Experimenting for Entrepreneurship

Small and medium businesses employ many workers in developing countries. However, little is known about the constraints of these enterprises and how they can be best supported to generate more employment and profit. Business training, capital, and in-kind donations are possible tools that may help these small enterprises and start-ups to prosper.  By providing entrepreneurs with business education and seed capital to make investments, they may be able to use limited resources to develop operations and foster economic growth.

 

Fundacion Bavaria, founded by one of the largest beverage providers in Colombia, invests around 1.9 million USD each year in the Destapa Futuro (Open the Future) program.  This program solicits ideas for new business ventures and provides business training and seed capital to entrepreneurs with promising business plans or small start-ups. To date, this program has trained thousands of entrepreneurs and financially assisted more than 200 businesses since the program’s inception in 2005.  However, the Fundacion Bavaria has not measured the impact of this program on Colombian business development until now.

 

Fundacion Bavaria partnered with the Centro de Formación Empresarial (CFE- or Enterprise Training Center) and Endeavor Colombia, a global nonprofit organization that supports high impact entrepreneurs in emerging economies, to administer the business training.

 

In order to participate in the Destapa Futuro program, entrepreneurs had to complete an on-line application that collected information on entrepreneur and business profiles, leadership potential, experience in business administration, size of the company, and potential social impact.  From this initial database of 8400 applications,  the executing agency, Endeavor Colombia, selected and ranked 475 candidates, half of them with business plans and the other half with existing start-ups. 

 

The entrepreneurs were divided into three groups according to the following criteria: the top 25 ranked entrepreneurs were assigned to the Endeavor training group; the following 100 were randomly assigned to either Endeavor or CFE trainings; and the reminding 350 entrepreneurs were randomly assigned to either the CFE training group or the comparison group (which received no training).

 

During the first round of the competition, selected participants were trained on entrepreneurial skills, including accounting, business plan development, and communication.  CFE used a combination of e-learning and in-person classes to implement the training.  For the e-learning component which was comprised of four sessions over one month, participants completed an online learning module with homework assignments and were assigned to groups of 20 students to participate in online forums and communicate via email/phone.  Only candidates who completed the homework and attended the online sessions were eligible for the in-classroom training.  CFE’s in-classroom component was comprised of three eight-hour classes with about 15-20 students.  Endeavor Colombia only offered in-classroom modules (without an e-learning component) that were delivered in four eight-hour sessions. Both trainings, by CFE and Endeavor Colombia, were offered in several large cities around the country.

 

Two months later, 100 entrepreneurs were selected to receive an additional two-day coaching in preparation for the final business plan presentation. The coaching session provided contestants with feedback regarding content and style of their presentations. After the final presentation, the best 60 entrepreneurs were awarded a prize to fund their project. These 60 winners were randomly assigned to receive either a cash or an in-kind prize. In-kind prizes were determined by Fundacion Bavaria, based on the entrepreneur’s requests and available resources. Cash prizes ranged from about 5,600 USD to 56,000 USD (10-100 million COP).

 

An additional incentive campaign targeted all 475 entrepreneurs with an online platform run by Somos Más, an information technology company. This program “Exclusive Destapa Futuro 2010 Winner Group” advertized prizes for entrepreneurship and provided access to workshops with an international consultant.

The evaluation run by IPA will assess the impact of the Destapa Futuro competition, differences between the training methodologies, and the impact of the various prize incentives in promoting business creation and growth of existing start-ups.

 

Results forthcoming.