Entrepreneurial support organizations called pacers are helping businesses in emerging markets achieve their goals by providing services for them in the long run. A blueprint for shifting to a pacer model shows how organizations can support entrepreneurs as they grow.
Open access to this article made possible by Stanford Seed.
Small- and medium-sized enterprises (SMEs) create and sustain a substantial portion of jobs in emerging economies, contribute to innovation, and drive social impact. Entrepreneur support organizations such as incubators, accelerators, and fellowship programs play an important role for SMEs in emerging economies by closing entrepreneurs’ gaps in knowledge, capital, and networks; providing guidance to reach targets; and fostering entrepreneurship ecosystems. Research has shown the positive effects of entrepreneurial support on revenue growth, employment, and financing. However, upon completion of these programs, entrepreneurs are often back on their own, unless they participate in another support program. While entrepreneurs in industrialized economies have access to a broad range of professional services—industry trade associations, peer networking organizations, and consultants—that can help them navigate their growth over time, the fact that such services are less accessible in emerging economies results in a services gap.
In reviewing the field of entrepreneur support organizations across Africa and India, we identified more than 90 of the most visible accelerators, incubators, and fellowships. Typically, these organizations provide structured learning experiences, peer-to-peer interaction, mentoring, and access to investor networks over a discrete time period. Sixty organizations publicly shared details about their programs online. We found that 46 provide short-term, episodic services to entrepreneurs that last from a few days to six months, followed at times by a loosely organized alumni network. Recent data from the Global Accelerator Learning Initiative, a partnership between the Aspen Network of Development Entrepreneurs and Emory University, further undergird our findings on the gap in continued support for emerging-market entrepreneurs, showing that long-term services often don’t exist to support their growth but are direly needed.
Our research has uncovered a novel type of entrepreneurial support organization that we call a pacemaker organization, or pacer, which offers an alternative for emerging-market entrepreneurs. Pacers serve entrepreneurs for the long run, from one year to a lifetime. Like pacers who help world-class marathon runners win races, pacemaker organizations help entrepreneurs achieve their goals in the marathon of scaling up an enterprise. Over the past two decades, some organizations have evolved their models to become pacers that help fill the gap in the entrepreneurial support landscape in emerging markets. Pacers adapt their programs and respond to entrepreneurs’ changing needs as they navigate how to scale up, maneuver crises, or pivot into new business domains.
The pacer model extends services over a longer time horizon than traditional support models, enabling SMEs to attain more social and economic progress. Pacers typically focus on post-revenue founders and their ventures, providing networking; continuous-learning opportunities; mentorship; long-term, trust-based peer engagement; and needs-based programming for founders and CEOs, which can range from preparing for a funding round to implementing a new performance management system to dealing with a cash flow crisis. Rather than drawing a distinct line between participants and alumni, pacers integrate entrepreneurs into their programming as members who can benefit in an open-ended fashion from pacers’ services. Some pacers work with their members over a long period even if they don’t take an investment stake in the firm, while others make small-risk capital investments, further strengthening their commitment and long-term interest in the growth trajectories of their members.
While entrepreneurial support organizations understand many of the challenges and opportunities of growing a business in an emerging economy, individual entrepreneurs don’t necessarily know when they will arise or how best to address them. Consider the case of Frank Omondi, CEO of Ten Senses, a macadamia- and cashew-nut processor and exporter based in Kenya. In 2017, Omondi participated in a one-year training program offered by the Stanford Institute for Innovation in Developing Economies, known as Stanford Seed. Yet, immediately after the program concluded, Omondi faced challenges in growing his enterprise. That’s when he tapped into Seed’s network of mentors and found Nancy Glaser, a seasoned Stanford Graduate School of Business alumna, who volunteered as a coach for several months by helping him address cash flow issues and get Ten Senses ready to find investors. Two years later, Omondi secured capital to further grow his business. In 2019, he needed expertise to develop a new, blockchain-based software to certify his fair-trade and organic nuts. He again tapped into Seed’s services, this time utilizing its internship program, working with a Stanford undergraduate to develop the new system.
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