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Venezuela’s New Passion for Startups

Posted by: Jonathan Ortmans on April 11, 2011 Source: Policy Dialogue on Entrepreneurship

Jonathan OrtmansDespite political moves that have been making foreign businesses and investors in Venezuela nervous in the past few years, entrepreneurship has managed to survive. For many Venezuelans, entrepreneurship is a way of facing the prolonged political and economic troubles in many sectors of the economy, as the Washington Post article “ With Chávez, Some Venezuelan Entrepreneurs See Opportunity” explained when the President won re-election.

Now at the end of his 2nd six-year term as President, Hugo Chavez has allowed some entrepreneurs to be his allies, such as the president of Entrepreneurs for Venezuela (Empreven). Many of these entrepreneurs are taking advantage of opportunities arising from the spending of government oil revenues. But even those who do not have the chance or do not feel the urgency to develop cordial relationships with the state, are finding smart approaches to leverage scarce resources.

For example, I met last week with one of the leaders of Global Entrepreneurship Week in Venezuela who rejects the doom-and-gloom scenario and who is forging ahead with lots of creativity and energy. When he saw little support for entrepreneurs at a prominent university, he joined the Board and fought successfully to change the rules around students starting businesses resulting in the opening of technology park incubator space to startups and the more effective use of alumni entrepreneurs in those spaces as their mentors. He also turned to existing network centric businesses and successfully convinced them of their responsibility to contribute a small proportion of their marketing, human resources, and web design staff time to startups – on an on-going basis.

Another example is evident with Global Entrepreneurship Week in the country. Facing the reality that Venezuela’s economy is unable to create enough jobs for those entering the workforce, young entrepreneurs amassed in numbers last November at Venezuela’s Global Entrepreneurship Week activities. With a total of 183 events and 35,768 participants, Venezuela finished among the top countries in the international ranking of Global Entrepreneurship Week 2010 and second in Latin America. These figures represent a 345% increase in events and a 550% increase in participants from GEW/Venezuela 2009. The 183 events in 2010 aimed at exposing innovative ideas and crystallizing them into enterprises. For example, the finale of the national ‘>'EUREKA’ awards challenged participants to develop proposals and prototypes that offer solutions to everyday problems. One of the winners, the student-developed Protomac project, presented a pioneering device that intelligently manages electrical current flow to protect against electric shock. This event also provided an opportunity to hold discussions on securing a place for innovation and enterprise in the higher education curriculum. TheFeria VenezuelaTech in turn brought together the country’s leading technological firms for presentations, seminars and workshops on the latest digital trends.

Venezuela is a country of young minds. It is estimated that over 70 percent of its labor force is under 35. They are living through a period of significant inflation and close state control of the private sector. It is hard to stay optimistic about Venezuelan entrepreneurship, but the GEW host there, Accede and other organizations such as the Venezuelan Association of Young Entrepreneurs, offer hope. They are helping young people muddle through the uncertainty with innovative initiatives that help young talents develop their entrepreneurial potential. These initiatives are positioning the country as one of the leading countries in the entrepreneurship movement.

The Venezuelan economy needs to create almost 2 million jobs but cannot do that sustainably without the help of private-sector entrepreneurs. The environment of undue uncertainty risks creating a situation similar to what is happening in Africa and the Middle East. A policy and institutional environment of support towards job- and wealth-creating ventures, on the other hand, provides a lending hand to economic and social prosperity.

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Jonathan Ortmans is president of the Public Forum Institute, a non-partisan organization dedicated to fostering dialogue on important policy issues. In this capacity, he leads the Policy Dialogue on Entrepreneurship, focused on public policies to promote entrepreneurship in the U.S. and around the world. In addition, he serves as a senior fellow at the Kauffman Foundation.

Category:  Growth & Poverty  Tags:  Venezuela

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