In recent years, the Government of Malaysia has been taking proactive steps to build a strong infrastructure for the Malaysian entrepreneurship scene. The development of a strong and sustainable startup ecosystem is considered to be a key economic driver for the nation to remain competitive in the global landscape.
MaGIC (Malaysian Global Innovation and Creativity Centre) was launched on the 27th of April 2014 by President Barack Obama and Prime Minister YAB Dato’ Sri Mohd Najib Tun Abdul Razak. Since the birth of MaGIC, there has been a significant number of entrepreneurs benefiting from the programs and initiatives offered by the Centre.
Startup Commons was invited to host a workshop at MaGIC on building digitally connected and data-driven startup ecosystem. The workshop supported the mission to catalyze the entrepreneurial ecosystem in Malaysia by introducing key stakeholders of ecosystem development to the framework targeting various activities and measuring the impact of these activities, and also providing better understanding of the relations between different areas.
"The workshop participants found useful insights on the architecture of startup ecosystem around the world, that will be useful when building similar ecosystem for Malaysia. On the other note, participants learned on designing program and platform that is data and KPI driven, allowing us to achieve result with higher effectiveness." MaGIC
The workshop generated great interest from the participants. We at Startup Commons hope that tools provided and skills learnt at the event will contribute to strengthening the entrepreneurship community.
With a view to build a sustainable long-term partnership, Startup Commons top-level people met with several organisations in Malaysia to get a better understanding of local startup ecosystem, its challenges and opportunities. These are major stakeholders in building robust startup ecosystem:
Malaysia is definitely placing great importance on the development of its digital economy as it will be a key pillar of its current and future economic growth and MDEC, has taken the mandate to look at the Digital Economy of Malaysia in a more holistic manner, involving also other agencies that are playing a relevant role.
Many of these agencies have the mandate to become more self sustainable, having already initiated a transition to reduce public funding dependency towards self sustaining agency operations. This direction requires “business-minded” people leading and operating these agencies and therefore, even more special focus on measurement-driven, efficiency and results as the only way to improve.
In the context of startup ecosystem, different agencies agree on the need to bring more networking, collaboration and connectivity amongst them and while offline activities already "get it", - digital is no different and it should reflect that: interactions, service processes, service development, ecosystem management, etc. Therefore, there’s initial common vision and good starting point to explore a digital approach aimed to bring more digital connectivity to all parties involved so that information can flow horizontally to reach other organisations, as well as measurability and scalability to make life easier to all actors for best navigation within the startup ecosystem.
Startup Commons team has been invited to build a piloting project proposal, with main objective to initiate data and KPI’s -driven approach by data collection and metrics implementation in order to become more efficient in end-to-end perspective (user, operative and decision making level). The piloting project itself will be a big opportunity for Malaysian agencies to understand this digital startup ecosystem infrastructure that will bring more synergies to boost productivity, competitiveness, and resilience.
A startup ecosystem is an immense source of data: just think for a while all type of possible interactions amongst the different players. Every entrepreneur, team member, mentor, investor, service provider, community, startup event, pitching competition, incubator, accelerator, platform, even our favourite place to grab a coffee with our team generates impactful data: numbers, words, tags, audio, videos, photos, geocodes, etc. Everything in real time.
Most advanced startup ecosystems in the world with their governments at the forefront have begun to become aware of such vast of data as a high value asset for overall goals of efficient government, public safety, but also to change how government operates for the benefit of all and in the context of startup ecosystems, how it can be used to generate more effective policies to serve startups in the most effective ways possible to facilitate innovative companies development, bring more economic development and make cities and countries more prosperous. This is also something that even few early stage startup ecosystems like Ho Chi Minh City, in Vietnam, are seriously planning as they have understood how it will help a city or country to “skip a generation” of trying to only build or grow traditional “offline” models to support entrepreneurs, innovation or startups and that by moving towards the digital side, they will accelerate the pace of growth.
This is a journey with no turning back and an ongoing challenge, which begins by:
Certainly, many cities everywhere see the potential of data and analytics to develop their startup ecosystems, like for example Malaysia is doing by putting in place Adax, an initiative by MDEC to enable businesses, governments, academia and professionals to rapidly adopt Data Analytics as a tool to empower decision making and innovation. But at the same time there is a natural fear to initiate this journey to firstly collect data and then turn data into knowledge to later put knowledge to work for the sake of the startup ecosystem growth. That’s the goal: make your startup ecosystem more intelligent.
