Entrepreneurs with great business ideas are often eager to venture out and actualise their dreams. But research has shown that start-ups tend to fail within the first two years due to challenging business environment and inadequate business support services.
Beyond the ideas that they have, most budding entrepreneurs don’t have good business managerial skills and make mistakes as they move on, some of which may not be reversible.
Moreover legal and regulatory requirements may seem burdensome and complex to achieve; as such, start-up founders may have to seek the support of consultants to execute them.
While there may be some bootstrap at the beginning, entrepreneurs may reach a point when they will need additional funds for expansion.
Some of these challenges that start-ups face are being addressed by accelerators, business incubators and venture capitals in Nigeria and globally.
In Nigeria, for instance, incubators such as Co-Creation Hub, She Leads Africa, iDEA Nigeria, among others, offer technical advisory support, funds and co-working spaces for start-ups.
However, interaction with other operators through online platforms can also help to address technical issues.
A report by the Intelligence Unit of The Economist, titled, ‘Informal innovation: Networks that power start-up cities,’ shows that informal professional networks and communities are more important for entrepreneurs than formal structures such as incubators and accelerators.
The report, sponsored by the Infocomm Development Authority of Singapore, reveals that start-up founders value informal meet-ups and virtual communities more than other factors in overcoming challenges such as identifying funding sources, grappling with complicated tasks and dealing with the fear of failure.
Though access to finance, talent and ideas is facilitated by incubators, accelerators and co-working spaces, the report notes that entrepreneurs’ connections with their peers have been shown to be as important to start-up growth in some cities as the role of institutions.
Networking online and offline
With new discoveries in technology, particularly the Internet and mobile technology, the report says new types of entrepreneur communities and energised grass-roots networking activities have emerged.
According to the report, many of such communities are available online and entrepreneurs are active participants.
The report notes that entrepreneurs are avid networkers as shown by over half of the survey group (58 per cent) who are enthusiastic about entrepreneur-oriented social networking groups.
They identified these global platforms as LinkedIn, Facebook or WhatsApp.
Other entrepreneurs making up about 36 per cent of the survey number, gain insights from locally oriented social networks or meet-up groups where they connect with other entrepreneurs.
The report points out that half of the survey respondents are involved in six or more global networks, and 44 per cent participate in six or more local online groups.
It adds, “Participation in physical networking activities is less frequent than the online variety – which is logical given that the former requires a larger time investment.
“Online and physical networking activities do appear to be complementary, rather than mutually exclusive.”
Informal groups offer advisory support
The report notes that informal communities have become important sources of support to entrepreneurs when starting their businesses. It explains that globally, new business founders rely heavily on banks as well as industry associations for help during the start-up phase.
However, the report finds that informal communities and their activities are as important to the respondents as formal structures such as incubators and accelerators, and are nearly as important as associations.
For example, in Tel Aviv, where launching a start-up is comparatively difficult, the report says meeting fellow entrepreneurs in informal settings is the single most important source of support.
The Chairwoman of New York Hearts Tech, a community set up to support online businesses in the fashion, beauty and lifestyle industries, Sharon Klapka, says this finding is true.
According to her, formal structures such as incubators and accelerators are useful, but to a limited number of entrepreneurs.