular since they were created in 2005, allowing self-employed workers to have a professional space outside an office and avoid isolation. But does it really work?Diane-Gabrielle Tremblay, Professeure à l'Université TELUQ, Université du Québec, directrice de l'ARUC sur la gestion des âges et des temps sociaux et de la Chaire de recherche du Canada sur l'économie du savoir, Université TÉLUQ Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1251182019-12-04T14:15:51Z2019-12-04T14:15:51ZIt takes an ecosystem to raise a successful start-up<figure><img src="https://images.theconversation.com/files/304296/original/file-20191128-178089-5cac3x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/tree-growth-three-steps-nature-beautiful-1089895325">Shutterstock</a></span></figcaption></figure><p>The geography of entrepreneurship is “<a href="https://www.theatlantic.com/past/docs/images/issues/200510/world-is-spiky.pdf">spiky</a>”, meaning that from region to region there are significant variations in rates of start-ups and, in particular, “<a href="https://www.accelerateplaces.com/think-startup-scale/">scale-ups</a>” – new businesses that are evolving into larger enterprises.</p>
<p>This can be explained by the fact that successful entrepreneurship occurs in “fertile soil” – economic and social environments conducive to entrepreneurial activity. And in some places these environments – or ecosystems – are much better at generating and supporting entrepreneurial activity than others.</p>
<p>An <a href="http://www.innovationamerica.us/images/stories/2011/The-entrepreneurship-ecosystem-strategy-for-economic-growth-policy-20110620183915.pdf">entrepreneurial ecosystem</a> is a clustering of interconnected individuals, organisations and bodies that facilitates and supports entrepreneurial activity. This ecosystem provides start-up businesses with resources – money, people, markets and infrastructure – within an open, inclusive culture that has supportive policies and leadership. </p>
<p>Supporting the development of entrepreneurial ecosystems is now a <a href="https://link.springer.com/article/10.1007/s11187-017-9865-7">prime focus</a> of economic development policy. Cities and regions typically have dozens of <a href="https://www.e-elgar.com/shop/from-innovation-to-entrepreneurship">entrepreneurship support organisations</a> (ESOs) that are fully-funded public bodies or not-for-profit organisations whose funding comes from government. These ESOs provide information, advice, networking, training, mentoring and financial help that is considered essential for entrepreneurial activity.</p>
<p>In Scotland, for example, one <a href="https://www.researchgate.net/profile/Ben_Spigel/publication/305517004_Developing_and_governing_entrepreneurial_ecosystems_the_structure_of_entrepreneurial_support_programs_in_Edinburgh_Scotland/links/579f5dd208ae802facbec322/Developing-and-governing-entrepreneurial-ecosystems-the-structure-of-entrepreneurial-support-programs-in-Edinburgh-Scotland.pdf">recent study</a> identified 43 ESOs in Edinburgh focused just on technology entrepreneurs. Our own ongoing research has identified 87 ESOs in Glasgow covering all sectors including social enterprise.</p>
<p>However, this profusion of ESOs is thought to be confusing for entrepreneurs who find it difficult to navigate the support infrastructure, raising concerns that there is overlap in the services that ESOs provide. But this is to misunderstand how entrepreneurial ecosystems work.</p>
<h2>Everything is connected</h2>
<p>Every year the University of Glasgow runs a programme to support four start-up teams with a grant of £2,500 and 12 weeks of one-to-one mentorship from the student enterprise manager. This includes introduction to ESOs in the wider ecosystem, training and space in the university’s “incubator” to help teams develop their embryonic start-up. </p>
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<p>Businesses which have successfully completed the programme have gone on to receive further support from a variety of ESOs in the local ecosystem and beyond. Typically, each participant receives a package of support from the <a href="https://www.sie.ac.uk/">Scottish Institute for Enterprise</a> (SIE). This helps them to connect to the local ecosystem to access lawyers, accountants and other specialists, provides assistance with start-up competitions, and access to networking events. </p>
