Effective brainstorming session on investing in youth

Guest post by Umniyat Choudhury

By 2020 Bangladesh’s youth population will exceed 60 million.  There is a definite need for empowering this ever-increasing group, and harnessing their abilities through financial models.  With this foundation in mind, the Social Innovation Lab organised “Investing in Youth – Financing Dreams” forum on 25 April 2012.  The objective of the forum was to identify needs and brainstorm strategic solutions for the current lapse in start up support for young entrepreneurs.

In efforts to promote a well-rounded discussion, we invited individuals from varied backgrounds.  Majority of the youth representation included young tech entrepreneurs and rural adolescents.  The ‘supply side’ was composed of representatives from Banks, BRAC microfinance and private investment firms.  Of course, the discussion could not have been multi-dimensional without the participation of established innovators with existing business incubation programs.

All participants expressed concern over limited access to finance, business support and skills training for young entrepreneurs looking to start a business.   Basically – there is a serious lack of, and support for, business incubation programs in Bangladesh.

In relation to seed capital, entrepreneurs stressed that funders should assess ‘intellectual property’ and the actual business idea instead of placing an emphasis on collateral and business experience. Financiers agreed that providing seed capital is vital, but inherently risky, so new criteria must be developed.

As part of brainstorming, a key solution was that the financial focus should be placed on an alternative stream of funds, ie venture capitalists and angel investors who have business incubation programs. However, a significant issue was the reluctance by private investors to rely on investment managers.  It was highlighted that if a culture of venture capitalism and private investment is to flourish, the use of investment managers must be promoted.

After a riveting two hours, we reluctantly drew the forum to a close, though ideas were still flying.

So, based on the constructive discussion at the forum, what were the main solutions?

  1. Focus on building Bangladesh’s incubation ecosystem –establish alternative sources of funding by creating private investment funds and promoting venture and angel investment and identify ways to exit the business for the investors.
  2. Train investment managers so they can adequately look after a portfolio of start-up enterprises.
  3. Provide facilities for young entrepreneurs to build on their existing tech skills and further-develop their business knowledge.
  4. Move away from traditional risk mitigation measures, and instead develop different tools to evaluate the financial viability of investing in a young entrepreneur.

We are pleased to add that the participants declared the forum a success.  The forum provided an arena for young entrepreneurs to voice their needs, and for financiers and innovators to brainstorm solutions. The key after this initial brainstorming session is to keep the momentum going and for the different organisations to implement the recommendations where relevant.

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