THE ENTREPRENEURIAL ECOSYSTEM

“No phenomenon can be isolated, but has repercussions throughout every aspect of our lives. We are learning that we are a fundamental part of nature’s ecosystems.”

—Arthur Erickson, Architect

Ecosystem: A collection of elements that affect each other’s condition.

Entrepreneurial Ecosystem: The collection of elements that affect the practice of entrepreneurship.

Getting lost in the wilderness is rarely the ‘good’ part of any fairytale. Unfortunately for the 104 entrepreneurs who founded Jamestown, the wilderness was all around them, their startup struggled, and most of them died—all because they took too long to realize they were lost.

Their problem wasn’t a lack of preparing. Ten years earlier another group of entrepreneurs had attempted the same mission, but since their disappearance from Roanoke, likely due to the worst type of encounter one could have with the local market involving a tomahawk, our new group of entrepreneurial colonists had developed a foolproof business model: send seasoned wealth managers and entrepreneurs from Europe to set up commerce in a world so full of untapped potential that people referred to it as ‘New’ even though it wasn’t, connect those resources to the worldwide distribution network run by their investors, and watch the money roll in from all over the world.

Their problem was a lack of the right preparation for the right environment. These entrepreneurs had designed a mission that would have been a huge success in Old Europe but made no sense for a similar mission in the New World. These entrepreneurs loaded their team with expert businessmen when they needed farmers. They prepared to sell their goods to customers back in Europe when they needed to sell anything to the natives next door. They decided they needed experts in European business and ignored the natives' expertise in New World survival. They loaded their boats with guns and gold when they needed food and tools.

In hindsight, it’s little wonder that most of these colonists died while generating no profit for their investors back in London. These entrepreneurs were so oblivious to the nature of their environment that they celebrated their good fortune at finding an abandoned peninsula to base their operations only to later realize it had been abandoned because it had no game, its soil yielded no crops, and its waters were filled with salt and malarial mosquitoes.

Today, the difference between different entrepreneurial ecosystems and the elements within them isn’t as obvious as it was for those early entrepreneurs, but a misunderstanding of their environments still causes many entrepreneurs to waste time, resources, or sanity doing the wrong things with the wrong resources in the wrong way until they ultimately fail.

To avoid the unnecessary struggles in their startup journeys, entrepreneurs must understand the four fundamental components of every entrepreneurial ecosystem and how to relate to them:

1. Entrepreneurial Talent: The other entrepreneurs and early team members who thrive in an entrepreneurial environment.

2. Market Networks: The consumers, customers, partners, vendors, and suppliers who will enable your mission to create, distribute, and capture value.

3. Knowledge Networks: The mentors, Board members, experts, teachers, and other people who will help you identify the right opportunities and make the right decisions

4. Financing Networks: The networks of investors and lenders who can supply the money you need to launch and run your mission.

You may not be facing a matter of your own life or death, but you are dealing with the potential life or death of your own startup. You have a much better chance of creating life for your startup if you understand the ecosystem you’re creating that life within.