<p>For example, <a href="https://www.bbc.co.uk/programmes/articles/4nhgBmsXHWDjRqC704jPLyD/about-dragons-den">Dragons’ Den</a> contestant Corien Staels, founder of <a href="https://wheelair.co.uk/#what-is-wheelair-for">WheelAir</a> – a company that has developed a cooling backrest for wheelchair users – received support from an ESO called <a href="http://www.ecosystem.scot/organisations/united-kingdom/edinburgh/edinburgh/investors-funding/enterprise-campus/">Enterprise Campus</a> to cover initial operational expenses.</p>
<p>Staels went on to win the SIE <a href="https://www.sie.ac.uk/sies-new-ventures-competition-launches-today-across-scotland/">New Ventures competition</a> and several other awards that provided money, business support, training and mentorship. Having turned down a funding offer from Dragons’ Den, she has gone on to raise equity funding from several individuals. </p>
<p>Staels’ example demonstrates the interconnectedness of the entrepreneurial ecosystem, with ESOs providing a range of different forms of assistance. The learning and support needs of entrepreneurs change as their business develops. No single organisation can provide all of the support and resources that new ventures need as they progress. This is precisely why many ESOs target specific types of entrepreneur and stages in the process – idea, start-up, growth and so on – specialising in the types of support they provide. Which means entrepreneurs can draw upon a variety organisations as their business evolves.</p>
<p>Crucially, these relationships within the entrepreneurial ecosystem are reciprocal. Just as businesses that emerge from start-up programmes need a range of support to develop, ESOs need “springboard” initiatives such as the Glasgow University programme, which germinate start-ups that in due course will become their clients.</p>
<h2>A healthy ecosystem</h2>
<p>Policymakers should not interpret the abundance of ESOs as an indication of duplication and waste. The real world is messy. The diversity of entrepreneurs and their changing needs on the entrepreneurial journey means that there also has to be a diversity of support available for these ecosystems to be effective.</p>
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<img alt="" src="https://images.theconversation.com/files/304332/original/file-20191128-178089-1s4yw5p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/304332/original/file-20191128-178089-1s4yw5p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/304332/original/file-20191128-178089-1s4yw5p.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/304332/original/file-20191128-178089-1s4yw5p.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/304332/original/file-20191128-178089-1s4yw5p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/304332/original/file-20191128-178089-1s4yw5p.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/304332/original/file-20191128-178089-1s4yw5p.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Enterpreneurial support organisations offer advice, support, training and mentoring which help new start-ups develop their business.</span>
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<p>Instead, they should ask key questions to assess of the health of entrepreneurial ecosystems. Do the services provided by the ESOs involved cover the whole entrepreneurial journey, enabling individual organisations to “hand over” entrepreneurs as their needs change, ensuring ongoing support as their businesses develop?</p>
<p>Do the ESOs collectively provide an appropriate mix of generic and specialist resources and support? Do they have shared goals and a sense of collective mission? Or is each in competition with one another, claiming successful businesses as a result of their own efforts? And finally, are these ESOs run by people with business start-up experience – by entrepreneurs <em>for</em> entrepreneurs?</p>
<p>What is critical here is to recognise for the need for connectivity between these various ESOs. Operating in isolation from one another does not help young start-ups, which will thrive best in an environment where ESOs recognise that their effectiveness is contingent on one another. To paraphrase the African proverb: “it takes a village to raise a child”, it takes an ecosystem – not a single individual or organisation – to feed, nurture and raise a successful entrepreneurial venture.</p><img src="https://counter.theconversation.com/content/125118/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michaela Hruskova receives funding from the Economic and Social Research Council for her doctoral research on entrepreneurial ecosystems.