Karachi

The U.S. Consulate Karachi in collaboration with local partners celebrated Global Entrepreneurship Week from November 14, 2022 to promote the advancement of the Pakistani entrepreneurial ecosystem by convening various programs with entrepreneurs, startups, incubation centers, industry leaders, academia, youth, and journalists.

Global Entrepreneurship Week (GEW) is aimed at promoting entrepreneurship and encouraging new opportunities for investment, partnership, and collaboration to boost economies and address some of the world’s most pressing economic challenges.

U.S. Mission Pakistan sponsored the Silicon Valley trainer and a professional speaker Oscar Garcia, founder and chief empowerment officer at Aspira, to join the celebrations in Karachi and Islamabad.

He gave several interactive motivational sessions on pitching, professional branding, and career development during his time in Karachi.

Oscar Garcia spoke on, ‘The Art of Taking Risks and Building Resilience’ at National Incubation Center Karachi (NICK) at NED University where the packed room learned about the vision and patience it takes for businesses to succeed. He led a roundtable discussion with U.S. Consulate Karachi officials, entrepreneurs, startups, and business journalists about the ‘Challenges and Opportunities in Pakistan’s Entrepreneurial Ecosystem”.

To close a week of events, he gave an interactive talk about ‘Sustainability in Start-Up Culture’ with the aspiring Pakistani entrepreneurs at Lincoln Corner Karachi where The Startup Lab is located.

The StartUp Lab is a one-of-a-kind space in Pakistan where any aspiring entrepreneur can turn their business idea into a reality using the latest technology and equipment for free.

Other events this week included an Access English Micro-scholarship program event at Lincoln Corner Pakistan American Cultural Center where more than 200 students listened to alumni and U.S. Consulate Karachi’s Information Officer, Krista Bustamante talk about entrepreneurship, the importance of hard work, finding a mentor, and building resilience.

The United States has been supporting Pakistani innovators, entrepreneurs, and students working to make a positive impact on their communities and the economy.  While talking to the promising Pakistani entrepreneurs at NICK, Consul General Nicole Theriot remarked, “This year marks 75 years of bilateral relations between the United States and Pakistan. The United States values our long-standing cooperation with Pakistan and has always viewed a strong, prosperous, and democratic Pakistan as critical to U.S. interests.  We support strengthening economic ties between our two countries by expanding private sector trade and investment, which benefits both countries.”

The U.S. government looks forward to continuing our work with Pakistan to grow and expand our commercial and economic ties, expand our collaboration in education, improve access to renewable energy, and increase agricultural cooperation, between our countries.  We also look forward to more cooperation on integrating women into Pakistan’s economy and help further nurture Pakistan’s entrepreneurial ecosystem. (PR)

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Monitoring Desk

Ahmedabad

Startups are now becoming community-oriented. The Sindhi community in the city has set up a venture capital fund of Rs.100 million to support startups developed by young entrepreneurs.

It aims to expand the size of the fund to Rs.1000 million in a year. So far 16 businessmen have pledged to contribute Rs.70 million to the fund.

Global Sindhu Business Network (GSBN) has created a syndicate within the community to incubate the fledgling business, cultivate talent and make Sindhi youth strong and confident.

GSBN coordinator Nikhil Methiya said, “We want to develop an ecosystem that allows startups to grow. We have established Global Sindhu Business Network and set up a venture capital fund with 16 syndicate members who have committed a fund of Rs.70 million. We will form a 15-member committee to look into entire process of funding the startups.”

He said that scalable businesses like those dealing in information technology services, artificial intelligence, healthcare, clean energy, climate change etc. will be preferred for funding.

‘Startups founders and owners will be required to furnish startup details and future roadmap with committee,” Nikhil said.

According to the model, GSBN will present the applications to the investors and businessmen from Sindhi community. The investor will get a portion of equity in the startup against the investment of the fund. The maximum ticket size for each startup will be Rs.50 lakh and based on the performance and progress, the investor will decide the next round of funding for that business.