Implementation requires to work at multiple levels, from grassroot to decision making level but as it happens in most of data-driven projects, one key component of its success depends on solid infrastructures and when it comes to data-driven startup ecosystems, it is mandatory to have an infrastructure (both offline and online) that reflects a deeper understanding as well as holistic view of startup ecosystem development. Startup ecosystems are about networking, collaboration and connectivity, and while offline infrastructures get it, - digital is no different and should reflect that: interactions, service processes, service development, ecosystem management, etc.
To gain that holistic view, the startup ecosystem should gather data not only from the public supporting services and programs but also from private side so therefore private sector data is key to changing policy to support entrepreneurs, startups and innovation and therefore building public-private partnerships (PPP) is another key component in order to create more comfortable environments where public and private sector can operate together at different levels, causing more volume and variety of data that will enrich startup ecosystem analytics. Additionally, this PPP models should be built so that cities and countries own the data and not let them to hands of foreign government or some private businesses. At stake is nothing less than the future economic of your towns, cities and countries and the digital economic development is so important that it must be under own control.
This huge amount of data by itself is useless and the digital startup ecosystem infrastructure must process and store data in appropriate form (which data must be collected from the interactions among the different user roles of the startup ecosystem, frequency of data collection, accuracy of data, and are current databases suitable for collecting real-time data) to turn data into actionable information and, ultimately, knowledge, and then the startup ecosystem will be better positioned to respond and be more efficient in all levels.
Data will only deliver value to the whole startup ecosystem, if it is translated into specific improvements tracked by traditional KPIs such as company birth rates, company death rates, rate of high growth firms (based on employment growth), rate of high growth firms (based on turnover growth), survival rates at 3 and 5 years, net job creation, job quality, volume of deal flows, and valuation of startups, which are very important to answer questions like what innovation is happening in sector x, y, z, at what phases the startups are, what is the ROI of innovation support services, where to invest to further improve and accelerate, what startups to promote, showcase to global investors, etc. The real challenge comes, when you wonder, what are the operative sublevel indicators that contribute the most to these traditional KPIs and this is where the digitalisation process fits for producing, collecting and analysing real primary data to match those supporting organisations, services and activities that produce more funding attracted, big investments, more exits, more disruption and eventually more economic development.
The good news are that no matter where you are on your startup ecosystem maturity level, the first step is to evaluate your status and to begin to plan for the future and there’s no doubt that future will be digital.
Startup Commons announces its digital startup ecosystem infrastructure goes mobile with fully responsive user interface
Mobile World Congress, Barcelona – February 28 – Startup Commons has released the latest versions of its Digital Ecosystem Infrastructure with full support for mobile front-end services.
Digital Ecosystem Infrastructure (DEI), the core element of the overall Startup Commons Digital Solution, is an ecosystem management software built specifically for startup ecosystems to automate back office functions connected to user facing front office functions - a suite of integrated modules, applications and views that national, regional and local governments and economic development organization use to collect, store, manage, visualize and analyse data from their startup and entrepreneurship ecosystem activities.
“We see increasing demand for our digital startup infrastructure platform, when most of countries, cities and regions plan, how they can better support and develop their growth company and SME ecosystem and also better measure the results and use of money,” commented Óscar Ramírez, Startup Commons CEO today in Barcelona. He continues “Today we announced a support to build mobile front-end services, for example, manage and participate in startup events locally, share and find information and use the local services for entrepreneurs and startups. Mobile services are an important part of startup infrastructure services especially in our fast growing Asian market.”
Ecosystem Explore is module of the DEI to provide "one-stop-shop", of real-time information about ecosystem startups, events, services and support organizations directly from DEI database. To visualize the pulse of startup ecosystem functions by startup development phase, location, type and time to help manage connections between all stakeholders. Now this module can be used also in mobile.
More information on Startup Commons Digital Ecosystem Infrastructure on
About Startup Commons
The Startup Commons Digital solution is designed and built from the ground up to serve startup ecosystems - to automate and connect back office functions like community management, CRM, reporting and analytics to user facing front office functions like events, forums, social networks and communications. Startup Commons customers are, for example, national and regional economic development organizations, universities, corporates and entrepreneurship programs in Europe, Asia and North America. Startup Commons is headquartered in Helsinki, with offices in the US and Asia.
CEO Óscar Ramírez
+34 656 180 880
After hosting the Startup Ecosystem Development workshop and receiving positive feedback from our guests, we would like to share with our readers the knowledge and success stories we gathered from presenters and visitors.
