x Abu Dhabi, UAEFriday 28 July 2017

Venture in and take your pick

The Life: Forward-looking countries are adopting specific policies to attract entrepreneurs, especially as the United States becomes less welcoming to immigrants.

The Start Up Chile programme aims to attract high-potential start-ups that would incubate in the capital Santiago. Victor Ruiz Caballero / Reuters
The Start Up Chile programme aims to attract high-potential start-ups that would incubate in the capital Santiago. Victor Ruiz Caballero / Reuters

Forward-looking countries are adopting new policies to attract entrepreneurs, especially as the United States becomes less welcoming to immigrants.

In particular, these countries are hoping to attract technology entrepreneurs because start-ups in this sector are responsible for rapidly creating jobs and wealth.

Michael Fertik, the American entrepreneur and author, has coined a term for this trend: venture countries.

"You had venture funds and venture capitalists and you are now getting what I am calling venture countries because they are committing themselves to specifically getting high-value, high-knowledge worker jobs," Mr Fertik says.

While Silicon Valley remains the largest and most influential start-up zone, challengers are emerging. Mr Fertik identifies Singapore, Chile, the UAE and the Benelux nations (Belgium, the Netherlands and Luxembourg) as some of the countries taking a different approach to attract start-ups, such as offering tax breaks, funding opportunities and adopting permissive immigration policies.

Take Chile, for instance. In 2010, the government created a programme called Start Up Chile to attract high-potential start-ups that would incubate in Santiago as a platform to going global. That year, 22 companies from 14 countries joined the programme, receiving US$40,000 (Dh146,932) of equity-free seed capital, a one-year visa and access to a variety of networks and mentors. The founders aim to have 1,000 participants in the scheme by the end of 2014.

A recent study - the Start-up Ecosystem Report 2012 - places Santiago among the top 20 places for start-ups, thanks to the strength of its mentoring. Here, start-ups have an average of 4.81 mentors, about 25 per cent more than in Silicon Valley.

In Singapore, the government has put in place a variety of policies to spur entrepreneurship including making it easier for highly qualified individuals to acquire visas. For start-up bosses, being able to access talented employees is essential to growing their fledgling businesses.

In the UAE, free zones offer infrastructure that appeals to entrepreneurs.

Researchers at the Kauffman Foundation in the US have authored numerous reports highlighting the importance of start-ups for job creation and the importance of immigrants as entrepreneurs.

This year, the organisation published a report called America's New Immigrant Entrepreneurs: Then and Now, which confirmed previous suspicions that restrictive immigration policies in the US are thwarting entrepreneurial activity.

"For several years, anecdotal evidence has suggested that an unwelcoming immigration system and environment in the US has created a 'reverse brain drain'," according to Dane Stangler, the foundation's director of research and policy. "This report confirms it with data."

The report shows that the percentage of immigrant-founded firms in the US has dropped to 24.3 per cent this year from 25.5 per cent in 2005. The decline in Silicon Valley is even more pronounced, with the proportion of immigrant-founded start-ups slipping to 43.9 per cent from 52.4 per cent.

"We are in a global competition for talent and growth [and] for the first time, countries are really figuring out start-ups," Mr Fertik says. "They are bending over backwards to make it work, [providing] special exception rules [for immigration] if you are high talent."

For would-be entrepreneurs holding a "bad passport", this emerging system offers the opportunity to "cherry-pick" the services these countries are now providing, according to Mr Fertik.

He offers the hypothetical example of a South Asian person looking to start a business: "Very smart but [has a] bad passport."

But now he can cherry-pick - perhaps choosing Singapore as his place of residence because it has a permissive immigration policy for entrepreneurs as well as good intellectual property protection.

He may then create his company in Dubai for tax purposes, open a sales office in a tax-friendly part of Europe such as Luxembourg or Switzerland, and put a call centre in Poland. He may also choose to sit his code on cloud servers in Benelux because of the security and stability that offers.

"Now, if you happen to live in the States or in London, there are a whole bunch of services that are there for you anyway," Mr Fertik explains. "But if you don't have that set of benefits, if you were born with the wrong passport, there are still a lot of ways to have a huge [impact]. There are all these different services you can use globally as an entrepreneur and the venture countries are competing to offer them. We've never seen this before."

lgutcher@thenational.ae