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Building Entrepreneurial Ecosystems That Thrive

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Wednesday, October 15, 2025
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How business schools can stop chasing Silicon Valley “unicorns” and instead cultivate “acorns” into diverse and sustainable entrepreneurial communities.
  • The Silicon Valley model of entrepreneurial ecosystem development—focused on rapid scaling and billion-dollar valuations—often creates fragile monocultures that struggle with economic shocks.
  • The Acorns-to-Oak-Trees (A2OT) framework offers a sustainable alternative, emphasizing four design principles that support venture diversity, adaptability, and long-term resilience.
  • Business schools can lead this transformation by teaching ecosystem design as a core competency and partnering with local stakeholders to build habitats that are hospitable to entrepreneurship development.

 
“Stop emulating Silicon Valley,” Daniel Isenberg, a professor of entrepreneurship and former venture capitalist, warned in a  back in 2010. Fifteen years later, that advice feels more urgent than ever. From Singapore to Sydney, policymakers and educators still spur venture creation by drawing on hallmarks of the Silicon Valley formula: 12-week accelerator sprints, demo nights, and metrics of success based on how much capital is raised rather than how many ventures endure.

The results are telling. In too many instances, we’ve —entrepreneurial ecosystems where founders are exhausted and talent is bottlenecked. If regions are too reliant on these ecosystems, local economies can even buckle when the latest tech trend cools. The  confirms this fragility by demonstrating the Silicon Valley Economic Model is built on highly interdependent components, making it vulnerable to cascading failure when a primary element declines.

Such monocultures arise from what I call “the unicorn problem.” This happens when governments, universities, and other regional institutions design startup “habitats”—ranging from accelerators to incubators—that favor a small number high-value companies over a collective of smaller ventures pursuing slow and steady growth.

The factors underlying this problem aren’t motivational—they’re structural. And as business schools, we have a unique opportunity to change this narrative. We can teach and guide future ecosystem builders to think like habitat stewards, not unicorn hunters.

From Metaphor to Method

The Acorns-to-Oak-Trees (A2OT) framework provides the answer. I developed A2OT using design science—I describe the framework and its creation in more detail in a  published in the Journal of Business Venturing Insights. The framework embeds principles related to ecology and sustainability—such as long-term adaptability, inclusivity, and resilience—directly into entrepreneurial ecosystems.

This method relies on four interconnected design principles:

First, it requires a diverse seed bank that encourages variety in entrepreneurial types—lifestyle businesses, social enterprises, Indigenous ventures, and traditional startups. Like natural ecosystems, entrepreneurial communities need biodiversity to withstand shocks.

Second, it provides nutrient-rich soil, in the form of specialized resources for different growth models. These resources include for steady-growth ventures, revenue-based financing for community-focused businesses, and traditional venture capital for high-growth startups.

Colorful graphic with four circles at top, bottom, left, and right, all joined by arrows flowing to and from each other. The top blue circle has the words "Diverse Seed Bank," which flows to and from the lime green circle at the right with the words "Nutrient-Rich Soil," which flows to and from the dark teal circle at the bottom with the words "Ecosystem Maintenance" which flows to and from the orange circle at the left with the words "Supportive Climate," which closes the loop to flow to and from the "Diverse Seed Bank" circle. All four have arrows pointing to the center, which reads "Transformed Startup Ecosystems for Sustainable Growth"

Third, it creates a supportive climate, where institutional structures legitimize diverse forms of success and develop metrics beyond those that prioritize unicorn creation. This climate celebrates companies that, , “choose to be great instead of big.”

Finally, it conducts ongoing ecosystem maintenance via established activities that sustain the system’s functions through continuous learning, adaptive governance, and iterative feedback loops.

The Business School Opportunity

Business schools educate future policymakers, investors, and leaders of support organizations, which puts them in the position to lead this transformation. Here’s how business schools can integrate A2OT thinking:

In the classroom. In entrepreneurship courses, we can move beyond the startup playbook to teach ecosystem design as a core competency. Students should understand how to cultivate diverse venture types, not just how to launch high-growth startups.

In public administration courses, we can encourage relevant policy and economic development by incorporating the topic of ecosystem sustainability into the curricula. Future policymakers need frameworks for building resilient entrepreneurial communities.

In entrepreneurship courses, we can teach ecosystem design as a core competency. Students should understand how to cultivate diverse venture types, not just how to launch high-growth startups.

In research. Business schools can conduct longitudinal studies tracking diverse venture types beyond unicorns, documenting how lifestyle businesses and social enterprises contribute to ecosystem health. Faculty can develop new metrics that measure entrepreneurial success across multiple dimensions—financial returns, community impact, and resilience.

