Manual for Energizing E n t r e p r e n e u r i a l E c o s y s t e m s

Colonia San Benito, Calle Circunvalación, No. 294, San Salvador, El Salvador.Teléfono: (503) 2264-5207 info@cenpromype.org www.sica.int/cenpromype@Cenpromype_sica

General ManagementIngrid Figueroa Santamaría

Editorial CoordinationCarmen Castro Blandón

ConsultingTeamNEXUS

CopyeditingLigia Carmona

Design and LayoutDiseñarte S.A. de C.V.

First Edition: October, 2014Printed and made in El Salvador, Central America.

This document is the property of the Regional Center for the Promotion of Micro and Small Enterprises (CENPROMYPE) and has been developed in the framework of the Comprehensive Promotion of Entrepreneurship in Central America and the Dominican Republic, with the support of the Republic of China (Taiwan). The partial or total reproduction is authorized provided the source is mentioned.

REPUBLIC OF CHINA (TAIWAN)

CONTENTS

Introduction 2

Objetives 3

Background 4

1 Five Pillars: Five Strategies 5

2. Open Goverment 9

3. Differential aproach

4. Network Coordination

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17

Methodology 20

Ecosystems comprise a set of organizations that interact or relate to each other within the same space; these relationships are critical to life sustain-ability. It is crucial to extrapolate this idea into the economic dimension of society in order for economic undertakings to come to fruition. The success of a social or economic initiative requires a set of stakeholders whose relations of cooperation, communication and support foster a business envi-ronment favorable for those who decide to develop a business.

From an economic and entrepreneurial perspec-tive, individuals and stakeholders in an ecosystem interact and feedback each other, in a virtuous circle of development, building collaborative networks that leverage their actions.

The story of mankind repeats success stories of entrepreneurial communities that developed these ecosystems, such as the cluster of Silicon Valley that stands out in current history as the symbolic profile of an entrepreneurial ecosystem that deserves to be analyzed.

An entrepreneurial ecosystem is a group of individ-ual elements, such as leadership, culture, capital markets, customers, and others, combined in com-plex ways.

Separately, each of these factors promote a busi-ness, but not enough to keep operating. All these elements together in one integrated system accel-erate the creation and development of more and better businesses.

This manual for energizing entrepreneurial ecosystems is considered a good practice and collects the experience of the countries of the SICA region, which has allowed the establishment of national ecosystems and the construction of strat-egies and / or Policies to promote Entrepreneur Development at the national level, from the imple-mentation of the SICA EMPRENDE Strategy; as well as the EMPRENDEN Program of Central America and the Dominican Republic .

Both the EMPRENDE SICA Strategy and the Program, have been possible thanks to the successful support of strategic agenda partners: the Republic of China (Taiwan) and the govern-ment of Colombia, through its Presidential Agency for International Cooperation (APC-Colombia), whom we thank for their commitment to the Cen-tral American region to convert it into an entrepre-neurial region .

Annexed at the end of the document are all the tools applied, in order for more organizations to use them, by incorporating entrepreneurship as a priority in the territorial, national and regional development plans.

Introduction

ObjetivesGeneral

Promote coordination and collective action processes among the agencies that encourage entre-preneurship to energize the entrepreneurial ecosystems and carry out coordinated agendas to assist entrepreneurs in these countries.

Develop an exercise to identify products and services from all players promoting entrepreneurship in the country through an institutional mapping.

Promote the communication of the entrepreneurial ecosystem, through the establishment of permanent communication processes and knowledge management among actors involved, in the processes to promote entrepreneurship in the country.

Establish the foundation for cooperation in the entrepreneurial ecosystem, through the harmonization of programs, initiatives and policies developed at the country level, through a strategy / National Entrepreneur Development Policy to reduce duplica-tion of efforts and contradictions.

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•

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•

Specific

BackgroundNo public or private entity has sufficient human or financial resources by itself, to powerfully affect an entrepreneurship ecosystem. This is why an approach based on understanding and articulation of all stakeholders in the business development system of the country is the only way to meet the challenges of an increasingly dynamic and competitive world.

