Investing in returning diaspora
Three reasons diaspora returns home:
- Compassion — returning for family
- Economy — returning to make money
- Opportunity cost — returning to save assets
The National Elite Foundation has become more active in recent years to prop up the knowledge based economy and tap into the genius of the diaspora. Speaking to them, we’ve come up with the above model.
Sadness
I’m spending more time in Tehran as we’re launching our innovation centre, iLab, a dedicated support platform for early stage technology companies.
I’m observing chronic sadness or lethargy in the Iranian business community. This shows up as the lack of discipline and hunger every day. I keep telling my team that if they turn up to and follow up meetings with discipline, this would be their competitive advantage!
We’ve had numerous occasions where we wanted to hire people where the candidate didn’t even turn up! It’s not that jobs don’t exist. Workers don’t.
My observation is that lethargy exists in all parts of the society. The successful business community is lethargic because they cannot access bigger global opportunities and there is a sanction-forced glass ceiling for them. On the other hand, corruption and lack of proper social mobility stops the younger and hungrier generation from exerting real effort.
I am astonished at the returning diaspora of the second type, the ones who return for economic reason. Even if they are successful, they face lethargy pretty quickly but are stuck. They cannot free themselves of the money-making machines they’ve built.
Investment decision
We prefer to invest in local talent that has authentic local experience but has global ambition.
If we see an opportunity by a returning diaspora, we usually want to see at least two years since they’ve returned to Iran to show how serious they are. The risks of abandoning the local business are too high within the first two years. If it is under two years, we won’t invest.
Global Technology Entrepreneurship
The only place I observed real authentic energy flow was among a rare subset of technology entrepreneurs. These are either the ones who design their product to be global from day 1 or the naive ones.
The naive ones are not easy to work with. It takes a lot of money to shape them into global forces.
On the other hand, working with the ones who design their product to be global from day 1 is joyful. Their companies are capital efficient, their attitudes are charming and positive and their teams are hungry. They are foolish to think that they can be global but at least they are trying! They have real entrepreneurial spirit. They are motivated by something other than reward. It could be duty or love.
I’m working with a few such entrepreneurial teams. It is our mission to do whatever we can do empower these entrepreneurs. Easier said than done though!
This is the eighteenth in a series of posts about our investment criteria and ecosystem resources which was also posted on LinkedIn. We’d love to hear from teams with crazy (but commercial) startups. Get in touch or attend our breakfast series. Finally, don’t forget to get your IV Score to prepare for your next VC meeting.
