The Lahore University Of Management Sciences Centre for Entrepreneurship and Innovation has claimed that its young entrepreneurs have raised a $600,000 investment from local and foreign investors and that the combined valuation of businesses at which these start-ups have raised the money at, or have had investor term sheets offered, is over $5 million.
Executive Director and Founder of centre Khurram Zafar while talking to Business Recorder claimed, "The centre has mentored and groomed over 80 entrepreneurs and its start-up businesses have created over 120 direct and 350 plus indirect jobs. By August, the centre will have contributed over 28 high growth potential businesses to Pakistan's economy. Hopefully, many will keep growing and creating additional jobs and wealth creation opportunities for its founders, employees and investors while solving real, local problems."
He went on to claim, "Among 13 start-ups from the two cohorts that have graduated from the Foundation incubator at LCE, one has shutdown and 12 are still operational. It's too early to tell how many will continue to grow and transform into big businesses, but the early numbers look extremely promising. We place a lot of emphasis on the people behind the new ventures. The founders are evaluated across thirteen different entrepreneurial competencies and this constitutes over 50 percent of the grades for their selection. The other 50 percent is for the business model where we primarily ensure that it's a high growth or high impact potential business and the team has the ability to execute the business model. The selection is made by The Foundation Council, an independent board comprising leading entrepreneurs, investors and industrialists from a diverse range of sectors.
"The Silicon Valley is a very unique phenomenon and even other states in the United States have not been able to replicate it. Last year, over 75 percent of venture capital funding went to companies in only three states. But, we will have our own Indus Valley very soon. An environment that is very conducive to entrepreneurs and new ventures, tailored to the peculiarities of our own market, human resource, investors and businesses. An ecosystem that will sprout local high growth businesses can leverage the equalising power of the internet to reach global markets of billions right from our backyard. Raising money may not be as cheap as it is in Silicon Valley, reaching customers might not be as easy as in Silicon Valley, and it may require longer bootstrapping periods and exit horizons, but we will soon have success stories that will grab global attention.
On details of business incubation at LUMS, he said, "The business incubation programme at LUMS called The Foundation which is a four-month intense, experiential business development programme where promising entrepreneurs scouted from all over the Pakistan are mentored and groomed to turn their ideas into high growth or high impact potential businesses. LCE management, industry leaders and successful entrepreneurs engage with incubated entrepreneurs regularly for 16 weeks to cover a broad spectrum of enterprise building areas. Start-ups and centre management mutually agree to monthly growth milestones which need to be met or exceeded in order for these young businesses to graduate from the programme. There is a lot of focus on market research, developing products and services that have a compelling need in the market, financials, pitching to investors and customers as well as activities designed to induce positive behavioural changes in the founders. After the graduation, the young businesses get to pitch at an Investors' Summit to raise funds for the programme.
While talking about different initiatives Khurram said there are bunch of such initiatives that have been launched across Pakistan that cover at least Sindh, Punjab and KP. I met a delegation from Aga Khan Foundation a couple months ago which wanted to launch an incubator in GB as well. Balochistan is the only province where I am not aware of the existence of a similar platform.
In reference to the difficulties faced during the incubation acceleration process, he said, "We mutually agree on monthly growth milestones with the start-up management and if any start-up misses the goals for two months in a row, they are ousted from the programme. It's not a free ride once they make it into the programme. From an investor standpoint, it really depends on the risk appetite of the investors. Most seed stage investors understand that young businesses have to make a lot of pivots before they nail the right business model and hence are more patient. We are seeing a lot of investors put money in start-ups that are based on multiple tranches tied to growth milestones. We do a lot of scouting at university campuses nation-wide as well as at various competitive platforms which bring innovators and entrepreneurs together, for example, Start-up Weekends, Civic Hackathons, Coding Jams, LUMS Entrepreneurial Challenges, various business plan competitions across numerous universities. The management of the centre also conducts multiple talks at universities targeting graduating students and encourages them to consider launching their own businesses as an alternative career choice. We share success stories and inspiring content through our social media properties as well."
He also said he was unaware of any local governments allocating funds toward the promotion of entrepreneurship but that the provincial governments of the Punjab and Khyber Pakhtunkhwa are taking steps to promote entrepreneurship through their respective IT boards.
"We see about 20 percent of our start-ups have female co-founders but we also recognise that this needs to change. LUMS has recently started a programme to scout and promote promising women entrepreneurs exclusively. The winner of this year's Start-up Weekend Challenge at LUMS was led by a woman. We are seeing more interest from women entrepreneurs but there is room for improvement there. Most of the SMEs launched by the federal government have been focused on micro-enterprises, or what is generally referred to as life style businesses, that support the family of an entrepreneur. If there are other programmes, I am not aware of them nor have I come across any success stories from these initiatives."