</span></em></p><p class="fine-print"><em><span>Colin Mason does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Entrepreneurial ecosystems are the perfect environment to help new start-ups develop and thrive – it’s all about being connected.Colin Mason, Professor of Entrepreneurship, Adam Smith business school, University of GlasgowMichaela Hruskova, PhD Researcher in Management Adam Smith School of Business, University of GlasgowLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1257852019-10-25T12:33:02Z2019-10-25T12:33:02ZWeWork debacle exposes why investing in a charismatic founder can be dangerous<figure><img src="https://images.theconversation.com/files/298579/original/file-20191024-170484-6foi43.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">WeWork wanted to be a lot more than a shared workspace. </span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/new-york-nyusamay-10-2018-wework-1278091729?src=9xiaJ5BmEePlhpkb52WWiA-1-12">rblfmr/Shutterstock.com</a></span></figcaption></figure><p>WeWork went from <a href="https://www.wsj.com/articles/the-fall-of-wework-how-a-startup-darling-came-unglued-11571946003">unicorn darling</a> with a nearly US$50 billion valuation to a cautionary tale for gullible investors <a href="https://www.wsj.com/articles/softbank-to-take-control-of-wework-11571746483?mod=hp_lead_pos2">worth just $8 billion</a> in a matter of months. It did so in part by wrapping its real estate sublet business in the cloak of a tech startup destined to “change the world.”</p>
<p>Were investors like SoftBank and JPMorgan duped by the hype of a charismatic founder, as happened with <a href="https://www.cnbc.com/2019/03/20/hbos-the-inventor-how-elizabeth-holmes-fooled-people-about-theranos.html">Elizabeth Holmes and Theranos</a>? </p>
<p>As a <a href="https://csbapp.uncw.edu/data/fs/vita.aspx?id=25472">lecturer in finance</a> and someone who managed investments for 20 years, I believe that there was some of that, coupled with <a href="https://www.investopedia.com/articles/investing/050813/4-behavioral-biases-and-how-avoid-them.asp">behavioral biases</a> that lead people to make bad decisions. But I also think something else was going on that should give investors pause the next time they stumble across a visionary founder promoting a “change the world” branding strategy. </p>
<h2>‘We’ will change the world</h2>
<p>WeWork was founded in 2011 as a <a href="https://www.businessinsider.com/the-founding-story-of-wework-2015-10">co-working venture</a>. </p>
<p>But Adam Neumann crafted and pitched a vision for his company that went well beyond office sharing and real estate. He said the “we” culture he was building would change the world.</p>
<p>“The influence and impact that we are going to have on this Earth is going to be so big,” <a href="https://www.wsj.com/articles/this-is-not-the-way-everybody-behaves-how-adam-neumanns-over-the-top-style-built-wework-11568823827?shareToken=st3fcd4c5c55d94ffc80b5721a8aa6ffa2">he told staff</a> during a music festival-like retreat, where he suggested the company could “solve the problem of children without parents” and even eradicate world hunger. </p>
<p>Such statements weren’t uncommon from him. But moreover, they fit neatly in the messianic-like Silicon Valley tech world, where companies believe their inventions can actually <a href="https://www.gq.com/story/the-most-bullshit-motivational-slogans-in-silicon-valley">“free the world.”</a> </p>
<p>Neumann’s ambitious plans hit reality recently as <a href="https://www.bloomberg.com/news/articles/2019-10-22/neumann-clings-to-billionaire-status-after-wework-gets-a-bailout">investors soured on the company</a> in the runup to a planned initial public offering. On Oct. 23, existing investor SoftBank agreed to rescue the embattled company with <a href="https://group.softbank/en/corp/set/data/news/press/sb/2019/20191023_01/pdf/20191023_01.pdf">billions in additional capital</a> in exchange for increasing its ownership stake to 80%. The deal pushed out Neumann, who will get US$1.7 billion despite burning through earlier investments. </p>
<p>Neumann’s “exit” package may be unusual in its scale, but otherwise similar fates have befallen numerous other founders, such as Theranos’ Holmes and <a href="https://www.washingtonpost.com/technology/2019/09/30/inside-new-uber-weak-coffee-vanishing-perks-fast-deflating-morale/">Uber’s Travis Kalanick</a>. Even Elon Musk, CEO of Tesla and founder of SpaceX, often seems to be <a href="https://www.businessinsider.com/elon-musk-shocking-quotes-tweets-2018-10">one outrageous tweet</a> away from his own ignominious end. </p>
