The Co-optation of Entrepreneurship: How Power Absorbs Disruption in an Undemocratic World

Esra Talu, Founder & CEO of GoGlobal, explores how co-optation—when power absorbs disruption—reshapes entrepreneurship in undemocratic systems.

At GoGlobal, we work closely with founders navigating complex markets. This article explores how co-optation—when power structures absorb and neutralize disruption—is shaping entrepreneurship worldwide, from emerging markets to advanced economies.

What Co-optation Looks Like in Practice

Co-optation occurs when disruptive energy is absorbed by existing powers—neutralizing its potential to transform. In politics, this means opposition leaders are pulled into the ruling structure. In business, it means entrepreneurship is steered—or stifled—by those with proximity to power.

• Egypt: Military-linked businesses dominate procurement and resources, diverting capital away from the private sector. Independent entrepreneurs struggle to access markets.

• Türkiye: Exemptions to procurement laws and preferential tenders give a small group of politically connected firms disproportionate access to megaprojects.

• China: The crackdown on Ant Group, Didi, and other tech giants showed how quickly political directives can redraw the boundaries of entrepreneurship.

• Global Cronyism: The Economist’s Crony-Capitalism Index reveals that in many countries, billionaire wealth is concentrated in state-dependent sectors, such as construction, finance, and energy.

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Bottom line: When contracts, licenses, and funding depend on political favor, the startup ecosystem cannot grow independently.

Is the U.S. Immune? Not Quite.

The U.S. still enjoys deep markets and strong legal protections, but two trends echo emerging-market dynamics:

1. Executive intervention in business decisions has raised alarms among mainstream business groups, who warn about erosion of rule-of-law predictability.

2. Policy-driven capital allocation—like anti-ESG laws in states such as Texas—has distorted finance, raising borrowing costs and making political loyalty a business variable.

Add historically high partisan polarization, and you get a quieter form of co-optation: firms self-censor or avoid ventures likely to trigger political backlash.

Why Northern Europe Keeps Punching Above Its Weight

Contrast this with Nordic countries, which consistently rank as “full democracies” in the Democracy Index and appear among the highest in the Global Innovation Index. Stockholm, for example, leads the world in unicorns per capita.

What makes the difference?

• High trust and pluralistic institutions

• Rule clarity and transparent markets

• Social safety nets that encourage risk-taking

These conditions lower the cost of failure and reduce the power of gatekeepers—fertile ground for independent entrepreneurship.

The Emerging-Market Pattern—Now Global

• Emerging markets: State-favored conglomerates dominate tenders, capital, and exits, pushing startups to sell out early.

• Middle East: With executive authority concentrated in one leader, rules can change overnight. Sovereign funds and state-linked capital dominate deal flow.

• India: The Adani saga illustrates how political proximity risk is now priced directly by markets.

Wherever authoritarian capitalism rises, independent entrepreneurs are crowded out by politically connected insiders.

How Founders Can Survive Co-optation

1. Jurisdictional strategy: Incorporate in rule-of-law hubs (Delaware, UK, Singapore) while operating locally.

2. Cap table hygiene: Diversify investors; avoid dependence on politically exposed groups.

3. Revenue resilience: Limit reliance on government contracts; keep a private-sector beachhead.

4. Governance armor: Strong boards, shareholder agreements, and neutral arbitration clauses.

5. Operational portability: Cloud redundancy, escrowed builds, and global vendor networks.

6. Transparency as protection: Clean audits and public metrics make retaliation costlier.

7. Diaspora & global networks: Tap international accelerators and investors to bypass local patronage.

8. Collective advocacy: Work through neutral industry bodies for fair rules.

9. Strategic positioning: Align with global priorities (climate, digital productivity) rather than rent-heavy sectors.

10. Exit optionality: Architect for international M&A, secondaries, or revenue-based finance—not just politically tied buyers.

    
    

Why This Matters

Authoritarian capitalism may deliver impressive growth statistics, but it narrows the space for true entrepreneurship. Startups risk being turned into tools of power, not challengers to it.

If we care about entrepreneurship as a democratizing force—not just GDP growth—we must resist the pull of co-optation. That means protecting independent founders, building resilient ecosystems, and ensuring entrepreneurship remains a path for systemic change.

✦ At GoGlobal, we help founders navigate complexity and safeguard their independence while scaling across international markets. If you’re building under these conditions, let’s connect.