Defining Entrepreneurship in Nepal

Matthew Carney - Ross School of Business and School for Environment and Sustainability

One of the most eye-opening aspects of working with entrepreneurs in emerging markets like Nepal is the degree to which the very concept of entrepreneurship differs from what is taken for granted in the United States. In America, most startups follow a familiar game plan; identify a robust market, disrupt existing firms by offering new services, scale up efficiently to maximize market share, and ultimately try to go public or get purchased by a larger competitor. Having spent six weeks working with energy entrepreneurs in Nepal, it is already clear how foreign this concept of “entrepreneurship” can be. In particular, this manifests in three distinct ways.

First, the basic infrastructure that undergirds our domestic economy is often taken for granted. For example, the CEO of a new software or direct-to-consumer apparel company will know they can count on ubiquitous internet access and expansive highway system to deliver those products. Local entrepreneurs in emerging markets have no such privileges.  When considering potential targets for decentralized solar power systems in Nepal, the realities of limited infrastructure not only hinder the entrepreneur but also the customer.

Secondly, entrepreneurs in emerging markets tend to rely on partnering with nominal competitors much more than those in the US. While most startups in America focus singularly on expanding and protecting their market share at the expense of their competitors, resource limitations in developing countries necessitate collaboration. Given how many people simply don’t have access to the market, working together connect with potential customers is worth the effort even when each company’s individual market share is diminished.  

Both of these factors are evident in the different approaches taken to scaling. American startups are often judged by their ability to add customers and increase revenue while keeping their marginal costs low. For example, it won’t cost twice as much to run a social media app with one million users as one with half a million. For energy entrepreneurs in emerging markets, however, each project must be profitable on its own and costs largely correspond to earning potential. Given the limits this imposes on startups’ potential profitability, it can make it much more difficult for entrepreneurs to attract outside investment - limiting their prospects from the outset.

The stark difference in constraints and opportunities between American and Nepali startups provides a learning opportunity for entrepreneurs of all stripes. It is an important reminder that the skills that makes an entrepreneur successful in one context may not be applicable in another.