Entrepreneurs have traits that are unique to them. These include opportunity alerts, adjusted to openings in the market and the investment environment, risk tolerant and innovative.
Although when considering who might become an entrepreneur, immigrants may not come to mind on the list of possibilities, but these people, as well as their descendants, are in a good position to recognize potential investment opportunities in their own country and also make good use of such opportunities by using their ties in both worlds.
Policymakers and development practitioners are examining how diaspora entrepreneurs could help promote economic growth by directing investment toward their home countries. Compared to diaspora bonds or remittances, diaspora members exercise more direct control over the use of funds with the presence of business investments. And members are more willing to take risks or engage in business activities in high-risk or emerging markets compared to non-diaspora investors. In addition, members have the advantage of being the “first movers” due to their knowledge of the local economic, political and cultural environment and also due to their language skills and personal connections, when it comes to starting or investing in businesses in their countries of origin. From
Despite the many advantages direct diaspora investors and entrepreneurs have, many developing countries have had limited success, especially those with internal conflict, social upheaval, or countries involved in war. People also find the presence of complicated tax laws, corruption and the lesser availability of local financing to be quite a deterrent when carrying out economic activities in a country.
Below is a brief description of the nature of entrepreneurship, the different strategies adopted by organizations to support entrepreneurs, their ventures, and the appropriate conditions to create direct investment opportunities in the countries of origin.
Levels of Commitment to Diaspora Entrepreneurship
In the last decade, numerous governments and other organizations have devised programs that aim to help emigrants and their descendants to invest in their country of origin. These include programs run by the government to run privately and financed, but for the most part, these are some kind of public-private partnership. Again, there are some organizations that are hybrid and work across multiple categories of activities, including mentoring, networking, venture capital, investment, and strategic partnerships.
Networking organizations work to foster entrepreneurship by providing different opportunities to bring together diaspora, professionals and local business leaders for meetings (either in person or online) and discuss the different opportunities that exist in the country of origin for business and investments. There are also many networking organizations that promote public-private partnerships by facilitating meetings between diaspora members and locals, while others work to foster partnerships and opportunities in their homeland among business leaders.
Mentoring organizations are more involved in supporting entrepreneurship among diaspora members. Their work is different from pure networking organizations as their efforts are aimed at bringing together aspiring entrepreneurs or business owners looking to expand their operations abroad, seasoned experts from the diaspora and business leaders.
Training organizations work to provide aspiring entrepreneurs with the knowledge and skills needed to set up and run a business. Programs include providing diaspora expertise to entrepreneurs in their home countries as well as providing lessons on business management as well as guidance on ways to seek funding.
The role of investment organizations includes providing the necessary funds for initial start-up or capital injections needed later on, and could raise public or private funds or matching grants. While there are organizations that do not get involved in monitoring the money they offer to entrepreneurs, others are likely to see how their money is used at different stages of project implementation.
Venture capital, as well as associated organizations, are involved in more than just providing seed funding and are typically involved in largely commercial projects that they believe could be a profitable venture. These organizations often opt for some strategic alliances with business leaders, professionals, engineers and other venture capitalists.
Organizations working for diaspora entrepreneurship work on different aspects to provide support. These could be creating networking opportunities between business leaders or fostering long-term economic growth to create strategic institutional alliances in knowledge-intensive sectors.