Entrepreneurship is not a fad, the role played by entrepreneurs throughout history is unequivocal, their impact on employment creation, wealth, advances in knowledge and improvement of the life conditions of the people, is and will continue being a force to be recognized, understood and systematically worked on to achieve more and better companies in both developed and devel-oping economies.

The role of the state is crucial within this approach. The diversity of stakeholders, dynam-ics, actions and incentives is so varied, that central and regional governments must deter-mine an agenda that addresses this issue at the center of all the development plan that allows them to work together with the private and academic sectors and the entrepreneurs to move towards a stronger economic system capable of providing all the services that a business idea needs collectively to be designed, structured and launched successfully.

An approach based on ecosystems allows to:

• Access and add to the knowledge, experience and resources of all ecosystem stakeholders (including the most important of all, (entrepreneurs).

• Reduce transaction costs caused by the disorgan-ized manner in which business development servic-es are provided.

• Set up a Response and Supplementing Unit among institutions that support entrepreneurship when assisting entrepreneurs to achieve the objective of creating more and better businesses.

• Empowerment of institutions to achieve scalable, replicable and sustainable models, capable of over-coming electoral cycles or changes in government.

• Get rid of the paradigm of "them against us", by establishing permanent dialogue platforms between government and citizens.

However, achieving this is not easy. A committed, dynamic team with mysticism is key, one capable of reaching agreements, proposing new models and leading the coordination of actors and actions needed.

Several concepts, plans and strategies have been proposed which together present a comprehensive model for the strengthening of the entrepreneurial ecosystems in emerging economies.

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35

Five PillarsFive Strategies

1

Support Industry

Educational System

Articulation

Mind Set and Culture

Financial Industry

Colonia San Benito, Calle Circunvalación, No. 294, San Salvador, El Salvador.Teléfono: (503) 2264-5207 info@cenpromype.org www.sica.int/cenpromype@Cenpromype_sica

General ManagementIngrid Figueroa Santamaría

Editorial CoordinationCarmen Castro Blandón

ConsultingTeamNEXUS

CopyeditingLigia Carmona

Design and LayoutDiseñarte S.A. de C.V.

First Edition: October, 2014Printed and made in El Salvador, Central America.

This document is the property of the Regional Center for the Promotion of Micro and Small Enterprises (CENPROMYPE) and has been developed in the framework of the Comprehensive Promotion of Entrepreneurship in Central America and the Dominican Republic, with the support of the Republic of China (Taiwan). The partial or total reproduction is authorized provided the source is mentioned.

REPUBLIC OF CHINA (TAIWAN)

46

There are so many variables that affect the entrepreneurial potential of a nation, that govern-ments find it difficult to determine where to intervene: should they create new funding vehi-cles? Or define unique training models in secondary or higher education?; strengthen the incu-bation and acceleration services?; Create tax incentives for the development of enterprises?; launch advertising campaigns that promote a way of thinking and a culture?. The answer is "Yes, to all of the above." But how can we approach each of these pillars to prioritize, deter-mine the impact and track progress on each of these fronts?

Five structural pillars have been considered in energizing the whole ecosystem:

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1.1 Support Industry

Strengthening of all other except financial prod-ucts and services necessary to facilitate the path to entrepreneurs; the structuring, incubation and acceleration services are provided so that entrepreneurs can

reach the market rapidly. For example, in this pillar it is essential to consider institutional strengthening programs that without being charity entities, allow support institutions to strengthen and improve their services.

1.2 Financial Industry

Clearly one of the most important gaps is the funding for business persons, and while impor-tant effort to promote new financing vehicles from the very onset, such as angel investors, crowdfunding platforms, access to credit, etc.; perhaps one of the most important changes is to understand that the best financing comes from the market and customers, so the design of schemes that accelerate the development and validation of prototypes and market validations must be central to this scheme.