The investors will allocate a portion of the profit gained from the business towards uplift of the Sindhi youth, especially in their education, training for civil services exams and skill development, Nikhil said.

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Courtesy: Times of India (Published on May 16, 2022)

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The decreasing cost of starting a startup increases the number of rich people in two ways: it means that more people start them, and that those who do can raise money on better terms.

By Nazarul Islam

I start my story, in the year I got married….my threshold year in life. There were no fund managers among the 100 richest Americans in 1982. Hedge funds and private equity firms existed in 1982, but none of their founders were rich enough yet to make it into the top 100. Two things changed: fund managers discovered new ways to generate high returns, and more investors were willing to trust them with their money.

But the main source of new fortunes now is starting companies, and when you look at the data, you see big changes there too. People get richer from starting companies now than they did in 1982, because the companies do different things.

In 1982, there were two dominant sources of new wealth: oil and real estate. Of the 40 new fortunes in 1982, at least 24 were due primarily to oil or real estate. Now only a small number are: of the 73 new fortunes in 2020, 4 were due to real estate and only 2 to oil.

By 2020 the biggest source of new wealth was what is sometimes called “tech” companies. Of the 73 new fortunes, about 30 derive from such companies. These are particularly common among the richest of the rich: 8 of the top 10 fortunes in 2020 were new fortunes of this type.

Arguably it’s slightly misleading to treat tech as a category. Isn’t Amazon really a retailer, and Tesla a car maker? Yes and no. Maybe in 50 years, when what we call tech is taken for granted, it won’t seem right to put these two businesses in the same category. But at the moment at least, there is definitely something they share in common that distinguishes them. What retailer starts AWS? What car maker is run by someone who also has a rocket company?

The tech companies behind the top 100 fortunes also form a well-differentiated group in the sense that they’re all companies that venture capitalists would readily invest in, and the others mostly not. And there’s a reason why: these are mostly companies that win by having better technology, rather than just a CEO who’s really driven and good at making deals.

To that extent, the rise of the tech companies represents a qualitative change. The oil and real estate magnates of the 1982 Forbes 400 didn’t win by making better technology. They won by being really driven and good at making deals!  And indeed, that way of getting rich is so old that it predates the Industrial Revolution. The courtiers who got rich in the (nominal) service of European royal houses in the 16th and 17th centuries were also, as a rule, really driven and good at making deals.

People who don’t look any deeper than the Gini coefficient look back on the world of 1982 as the good old days, because those who got rich then didn’t get as rich. But if you dig into how they got rich, the old days don’t look so good. In 1982, 84% of the richest 100 people got rich by inheritance, extracting natural resources, or doing real estate deals. Is that really better than a world in which the richest people get rich by starting tech companies?

Why are people starting so many more new companies than they used to, and why are they getting so rich from it? The answer to the first question, curiously enough, is that it’s misphrased. We shouldn’t be asking why people are starting companies, but why they’re starting companies again.

In 1892, the New York Herald Tribune compiled a list of all the millionaires in America. They found 4047 of them. How many had inherited their wealth then? Only about 20% — less than the proportion of heirs today! And when you investigate the sources of the new fortunes, 1892 looks even more like today. Hugh Rockoff found that “many of the richest … gained their initial edge from the new technology of mass production.”

So it’s not 2020 that’s the anomaly here, but 1982. The real question is why so few people had gotten rich from starting companies in 1982. And the answer is that even as the Herald Tribune’s list was being compiled, a wave of consolidation was sweeping through the American economy. In the late 19th and early 20th centuries, financiers like J. P. Morgan combined thousands of smaller companies into a few hundred giant ones with commanding economies of scale. By the end of World War II, as Michael Lind writes, “the major sectors of the economy were either organized as government-backed cartels or dominated by a few oligopolistic corporations.”

In 1960, most of the people who started startups today would have gone to work for one of them. You could get rich from starting your own company in 1890 and in 2020, but in 1960 it was not really a viable option. You couldn’t break through the oligopolies to get at the markets. So the prestigious route in 1960 was not to start your own company, but to work your way up the corporate ladder at an existing one.

