Entrepreneurs have traits that are unique to them. These include alerts to opportunity, adjusted to the openings in the market and the investment environment, tolerance of risk, and innovative.
Although when considering who could become an entrepreneur, migrants may not come to mind in the list of possibilities, these people as well as their descendants are well placed to recognize potential investment opportunities in their own country and also make good use of such opportunities by using their ties in both the worlds.
Policymakers and development practitioners are examining how diaspora entrepreneurs could help in promoting economic growth by directing investments toward their home countries. When compared with diaspora bonds or remittances, diaspora members make more direct control over funds used with the presence of entrepreneurial investments. And the members are more willing to take risks or engage in business activities in emerging or high-risk markets when compared with non- diaspora investors. Moreover, 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 linguistic abilities and personal connections, when it comes to starting or investing in a business in the countries where they originally hailed from.
In spite of the many advantages that diaspora direct investors and entrepreneurs have, there have been limited successes seen by many developing countries, especially those having an internal conflict, social upheaval, or countries involved in some war. Also, individuals find it quite deterring the presence of complicated tax laws, corruption, and less availability of local financing when pursuing economic activities in a country.
Here is a short description of the nature of entrepreneurship, the different strategies adopted by organizations to support the entrepreneurs, their ventures, and the conditions that are suitable to create opportunities for direct investment in countries of origin.
Levels of Commitment to Diaspora Entrepreneurship
In the last decade, numerous governments and other organizations have come up with programs that are aimed at helping migrants and their descendants for investing in their country of origin. These include government-led to privately run and funded programs, but mostly, these are some kind of private-public partnership. Again some organizations exist that are hybrids and work in several categories of activities, including mentoring, networking, venture capital, investment, and strategic partnerships.
Networking organizations work towards encouraging entrepreneurship by providing different opportunities to bring in the diaspora, professionals, and local business leaders together for meetings (either in person or online) and discuss the different opportunities that exist in the homeland for business and investment. There are also many networking organizations that promote public-private partnerships by facilitating meetings between diaspora members and locals, while others work towards fostering partnerships and opportunities in their homeland among business leaders.
Mentoring organizations are more involved in supporting entrepreneurship among members of the diaspora. Their work is different from pure networking organizations as their efforts are aimed to bring together aspiring entrepreneurs or business owners looking forward to the expansion of their operations abroad, seasoned diaspora experts, and business leaders.
Training organizations work in providing knowledge and skills needed to set up and run a business to aspiring entrepreneurs. The programs include providing expert knowledge of Diasporas to entrepreneurs of their countries of origin and also providing lessons on managing the business as well as guidance on ways to seek finance.
The role of investment organizations includes providing initial start-up funds necessary or capital infusions necessary later on, and it could pool public or private funds or equivalent grants. While there are organizations that do not get involved in overseeing the money they offer to entrepreneurs, others are likely to see how their money is used at different stages of the implementation of the project.
Venture capital, as well as partnership organizations, are involved in more than just providing start-up funds and usually, they are involved in business projects to a great deal that they think could be a profitable venture. These organizations often go for some strategic alliances with business leaders, professionals, engineers, and other venture capitalists.
Organizations that work for diaspora entrepreneurship work on different aspects to provide support. These could be creating opportunities for networking among business leaders or fostering long-term economic growth by creating strategic institutional partnerships in knowledge-intensive sectors.