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1.3

1.4

1.5

Entrepreneurship Training: Education System

Articulation

Mind Set and Culture

Another key element is the creation of technical capabilities for the development, sustainability and growth of more and better businesses; thus, the importance of higher education institutions. They play a central role in this pillar. Therefore, the strengthening of capacities, curricula and spaces within these institutions must be strengthened with the implementation of models that go beyond the curriculum and integrate both extra-cur-ricular and structural aspects within these institutions. A course in entrepreneurship is not enough to solve the problem.

This pillar is led by public entities, and comprises all efforts undertaken by public, national or regional agencies in actions such as i) implementing policies that foster entrepreneurship development, ii) generating articulat-ing and discussion spaces, iii) designing incentives to stimulate new companies, iv) identifying solution gaps and strategies for them, v) defining institutional strengthening programs or seed capital, vi) prioritizing resources and complementing public sources vii) targeting programs and agencies into segments to pursue entrepreneurship.

Undoubtedly, mentality and culture are crucial to business ecosystems. In this sense, it is not only necessary to assert the role of entrepreneurial people as key players for economic development but also to measure the impact of their attitude and behavior not only for them to face the vicissitudes of this path, but also for them to consider entrepreneurship as a life choice from an early age. Actions and strategies in this pillar are earmarked at changing the mindset of citizens through actions ranging from i) a greater presence of these issues and success stories in the media, ii) presence in the discourses of opinion leaders, iii) mass forums, com-petitions and programs iv) establishment of social discussion spaces for building knowledge networks, among other things

Develop an exercise to identify products and services from all players promoting entrepreneurship in the country through an institutional mapping.

Promote the communication of the entrepreneurial ecosystem, through the establishment of permanent communication processes and knowledge management among actors involved, in the processes to promote entrepreneurship in the country.

Establish the foundation for cooperation in the entrepreneurial ecosystem, through the harmonization of programs, initiatives and policies developed at the country level, through a strategy / National Entrepreneur Development Policy to reduce duplica-tion of efforts and contradictions.

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2Open Government

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This philosophy promotes an open, transparent and collaborative State. Central-ized and vertical decision making public policy models present a Citizens- State relationship that is far from the current reality and that has been reassessed for more than a decade at the international level. Knowledge is everywhere, and therefore, the establishment of permanent multi-directional and collaborative communication channels that the States and their teams must firmly assume.

Three main strategies have been proposed to accomplish this paradigm shift

Although not necessarily a sequential process, it should all begin by establishing clear two way communication channels that allow citizens to know and under-stand what the state, its representatives and staff, its programs and agencies pursue. This is traditionally reflected in "accountability" documents and lengthy institutional papers, but they should go beyond this. New communication schemes, methodologies and tools such as infograms, blogs, video blogs, discussions, platforms, etc. should be built by the government to communicate its programs, achievements and mistakes.

Strategy #1 – Communicate, communicate,communicate…

Strategy # 2 - Educate, consult and discuss

Strategy #3 – Pyramid Structures and horizontal spaces

The process of building public policies cannot be centralized; it is important to create opportunities for citizenship to participate in the design and implementation of public policies.

For this, and recognizing the slowness of some democratic processes, it is important to always come up with simple and clear proposals on which to build. These efforts should be built on the premise of understanding the state as a "platform" and not as a closed and distant "vending machine" for citizens. The establishment of forums for dialogue and construction avoid the paradigm of "them versus us" which frequently guides State –Citizen or Central Government vs. Regional Governments relationships.

Generally, the state and its means are rigid and formalistic, so much so that instead of facili-tating the process, they often become the main obstacle to the successful implementation of public policies; reason why the development of informal and permanent spaces where problems and solutions can be discussed openly, is increasingly consolidating itself as a strat-egy that not only increases the effectiveness of public instruments, but also allows to have more permanent programs and policies, designed based on market realities and not on the interpretation of one subject matter "expert".

New Generations

National Directions

State Directories

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3

Differential Approach

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All entrepreneurship efforts are important, and although it might seem an obvious premise, it is easy to fall into favoring some over others. Thus, the appropriation of a differential approach, from the highest level, that recognizes every entre-preneurial pursuit, is essential to achieve a balanced interven-tion in the ecosystem.

