Keys to seeding entrepreneurial ecosystems

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This article was published 23/10/2024 (695 days ago), so information in it may no longer be current.

Spending time around the North Forge Technology Exchange folks, you might hear the phrase “it takes a village” to raise a startup company.

In an understated but surprisingly inspiring talk Wednesday hosted by the Winnipeg Chamber of Commerce (as part of its Small Business Week activities), Dharmesh Gandhi, a partner with EY Canada (formerly Ernst & Young), spoke about the creation of entrepreneurial ecosystems.

He described pretty much what North Forge has done over the years.

You need the people with an idea willing to take a risk in starting a company. Gandhi called the incubators and accelerators as the soil, sunlight and water that nourishes the companies and allows then to grow.

You need mentors who can share the kind of lived experience those who are new to the business might not even have thought of.

Post-secondary institutions provide the workforce, capital is required to fund the scale-up and, with any luck, government support might be forthcoming.

“When they all work symbiotically, in terms of achieving shared goals, what you get is a thriving entrepreneurial ecosystem,” Gandhi said. “And rising water lifts all ships.”

There’s obviously all sorts of tricky bits along the way that make the process much more messy. But he said there’s no reason smaller cities like Winnipeg cannot be successful in this regard.

Gandhi said the three main challenges startups face — talent, dealing with red tape and raising capital — are geographically agnostic, despite the fact Winnipeg entrepreneurs have been wringing their hands about access to capital for decades.

As for talent, Gandhi said that wouldn’t be a problem in Winnipeg (and no one would disagree with him).

The red tape side of things would be a testament to how supportive the local governments are. There’s always going to be a broad spectrum of tolerance from those who believe there should be no government regulation on anything to those who take the time to thoroughly understand what the impediments are that will have to be overcome.

Back to the capital raising, Gandhi said local consternation is no different than anywhere else.

“Winnipeggers may think they need to go to Toronto or Vancouver to access capital,” he said.

“People in those cities think they need to go to the (United) States. Startups there think they need to go to Silicon Valley. The people in Silicon Valley think they need to go to Texas.”

But he did add, just like every other part of entrepreneurialism, raising capital is hard work.

“Even in major centres in Canada, a large portion of the venture capital has always come from the U.S. You need to travel and be out there. You need to get a lot of ‘no’s’ until you finally get a ‘yes,’” Gandhi said in an interview.

When it was suggested although it could be argued Winnipeg has created a healthy startup ecosystem, it could also be argued there’s not been many home runs (SkipTheDishes and Bold Commerce notwithstanding).

“You can build the ecosystem, but you need to cultivate it. As soon as companies get to a certain stage, they’re lured elsewhere. That’s a challenge every region faces. You have to actively work at that,” Gandhi said, adding the functioning ecosystem has to be available to help the scale-ups get to the next stage.

Meantime, he believes AI will have a dramatic impact on startups — the great equalizer, smoothing out any deficiencies geography might otherwise have been responsible for.

A big part of Gandhi’s national practice at EY is advising clients on accessing available incentives. There are hundreds of government programs out there, changing so much he said EY has developed an AI tool that scrapes the internet on a daily basis to stay up to date.

But regardless of the quality of support, level of talent, access to capital and ability to write winning funding applications, Gandhi said there’s something else absolutely required.

Gandhi said his mentor recently sold his business for more than $1 billion.

“If he can be a billionaire, anybody can,” he said. “It’s all just hard work. There’s no secret to it.”

martin.cash@freepress.mb.ca