Should Governments Be Afraid of Entrepreneurial Brain Drain?

Brain drains

It’s a post by Valentin Dombrovsky, Chief Alchemist at Travelabs.

Today I came back from Seedstars Summit in Lausanne — best startups from emerging markets gathered there to have fun, connect with each other and to get an opportunity to be selected as a SeedstarsWorld Global Winner. Prize of $500k. investment is just a cherry on top of this awesome cake which was cooked by SeedstarsWorld founders Alisee de Tonnac and Pierre Alain-Mason and their awesome team.

I had lots of emotions and meaningful conversations during event, but there’s one topic which I want to talk about specifically. Being SeedstarsWorld supporter since December 2012, when I was introduced to founders by my friend, I’ve heard some “negative feedback” to it — mostly about “brain drain”. Does the fact that the competition is organized by Swiss company and the final event is held in Lausanne mean that SeedstarsWorld make startups to move to Switzerland? Actually, no. SeedstarsWorld doesn’t make company leave its local market and tends to invest in companies that build solutions solving problems in their countries with good chances for expanding to neighbouring markets (Simplepay and this year winner Giraffe are good examples of that approach).

But even when approach is totally different and accelerator or incubator has a goal to attract entrepreneurs on a certain market, thus stimulating “entrepreunirial brain drain”, I am personally totally fine with that and believe that governments should also be.

Before explaining my point, let me dig a bit deeper into the history of the subject to see how “brain drain” has evolved over the years. Historically massive human capital flight, or brain drain, happened due to inhumane living conditions in specific countries or among specific demographics. That made skilled people leave in search of better place to live and to work. The history of such movements counts for several centuries — the earliest one being Neoplatonic academy philosophers move. Soviet Russia has experienced several emigration waves, some of which gave the birth to the term “Philosophers’ ships”. We know Einstein as an American scientist because he emigrated from Nazi Germany.

Eistein shows tongue to Hitler — his brain drained from Nazi Germany

Of course, such emigration waves didn’t bring any good to the countries of their origin. Usually, emigrants were banned from any communication with local community and were considered as sort of “traitors” or “criminals” (even if they were not sent away from the country for the very same reason). That’s how it was back then — now let’s get back to modern days.

Of course, today we also see brain drain happening in various regions for various reasons. Let’s speak about specific case which was the reason for this post to be written — entrepreneurs seeking for better environments to make money. And we speak about “brain drain”, obviously we’re speaking about those who want to monetize their inventions or some sort of IT solutions. What should governments do with that? Shoud they “close borders” making people to stay or there’s another way of dealing with it? Well, in my believe there are 2 types of activities that should be implemented. These activities seem to be opposite to each other, but, in fact, they’re about the same thing — startup eco-systems connections.

SeedstarsWorld connects startups and eco-systems

This is pretty simple:

People should be stimulated to go abroad to launch global companies and to get foreign investments.

Governments should work over entrepreneurial environments to attract those who are looking for place to launch their company or for a market to work with in some way (be it market expansion or some sort of outsourcing).

While the latter one might seem obvious, former one could seem kind of counter-intuitive. But let’s take a closer look at this. We’re speaking about stimulating integration between startup communities and building connections, so here are some points on why we need to motivate entrepreneurs to go and seek for new markets to work with:

1. We’re speaking about people who are by nature tend to build connections. They have connections in their home country, they get new ones wherever they go. These connections help in all sorts of ways — in general, we’re speaking about ease of informational and knowledge flow and about new perspectives that these people are able to get.
2. People leaving their countries for new ventures shouldn’t be “marked” as traitors of any sort — these people are source of knowledge for local eco-system as well as “bridge” for others who might want to follow their way.
3. Fellow countrymen who managed to become successful abroad tend to have good influence on entrepreneurial mindset in the local communities. They’re “setting the minds” of young people who’re looking for role models in life.
4. Local governments should support all sorts of initiatives for establishing communication flow between local eco-system and entrepreneurs who went to work abroad for the reasons described above.
5. Research and development on developed markets is usually costly. Entrepreneurs who’ve left the country, but remained part of local community, tend to build local R&D centers, thus again, enabling transfer of knowledge and experience to people working there (not speaking about direct invesments into local economy and creation of workplaces).
6. When creating own entrepreneurial environments, governments require information on what’s working and what’s not for others — entrepreneurs working abroad might be the source of such information.
7. Finally, people who left the country might invest back into it via different sorts of initiatives — from venture investment to all sorts of philantropic activities.

And this is just a handful of reasons. All in all, innovations are built via communication. I totally believe in future without borders (luckily, we’re in such kind of future in virtual reality already). Have you your own thoughts on it? Any reasons for or against my points? Comments are totally welcome.