<p>Each of these leaders embodied varying traits that <a href="https://www.salon.com/2017/05/20/silicon-valleys-ceo-worship-problem/">inspired almost cult-like followings</a> among investors who forked over billions to be a part of their rise. In cases like Tesla and Uber, the companies have managed to become successful despite their CEOs’ shortcomings. Theranos and WeWork are examples of what can go wrong when the founder is both owner and executive in a venture capital-backed startup.</p>
<h2>Principals and agents</h2>
<p>Finance scholars like myself think about this in terms of the <a href="https://www.cfainstitute.org/en/research/foundation/2014/the-principalagent-problem-in-finance">principal-agent relationship</a>, an issue that is crucial to the management of almost every business and organization. </p>
<p>The principal is a party or group that enlists the agent to manage some asset or process in their best interest.</p>
<p>In a healthy corporate structure, the alignment of principal and agent is accomplished through governance and executive compensation policies that provide management incentives to act in the best interest of owners. For example, the CEO’s compensation might include stock in the company that vests over some period of years and is dependent upon specific performance targets. </p>
<p>In the case of WeWork, Neumann was acting in both roles: He was principal as the investor with the controlling stake and agent as the executive tasked with running the company. Even the <a href="https://www.sec.gov/Archives/edgar/data/1533523/000119312519220499/d781982ds1.htm#toc781982_1">prospectus</a> for the company’s ill-fated IPO included language that would have given him <a href="https://www.bloomberg.com/opinion/articles/2019-08-19/we-looks-out-for-our-selves">control for life</a>.</p>
<h2>Why it’s a problem</h2>
<p>You might wonder what the problem is with this arrangement given that it’s common for managers to be owners, as is the case with small businesses and family-owned companies. </p>
<p>When it’s their own money at stake, surely they’ll be looking out for their own best interests, right? In those situations, yes, and the downside risk is assumed by the owner-managers. </p>
<p>The difference between those types of companies and the likes of WeWork and Theranos is that startups typically have significant outside investment capital. SoftBank, for one, was also a principal in WeWork. In such situations, the interest of a founder like Neumann may not necessarily align with those of the company itself and its other investors. </p>
<p>During WeWork’s buildup, for example, Neumann borrowed hundreds of millions of dollars <a href="https://www.wsj.com/articles/softbank-to-take-control-of-wework-11571746483?mod=hp_lead_pos2%20%22%22">against his stock in the company</a>, leaving himself and WeWork exposed depending on the shares’ future valuation. He also charged his own company $5.9 million for trademark rights to the word “we” – <a href="https://www.businessinsider.com/wework-ceo-gives-back-millions-from-we-trademark-after-criticism-2019-9">a sum he gave back</a> after intense criticism.</p>
<p>Even in leaving the company, he was able to <a href="https://www.bloomberg.com/opinion/articles/2019-10-23/how-do-you-like-we-now">negotiate a generous go-away package</a>, including the ability to cash out almost $1 billion in stock and receive a $185 million consulting fee. This at the same time that the company’s future is uncertain and it’s <a href="https://www.theguardian.com/business/2019/oct/15/wework-sack-staff-workers-adam-neumann">laying off 2,000 workers</a> – which it delayed doing because <a href="https://www.wsj.com/articles/softbank-offers-to-put-6-5b-into-wework-including-5b-loan-11571687872">it couldn’t afford their severance</a>. </p>
<p>Unemployed workers and wasted capital are the collateral damage when investors fall prey to the principal-agent problem. And unfortunately, I don’t think this will be the last time.</p>
<p>[ <em>You respect facts and expertise. So do The Conversation’s authors and editors.</em> <a href="https://theconversation.com/us/newsletters?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=yourespect">You can read us daily by subscribing to our newsletter</a>. ]</p><img src="https://counter.theconversation.com/content/125785/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Greg Putnam does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Adam Neumann both controlled and managed the co-working company he founded in 2011. A finance scholar explains why that can be a serious problem in venture capital-backed startups.Greg Putnam, Lecturer in Finance, University of North Carolina WilmingtonLicensed as Creative Commons – attribution, no derivatives.