The workshop was a one-day event during SLUSH festival in Helsinki, it attracted interest on global scale: the guests came from 9 countries in Europe, South America and Asia and various business areas, including policy makers, platforms and API developers, professional services, multinational corporation and startup communities (incubators, accelerators and hackathons).
The idea behind hosting such workshop was to introduce key stakeholders to ecosystem development framework that helps in targeting various activities and measuring the impact of these activities, and also assist in better understanding the relations between different areas.
Despite having limited time to cover such a vast concept, the workshop speakers from Startup Commons and Resolute HQ introduced guests to Ecosystem Development process from the ground up:
To showcase practical applications of the theory, we had several inspiring presentations from the companies already working (and succeeding) in this space:
Additionally, big number of practical materials and tools were provided during and after the workshop.
We would also like to say thanks to our esteemed partners – EY and University of Helsinki / Think Company for their excellent assistance during the workshop, as well as for City of Helsinki, Head of Unit, Tommo Koivusalo for the kind words and encouragement for shared efforts that systematic development of vibrant Startup Ecosystems requires.
The video streaming was not provided at the event, but we highly recommend to watch this video of Valto Loikkanen presenting at DOKU: TECH 2016 on “Raising ecosystems from the ground up”.
From talking to our guests it became obvious that ecosystems and their development have become an urgent topic in many parts of the world. That is way we are taking on an ambitious goal for 2017 to host 12 workshops around the world. We welcome all stakeholders who are wishing to collaborate on various areas for such event (place, coffee, food, communication, etc.). The concept and main themes for the workshop can be found here. Please get in touch to discuss opportunities for partnership!
And for the readers, keenly interested in the subject, we provide detailed excerpts from the workshop on specifics of ecosystem development.
2017 promises new innovations and closer collaborations among various agents to bring these innovations to life, so don’t hesitate to contact us to discuss how you can contribute to growing successful startup ecosystem in your region!
Billion dollar startups are emerging faster and faster. Given innovative startups’ critical role in the information economy, the importance of healthy startup ecosystems only stands to increase in the future, being this the reason why local, regional and national governments across the world are establishing programs to support tech entrepreneurs in an effort to stimulate economic growth and job creation.
One quite common starting point to connect, support and grow a startup ecosystem is by mapping it in order to know what is going on in the startup ecosystem, who are doing what and why, where and when are things happening or how different parties can "get in on it". Some relevant reference cases related to that are Berlin Startup Map, Mapped in Israel or Digital NYC to name a few.
However, usually in this type of cases there’s an important speed gap between the showcased information and real startup ecosystem activity that generally becomes into outdated and inaccurate information for all user roles within the startup ecosystem, generating a lot of frustration.
The main reasons behind that result are:
Therefore, the level of maintaining the basic information and improving quality and completeness of the information becomes "continuous effort to sustain", so more systematic and sustainable solution is eventually needed.
Countries like Vietnam are implementing digital backbone to digitally connect and visualize Vietnam startup ecosystem functions to stimulate further innovation in its emerging tech scene with the objective to collect, maintain, distribute, showcase and use vietnamese startup ecosystem information on real-time to benefit all parties involved.
This Digital Ecosystem Infrastructure solution has the architecture to connect these manual mapping efforts with systematic approach to get primary measurable data from the startup ecosystem and one key component connected to this digital infrastructure via API's is the ecosystem view module that can showcase all the information and resources of cities' digital economy in one place, visualising the pulse of startup ecosystem functions by startup development phase, location, industry, time, etc. helping people and startups find the right services and connections at the right time and also helping public & private sector decision makers and service providers target their services to the specific needs of the startups and other ecosystem actors.
This ecosystem view provides access to tools, services and support needed to turn ideas into real businesses, including:
Additionally, from local/national economic development or innovation agencies as well as supporting organizations perspective, the ecosystem view module turns the collected information into actionable knowledge to improve and redesign existing programs, services, funding schemes, etc or to create new ones as fast as possible, getting for example:
Overall, this digital ecosystem view simplifies things and makes the startup ecosystem more transparent and all parties can get more benefits from them. Additionally, by just adding startup development phases layer, it provides the right services at the right time. This alone is valuable for the future. The digital ecosystem approach is all about better access, transparency and efficiency. This, along with the statistical data that this it generates, leads to accelerated development of all areas it spreads to and effectively connects a city or country with the new digital finance world.