Opportunity entrepreneurship funding instruments are quite different to necessity entrepreneurship funding ones, reason why the design and implementation of each one must be an ever present issue in defining the various intervention mecha-nisms. Several countries of the Americas and hundreds of institutions at the international level have identified 4 entre-preneurship funding mechanisms, and grouped them into two general categories: 1) Necessity and, 2) Opportunity.

What is entrepreneurship due to Necessity?

What is entrepreneurship based on Opportunity?

Enterprising citizens that upon deciding to start a business, had no other job opportunity, being this one their only option to generate income.

Business driven citizens who upon deciding tostart up an enterprise, studied the environment and identified a business opportunity, selectingthis option over other income generating possibilities.

Subsistence

Traditional

Dynamic

HIght Impact

Formal or informal enterprises, productive units, micro establishments, businesses aimed at generating a daily living income for their daily living (self-employment), without planning, growth vision, with low income, no-value added, and no enterprise sales growth.

Companies with less than 3.5 years of operations that are characterized by an average growth potential thanks to the organization of the busi-ness structure, that are able to obtain surplus, with accumulation levels corresponding to the average of the respective sector.

Companies with less than 3.5 years of operations but with a growth potential, where knowledge, human talent and technological management, in addition to access to funding resources / invest-ments, and corporate government are essential to grow quickly and steadily above the average of the industry, having the opportunity to reinvest and achieve a meaningful sales level in one decade.

Companies based on a high degree of differentia-tion and even innovation, with a clear desire to accumulate wealth, and to transform and revitalize the economy through innovation and quality employment. It is a company that grows rapidly and steadily, and is capable of achieving a significant sales level in one decade.

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4

Network Articulation

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These are people networks rather than institution networks, and due to this, it is essential to establish personal connections beyond the formal interaction spaces that allow to develop ideas, new programs and devise new ways of doing things. Although the network articulation processes can be complex and exhausting, the following steps are a guide to the different levels of articulation that can be accomplished:

PHASES OF NETWORK ARTICULATION

It is important to say that articulation and working spaces must the built to reach progress in each of the phases, accompanied by the considerable participation of ecosystem stakeholders.

Following are some of the players suggested as part of the ecosystem:

1. National Government 7. Associations (in representation of the private sector)2. City Halls 8. Social Responsibility Programs3. Governor Offices 9. Incubators and Accelerators4. Chambers of Commerce 10. Compensation Funds5. Technical Training Centers 11. Traditional Banks(Public and private) 12.Cooperation Agencies6. Higher education institutions

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Identification

Comunication

Collaboration

Cooperation

Collective ActionProgram Integration, initiatives and policies to respond as a system (united) to regional needs.

Mapping and identification (personal and institutional level) of allactors, products and services offered in each ecosystem.

Establishment of permanent communication andknowledge management processes among stakeholders.

Harmonization of programs, initiatives and policies developed with the purpose of reducing duplication of efforts and inconsistencies in the offer

Program articulation, initiatives and policies developed with the purpose of increasing the impact and distributing transaction costs.

Following is a description of the phases suggested to promote networks / business ecosystems, which are subsequently included in the revitalization methodology:

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CRITICAL PATH

MethodologyFollowing is a description of the phases suggested to promote networks / business ecosystems, which are subsequently included in the revitalization methodology:

¿WHAT? 1. ECOCYSTEMMAPPING

2. PROSPECTIVE

3. STRATEGICINITIATIVES

4. INSTALLATION FORTHE NATIONALENTREPRENEURSHIPNETWORK

5. COUNTRYSTRATEGIES

5. DEVELOPMENT OFTECHNICALWORKSHOPS(TOOL BOX)

7. ACTION PLAN 7. FOLLOW UP

8. IMPLEMENTATION

¿HOW?

¿HOWMUCH?

¿WHEN?

¿WITHWHOM?

