Tag Archives: entrepreneruship

Changing the Rules of the Game: Crowdfunding and Entrepreneurship

Crowdfunding has taken the cyberspace by storm. Through platforms such as Kickstarter or Indiegogo, innovators can pitch their ideas and like-minded individuals around the world are able to come together to pool their resources toward a specific goal. Crowdfunding advocates say it is an entirely new model that goes beyond traditional types of investment — but regulators do not always agree.

From non-profit causes to art projects, crowdfunding has been a powerful force. But in the U.S., and in many other countries, it encountered a serious barrier when it comes to supporting small businesses and entrepreneurs: 80-year-old securities laws which made it illegal to publicly solicit money from unaccredited investors. As a result, Americans could use their money to help entrepreneurs in developing countries through platforms such as Kiva.org but were unable to invest in their local restaurant or gym.

Even though there are, in theory, many sources of funding available to such small businesses, in practice banks are often reluctant to lend to them and angel and venture capital options are also limited outside of fast growing sectors such as IT. This made changing the antiquated law an imperative. But how to do it? The story of how crowdfunding became legalized in the U.S. is the story of how 3 guys changed the rules of the game in 460 days.

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Signs of dynamism in Pakistan’s chambers

CIPE staff with leaders of the Islamabad Women's Chamber of Commerce.

Having done a quick tour of Pakistan, I came away with encouraging signs of a hopeful future. Certainly I’m leaning towards optimism, given the country’s serious challenges in law and order, governance, and energy. Really though, I met some remarkable people and was charmed by the beautiful old city of Lahore. Here are some hopeful signs from the chamber movement.

The Peshawar Women Chamber of Commerce and Industry, registered in 2010, has recruited 150 paying members. Its secret seems to lie in networking and media relations. Likewise, the Islamabad Women Chamber of Commerce and Industry is now up to 150 registered members and is looking outward to rural areas. It shows a strong member focus with monthly member meetings and monthly exhibitions. These are two among a movement of eight women’s chambers established since legal changes in 2006 allowed women entrepreneurs such freedom. The Lahore Chamber of Commerce and Industry, too, has found women business owners to be a pool for recruits, now having 450 women members.

Some chambers are reinventing themselves, notably the Rawalpindi Chamber of Commerce and Industry (RCCI). After attending CIPE’s secretaries general conference, Secretary General Irfan Manan Khan was inspired to establish an R&D center for members and an information resource center. He’s also introduced simple changes in member relations—he claims it’s “not rocket science”—that have set a record rate of member renewals and pushed the chamber’s membership above 4,000 members. The communication tools employed are indeed simple (SMS, email, online chat); more fundamental is RCCI’s member focus that is producing results.

The Islamabad Chamber of Commerce and Industry (ICCI) has taken a special interest in entrepreneurship, investing in an Entrepreneurship Development Center  This is in part an outgrowth of earlier CIPE work with ICCI on the advancement of youth policy. This November, ICCI will be diving in as a leader in Global Entrepreneurship Week to inspire a new wave of entrepreneurs.

All the chamber leaders whom I met unanimously expressed their appreciation for CIPE’s annual chamber conferences for presidents and secretaries general. Not only are these fora unique in Pakistan, the presidents’ conference (PDF, p. 7) organized with RCCI has produced a joint stand on common policy challenges. This led to unprecedented negotiation on tax policy with government and may be a harbinger of future key reforms.

My apologies to all the first-rate chamber leaders I met whom I haven’t mentioned. I thoroughly appreciated the opportunity to peek inside the operations and innovations of each chamber.