In addition to the digital solution and architecture, another key component is the shared source licensing model, mainly developed for public sector constraints and known challenges, allowing them to get access to source code to give them full freedom to develop any adjustments, functionalities, new features etc. as they like either with existing or external development resources. Parallely, as we are working globally with other cities and countries and building everything under the same technological infrastructure,whenever a city develops a new functionality, it becomes available at no cost to the rest of cities, which drives down everyones new development associated costs. Also, there is no vendor lock, being able to keep the full software and freely continue to develop it further as independent software.
If you want to explore how this digital solution fits on top of the work you are doing now to support startups and innovation to go further with what you’ve got, then contact us to organise a workshop to take your startup ecosystem to the next level.
Vietnam has a huge young population that is very active on internet, mobile and with highly national enthusiasm for technology, startups and entrepreneurship, and as a result, vietnamese startup ecosystem is rapidly growing in cities like Ho Chi Minh, Hanoi and Da Nang, aiming to become a modern industrialized state by 2020.
In order to achieve that, the national government has planned to develop a functioning national innovation system, fostering its startup ecosystem and supporting the growth of innovation via Startups and SME's. The project has set the following targets for 2020:
Complete the main legal framework for a startup ecosystem; run an online portal for the National Innovative Startup Ecosystem; support about 800 startup projects and 200 startup enterprises, of which 50 will raise follow-on investment from private venture investors or will undergo mergers and acquisitions worth about 1 trillion VND (about 50 million USD). By 2025, the project is expected to have supported 2,000 startup projects and 600 startup enterprises, of which 100 will have raised follow-on investment from private venture investors, or will have undergone mergers and acquisitions worth about 2 trillion VND.
One key actor to support these goals is the Innovation Partnership Program (IPP), that is an Official Development Assistance (ODA) program financed jointly by the Governments of Vietnam and Finland. IPP has been supporting the project draft “National Program to Support Innovative Startup Ecosystem in Vietnam by the year 2025” by working with policymakers.
One of the identified top priorities along with the national government is to get in place a solution to enhance partnering, online information sharing, matchmaking, communication and benchmarking to mention. All of this should be done in a global context reaching out international innovation and startup networks.
Problem to solve
One of the key challenges in this work is to maintain a holistic picture of the constantly developing and evolving ecosystem and measure the results of different actions and sub projects and to share these openly for the benefit of everyone in the ecosystem.
Digital online services and solutions play a key role in scaling knowledge sharing and training functions, as well as to increase reach, accessibility and transparency of many of these service functions. Several actors within the ecosystem have identified online solutions as important element to bring reach, efficiency and scale to their services and for most basic online tools, like newsletters, event management, community management, application management, CRM etc. are crucial part of their basic operations. At the same time new talent, potential innovative startups, business angels, mentors, etc. are expecting to get all relevant information online and on time.
Due there is usually no single enabling or coordinating party taking holistic responsibility of the complex digital and online aspect of the ecosystem connectivity and development, the digital aspect of the ecosystem thinking and development leds this key dimension to be overlooked, and as a result, online presence and functions remain disconnected and siloed within the ecosystem. It’s also common that this problem is usually identified only at much later stage of the ecosystem maturity. After the ecosystem thinking have already spread in other cooperative levels and cooperative activities have really started to work, as that is the natural time when the sharing of the information related to mutual coordination, connecting service processes etc. are happening. At that point the problem with disconnected services and processes starts to be identified, along with realization to start harmonizing terminology and KPI’s of similar service functions across startup development phases.
Also typically at later ecosystem maturity level, it becomes more difficult to start replacing and connecting various existing digital tools, due software limitations, software license agreements in place, wanting to use familiar tools already in use etc., than it would be to have been able to start this connectivity thinking at the earlier ecosystem maturity level.
When the online and digital tools are considered and designed with more holistic ecosystem thinking and implemented and coordinated alongside with other ecosystem enabling and development actions, it is possible to avoid facing many of the problems later on and instead use the digital side to speed up the ecosystem development - and best scenario, to help a new or early maturity ecosystem to “skip ahead” several years of development.
Startup Commons team, due to our proven international track record on startup ecosystem development, supporting tools and holistic digital ecosystem solution used by ecosystems, was selected to carry out this national pilot project.