Making everyone a corporate employee decreased economic inequality (and every other kind of variation), but if your model of normal is the mid-20th century, you have a very misleading model in that respect. J. P. Morgan’s economy turned out to be just a phase, and starting in the 1970s, it began to break up.

Why did it break up? Partly senescence- The big companies that seemed models of scale and efficiency in 1930 had by 1970 become slack and bloated. By 1970 the rigid structure of the economy was full of cozy nests that various groups had built to insulate themselves from market forces. During the Carter administration the federal government realized something was amiss and began, in a process they called “deregulation,” to roll back the policies that propped up the oligopolies.

But it wasn’t just decay from within that broke up J. P. Morgan’s economy. There was also pressure from without, in the form of new technology, and particularly microelectronics. The best way to envision what happened is to imagine a pond with a crust of ice on top. Initially the only way from the bottom to the surface is around the edges. But as the ice crust weakens, you start to be able to punch right through the middle.

The edges of the pond were pure tech: companies that actually described themselves as being in the electronics or software business. When you used the word “startup” in 1990 that was what you meant. But now startups are punching right through the middle of the ice crust and displacing incumbents like retailers and TV networks and car companies.

But though the breakup of J. P. Morgan’s economy created a new world in the technological sense, it was a reversion to the norm in the social sense. If you only look back as far as the mid-20th century, it seems like people getting rich by starting their own companies is a recent phenomenon. But if you look back further, you realize it’s actually the default. So what we should expect in the future is more of the same. Indeed, we should expect both the number and wealth of founders to grow, because every decade it gets easier to start a startup.

Part of the reason it’s getting easier to start a startup is social. Society is (re)assimilating the concept. If you start one now, your parents won’t freak out the way they would have a generation ago, and knowledge about how to do it is much more widespread. But the main reason it’s easier to start a startup now is that it’s cheaper. Technology has driven down the cost of both building products and acquiring customers.

The decreasing cost of starting a startup has in turn changed the balance of power between founders and investors. Back when starting a startup meant building a factory, you needed investors’ permission to do it at all. But now investors need founders more than founders need investors, and that, combined with the increasing amount of venture capital available, has driven up valuations.

So the decreasing cost of starting a startup increases the number of rich people in two ways: it means that more people start them, and that those who do can raise money on better terms.

But there’s also a third factor at work: the companies themselves are more valuable, because newly founded companies grow faster than they used to. Technology hasn’t just made it cheaper to build and distribute things, but faster too.

This trend has been running for a long time. IBM, founded in 1896, took 45 years to reach a billion 2020 dollars in revenue. Hewlett-Packard, founded in 1939, took 25 years. Microsoft, founded in 1975, took 13 years. Now the norm for fast-growing companies is 7 or 8 years.

Fast growth has a double effect on the value of founders’ stock. The value of a company is a function of its revenue and its growth rate. So if a company grows faster you not only get to a billion dollars in revenue sooner, but the company is more valuable when it reaches that point than it would be if it were growing slower.

That’s why founders sometimes get so rich so young now. The low initial cost of starting a startup means founders can start young, and the fast growth of companies today means that if they succeed they could be surprisingly rich just a few years later.

It’s easier now to start and grow a company than it has ever been. That means more people start them, that those who do get better terms from investors, and that the resulting companies become more valuable. Once you understand how these mechanisms work, and that startups were suppressed for most of the 20th century, you don’t have to resort to some vague right turn the country took under Reagan to explain why America’s Gini coefficient is increasing. Of course the Gini coefficient is increasing.

With more people starting more valuable companies, how could it not be? Get in the game and do something….

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About the Author

The Bengal-born writer Nazarul Islam is a senior educationist based in USA. He writes for Sindh Courier and the newspapers of Bangladesh, India and America. He is author of a recently published book ‘Chasing Hope’ – a compilation of his 119 articles.

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