Approximately3 months

Approximately3 months

Approximately3 months

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Phase 1: Identification

The following activities are recommended to begin establishing the entrepreneurial ecosystem, in the identification phase:

•Develop a database of all critical public and private stakeholders from the entrepreneur-ship support institutions and define the key role they can play in the ecosystem (see Tool # 1 attached)•Manage and negotiate two tools with the entities identified in the database that will clearly define the range of services available to foster entrepreneurship:

* Institutional mapping (see Tool # 2 and # 3 in annexes)*Prospective Interview (see Tool # 4 in annexes)

•Identify the political and regulatory framework in force in the country to promote entre-preneurship and complete the chart with the exact names of the regulation in effect for its respective subsequent analysis (see Tool # 5).

• Identify diagnostics and / or studies conducted in the country in terms of Entrepre-neurship such as Entrepreneurship Global Monitor (GEM), Doing Business, GEDI, among others.

•Process and analyze information retrieved to establish the status of entrepreneurship in the country, benchmarking the results to international entrepreneurial promotion.

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Phase 2: CommunicationAll entities that participated in the identification phase are invited to this phase, to preliminarily install the National Entrepreneurship Network and/or Entrepreneurial Ecosystem, and meet once a month to foster communication among actors .

The following agenda is recommended to develop this workshop program:

NATIONAL ENTREPRENEURSHIP NETWORK Technical Workshops Schedule

MACHINE ROOMAGENDA FOR THE DAY

1.

TOPIC DATE GOAL AGENDA FOR THE DAY FINAL OUTCOMES

1. Dissemination of the Regional

Entrepreneurship Strategic Agenda and bases of the

national eco-system map.

Disseminate the SICA EMPRENDE

Strategy and the Entrepreneurship

work plan among system stakeholders .

Dissemination of the Regional Entrepreneurship Strategic Agenda: initiatives,

manifest, vision, mission, principles.

Dissemination of the five pillars and ten initiatives manifest, vision, mission, principles of the national strategic

entrepreneurship Agenda.

Socialization of the work path of the national enterprise network.

Completed forms for entrepreneurship and prospective interviews.

Certification of the validation of the types of entrepreneurships

and their respective characteristics.

Preliminary map of the entrepreneurship tools. Completed forms.

Certification of entrepreneurship segment validation of national public policy.

Presentation of the working path of the national entrepreneurship network to design the basis of

the national or regional entrepreneurship strategy (opportunity and necessity round tables).

Workshop on mapping the ecosystem and prospective interviews

(national vision ecosystems).

Validation of the types of entrepreneurship (features) and validation of business

ventures segments (see tools in annexes)

Submission of preliminary results from the national

entrepreneurial eco-system map

Submission of the supply of programs per each institution (1 x session).

Structure the map tThat shows the

supply of entrepreneurship

support instruments of the national eco-system..

Design and disseminate

the event calendar for

national entrepreneurs.

Presentation and validation of entrepreneurship public policy segments.

Certification of the validation of entrepreneurship public policy

segments

Dissemination of tools supplied in the funding chain at the national level.

Building the joint calendar of entrepreneurship events at the national level

Analysis of the funding chain for entrepreneurship and its annual funding resources.Workshop on the

joint Calendar of entrepreneurship events

Calendar of the workshop on joint Entrepreneurial events

Month 1

Month 2

Month 3

2. Design of the unified

entrepreneurship programs Directory

3. Joint event calendar

And entrepreneurship

summons.

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Note: See attached guidelines for running the workshops.

4. Joint Academic Agenda Global

Entrepreneurship Week.

Jointly plan the development of a national

event to celebrate the GlobaLEntrepreneurship Week.Create a joint academic

agenda on one entrepreneurship priority

topic for the country (eg incubators, seed

capital, etc.) as part of the Global

Entrepreneurship Week.

Workshop on national institutional entrepreneurship networks and the targeted formats recommended.

Academic subjects prioritized for the academic agenda of

the Global Entrepreneurship Week

Characterization / diagnosis of the institutional networks

of national entrepreneurship ecosystem.

Disclosure of the supply of entrepreneurship programs

of one (1) public or private institution

Recognize best practices as tested international entrepreneurship

promotion models.

Direction of the basis of the national entrepreneurship strategy.