Schools can also establish research partnerships with ecosystem organizations to evaluate which support mechanisms work for different venture types, creating evidence-based best practices.

Through community engagement. Business schools can partner with local ecosystem builders to implement A2OT principles by redesigning accelerator selection criteria to include diverse venture types and developing specialized mentorship programs for different growth trajectories.

Schools and their partners also can create recognition systems that celebrate varied forms of entrepreneurial success and establish feedback mechanisms to continuously adapt ecosystem support.

A System Based on Adaptation

What makes A2OT different is its dynamic, systems-based approach. The four design principles operate through feedback loops that enable continuous adaptation.

When diverse ventures demonstrate success, resource providers can modify their offerings based on each venture’s trajectory. Each success story will influence institutional narratives, which in turn will encourage more diverse entrepreneurship. Ongoing maintenance activities will ensure this virtuous loop stays healthy and responsive, sustaining the ecosystem for the long term.

In addition, the A2OT framework provides specific action levers for different stakeholders:

  • Policymakers design incentives supporting varied entrepreneurial paths and create ecosystem health metrics beyond high-growth ventures. They also ensure that regulatory frameworks accommodate diverse business models such as  and cooperatives.
  • Investors expand investment criteria to include steady, sustainable growth ventures and develop expertise in evaluating different business models with longer time horizons.
  • Support organizations form industry-specific communities of practice, create platforms showcasing diverse success models, and develop specialized resources for different venture types.
  • Educational institutions integrate curricula on varied entrepreneurial paths and expose students to diverse role models beyond tech unicorn founders.

By design, A2OT transforms ecosystem development, moving away from an emphasis on discrete interventions toward an adaptive, living process that evolves with changing conditions.

The Design Science Advantage

The A2OT framework exemplifies how business schools can bridge the theory-practice gap through design science, which enables them to focus on artifact creation rather than just theory development. The design science methodology’s iterative cycle—problem identification, literature synthesis, artifact development, real-world testing, and insight extraction—ensures that academic rigor serves practical relevance.

A2OT does not simply explain how entrepreneurial ecosystems work—it shows stakeholders how to build them better. This represents a fundamental shift from knowledge about the world to knowledge for the world, with an emphasis on effecting positive change.

The question isn’t whether entrepreneurial ecosystems should be more sustainable and inclusive. The question is how quickly we can make that transformation happen.

At RMIT University in Melbourne, Australia, for example, this approach aligns with our  vision. We support this strategy through our eight , which are designed to rapidly bring together transdisciplinary research teams with external partners to address complex problems. We realize this strategy by transforming academic insights into practical solutions that create real-world impact. Other business schools can adopt similar approaches to demonstrate clear pathways from research to societal benefit.

By doing so, they will address growing demands—from funders, accreditors, and institutional leadership—to demonstrate measurable impact.

A Call to Action

Business schools that implement A2OT principles can reap long-term benefits, but they also can face real short-term challenges. Established ecosystems might resist supporting alternative venture types, and resource-constrained regions might struggle to provide diverse funding mechanisms. Cultural contexts that favor high-growth models could need time to embrace broader success definitions.

Business schools can address these challenges in targeted ways. For example, they can overcome resistance by building evidence of the benefits of diverse ecosystems and by developing metrics that capture more varied indicators of value creation. They also can train students to navigate the political and cultural dimensions of ecosystem change.

The time has come to move beyond Silicon Valley envy. As business educators, we can shape how future leaders think about entrepreneurial ecosystem development. We can teach them to embrace a different metaphor to guide startup creation: cultivating resilient forests of ventures rather than hunting for mythical unicorns.

The A2OT framework provides a starting point, by translating ecological wisdom into practical ecosystem design. But any framework is only as good as its implementation. We need business schools that are willing to experiment, support research that validates approaches, and form partnerships that put these principles into practice.

The question isn’t whether entrepreneurial ecosystems should be more sustainable and inclusive. The question is how quickly we can make that transformation happen. Business schools, with their unique combination of research capability, educational reach, and community influence, are perfectly positioned to lead the way.

The future of entrepreneurial ecosystem development won’t be written in Silicon Valley boardrooms. It will be shaped in classrooms, research labs, and community partnerships where we dare to imagine something better than the unicorn chase.

Are you ready to help plant those acorns?

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Authors
Timothy Hor
Assistant Professor in Management and Technology, School of Management, RMIT University, and Fellow, Center for Design Science in Entrepreneurship, ESCP Business School
The views expressed by contributors to ӣҵ Insights do not represent an official position of ӣҵ, unless clearly stated.
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