In the last post, I’ve emphasized how international investors are helping entrepreneurs move their businesses to the US and the talent network effect this reinforces.
Brain drain is seen unfortunate for local ecosystems, but I believe immigrant entrepreneurs return to transform and re-build their startup scene from scratch.
Cross Border Give-Back
It is important to understand the principles of the spiral growth mechanism as successful entrepreneurs become investors and re-invest in the next generation.
This give-back phenomenon, supported by many successful examples in the US, happens at a micro level throughout the world, only with a slight twist.
After gaining wealth in the US, successful immigrant entrepreneurs invest back to their home country and bring their know-how and network with them.
This opportunity to invest smart money with an admirable purpose boosts entrepreneurship, thus more success stories from the region follow.
Vinod Khosla’s (Sun Microsystems co-founder) extra focus on India — way before other VCs showed up, and Niklas Zennström’s (Skype co-founder) effect on the Nordic ecosystems as a board member of Truecaller, Mapillary and Rovio are perfect cases of such opportunistic give-back.
These role models inspire and pave the way for generations to come.
Rise of Startup Mafias
Conventional institutions lack the agility to keep up with the fast advancements in technology and innovation. As schools lag behind in teaching frontier tech, startups emerge as the new learning platform to develop the necessary skill sets and connections before starting a company.
This produces a multiplier effect, well-known with examples like Paypal mafia or as Dave puts it, the Estonian mafia (notably founded Playtech, Kazaa, Skype, Transferwise and more recently Pipedrive).
Similarly, Israeli Defense Forces (especially Unit 8200) became the country’s R&D hub and incubator, as intelligence officers mastered in core competencies during military service and co-created the Startup Nation.
Exploring expansion options or looking for cost efficiency, immigrant entrepreneurs return to their backyard. Philanthropic aspects aside, their first international office launches back home due to access to cheap talent and overall familiarity with the market.
For that reason, Udemy still has significant development offices in Turkey even after raising more than $170M, and Zendesk, with a market cap of $2.5B, still has developers in Denmark.
Aspiring to work at global companies with a broad vision and purpose, local talents chase these opportunities in pursuit of a brighter future. Hence the multiplier effect runs cross borders as new startups emerge with global ambitions and remarkable experience.
Support Brain Drain!
Local ecosystems should support and encourage entrepreneurs to launch and grow their startups in regions with bigger potential. This vision should be promoted collectively by universities, incubators, angels and institutional investors.
Government funds, initiatives and subsidies must become geo-agnostic and help their citizens build businesses without any geographic limitations.
This brain drain will in return produce more immigrant entrepreneurs who will start the renaissance in under-developed ecosystems by cultivating the engineering talent and nurturing local entrepreneurs to compete globally.
Ever noticed how some smaller countries like Israel, Estonia or Sweden were able to create more unicorns than developed mid-sized ones like Italy, Spain or France? I’ll examine that next…