Action centers of the first year, prioritized by each of the entrepreneurship

round tables (by opportunity and necessity).

Disclosure of the supply of entrepreneurship programs of one (1) public or

private institution.

Validation of the entrepreneurship targeting

instruments.

.Validation of the targeting of strategic roles of public and private institutions

of the national entrepreneurship ecosystem.

.Disclosure of the supply of entrepreneurship programs

of one (1) public or private institution.

Map of the policy, regulatory and statistical framework

for entrepreneurship promotion.

Certification of prioritization of the factors for strengthening the regulatory,

political and statistical framework for entrepreneurship.

Disclosure of entrepreneurship programs supplied by one

(1) private or public institution.

Certification of the validation of the national, sub-regional

articulation model.

Schedule of visits to the sub-regions and monitoring mechanisms.

Disclosure of entrepreneurship programs offered by one

(1) public or private institution

Workshop on the analysis of national institutional eco-system networks

Characterized as a national entrepreeurship system .

Presentation of the programs offered by each institution (1 x session).

Introduce the international trends that foster entrepreneurship

through good international practices (see Think tanks tool in annexes).

Construction of the mission, vision, principles, schedule and responsibility for the national entrepreneurship

strategy (see and use tools on the basis of the strategy, in the appendices).

Prioritization of the three strategic focuses of the round table on opportunity entrepreneurship and necessity entrepreneurship for the year 2014.

Presentation of the programs

offered by each institution (1 x session).

Submit the proposal for targeting entrepreneurship instruments by: entrepreneurship, entrepreneur segments,

entrepreneurship process, budget of entrepreneurialprocess stages (See and apply targeting tools in annexes).

Submit and validate the targeting proposal of institutional roles in the national

entrepreneurship ecosystem.

Presentation of the supply of programs per institution (1 x session).

Presentation of the regulatory, political and statistical framework for entrepreneurship support (see and apply regulatory framework tools in annexes).

Prioritization of factors for strengthening the regulatory, political and

statistical framework for entrepreneurship.

Presentation of the programs offered by each institution (1 x session).

Submission and validation of national-sub-regional articulation model.

Designing the scheduling of visits to the sub-regions and design amonitoring mechanisms (commitment

management and impact assessment).

Presentation of programs offered by each institution (1 x session).

Design and validate the basis of the national

strategy for entrepreneurship.

Strategically target support instruments which

comprise the national entrepreneurship ecosystems.

Design strategies for the strengthening of the regulatory, political and statistical framework for

entrepreneurship.

Designing the articulation strategy for the

nation-sub region of the national entrepreneurship

ecosystem.

Month 4

Month 5

Month 6

Month 7

Month 8

5. Basis of the national strategy for entrepreneurship - Action Plan 2014.

6. Targeting institutional

roles of entrepreneurship

eco-systems.

7. Analysis of the regulatory,

political, statistical entrepreneurship

framework.

8. National, sub-regional

articulation strategy.

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Phase 3: Collaboration

Agosto 2014 Julio 2014

Mayo 2014

At this stage, the organization that has led the process of energizing the ecosystem, usually the institution responsible for MSMEs in the country, will dedicate time and resources to structure the document of the Entrepreneur Development Strategy at the national and / or regional (territorial) levels and as before, will launch its official release and its roadmap will be validated in a full session with the entrepreneurship network/entrepreneurial ecosystem.

Following are some of the national strategies built using this methodology:

This stage sees to the implementation of the national and / or regional strategies, coordinating activities and managing national and international resources for its operation.

Besides, it is necessary to monitor and evaluate progress to certify advancement and / or make adjust-ments along the way to achieve expected objectives and results

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Phase 4: Cooperation

Phase 5: Collective Action

This is considered the most ambitious phase of the entrepreneurship ecosystem construction and consolidation process and involves the design and implementation of interagency entrepreneurship Mega Programs.

This phase involves presenting and disseminating all construct-ed plans at the territorial level and replicating the process in the territories at the interior of the country to regionalize the National Entrepreneurship Policy.

CENPROMYPE is an institution attached to SICA