The collaborative work for Vietnam digital ecosystem is being conducted step by step in very transparent manner to achieve consensus and solid progress within the key stakeholders of innovation ecosystems and it has been splitted into three different phases:
From phase 1 in June, two weeks full of meetings, workshops and one-to-one discussions with local/national public and private players in the vietnamese ecosystem, some outcomes deserve to be highlighted:
As we are moving to actual pilot phase to implement digital ecosystem solution in Vietnam context, by setting up the base version with geographical scoping in Da Nang, Hanoi and Ho Chi Minh ecosystems, along with Vietnam national ecosystem to showcase these local startup ecosystems and Vietnam as a whole also for further deployments, implement related communication framework and roles to support the platform at core level, define needed key operative roles needed to support the development and management of the different ecosystem functions at different levels, train and empower local teams and people to key roles to take “ownership” of the key functions, showcase how platform implementation and different development tracks can be managed to further accelerate the progress, and support in finding a good balance for PPP (Public Private Partnership) regarding the digital platform in different cities going forward. And eventually, to pass on the ownership and core responsibility of the platform the logical entity, entities or consortium to conclude the pilot phase.
The progress of the Vietnam Digital Ecosystem pilot will be followed closely on our blog.
If your city or your country has a current action plan in place to support entrepreneurship, startups, innovation and you want to enhance the use of data and evidence to improve startup supporting services, inform local decision-making and engage all key players that are part of the startup ecosystem concept, contact us and let's get started.
The role of technology startups in our global economy has never been more important. Startups may seem insignificant compared to large multinational companies that have trillions of dollars of wealth sloshing around in public markets, but a Kauffman Foundation study found that the majority of job growth in the United States is driven by technology startups. The power of information technology has been steadily increasing for the last three decades and has recently reached a level of maturity that has started to trigger a reorganization of the global economy. It has never been easier or cheaper to create a startup thanks to infrastructure like open source software, software as a service, cloud hosting, globally ubiquitous payment processing, viral distribution channels, real-time collaboration, on demand logistic services and hyper-targeted advertising.
As a result, the pace of change is speeding up and the implications of this are immense. Billion dollar startups are emerging faster and faster. Given the innovative startups’ critical role in the information economy, the importance of healthy startup ecosystems only stands to increase in the future, being this the reason why local, regional and national governments across the world are establishing programs to support tech entrepreneurs in an effort to stimulate economic growth and job creation.
The City of Barrie has a strong entrepreneurial ecosystem background with key players like Invest Barrie, Henry Bernick Entrepreneurship Centre at Georgian College or VentureLAB. Its target is to make the transition from entrepreneurship to startup ecosystem and wants to encourage technology entrepreneurs to start and grow global businesses that will create more jobs, boost Barrie’s economy, strengthen global connections and make the city a more desirable place to live, work and visit.
Barrie’s tech startup ecosystem is in the very early stages of development and they face challenges like lack of volume factor, limited access to investment, key services and activities, as well as a framework in place to break with silo mentality and implement a holistic approach that can bring more connectivity, measurement and benchmarking to its startup ecosystem.
Initial two days kick off workshop to build mutual understanding of the current level of Barrie's startup ecosystem and services, to figure out what development and focus is required first and which parts of this development would benefit the most to begin with. This allows to then set a clear target and milestones, along with a specific plan, timeline and budget to reach the set target.
As part of running the workshop, the main covered steps were:
Startup ecosystem development is no longer a concept just for big cities. Smaller cities are making a step forward, leveraging their size to be not only faster and more flexible for coordination activities, decision making and services implementation but also to find the room to collaborate with other bigger startup ecosystems.
If you are planning to initiate similar transition or improve your current one, please take 30 secs to check here your startup ecosystem maturity level and then contact us for consultation.
Prime Minister Narendra Modi launched the ambitious ‘Startup India’ Movement to boost digital entrepreneurship at the grassroots level in India. Leaders from Silicon Valley to Japan participated in this grand event to foster entrepreneurship.
Japanese Telecom Soft Bank’s Founder and Chief Executive Masayoshi Son said that “India’s economy might surpass the US and China to become the world’s largest in the next three decades”.
TIE President Ram Reddy, Travis Kalanick Founder of Uber, WeWork’s Founder, Adam Neumann and several technology leaders witnessed the launch of this global movement.
Here are the highlights of the government's plan for startups:
· Credit guarantee scheme worth $1.5 Billion for startups in the next four years.
· Atal Innovation Mission to give impetus to innovation and encourage the talent among people
· Profit from start-ups established after April 1, 2016, to be exempted from Income Tax for three years
· No government inspection for start-ups for three years
· A regime promoting self-certification based compliance, including environmental regulation.
· Startup India Hub to be developed as a single point of contact.
· A mobile App to be launched to facilitate beginning a startup in one day. The App will have a small application form that can be easily filled for registration.
· Easier patent filing norms in the offing.
· Free patent filing planned. Patent fee reduced by 80 per cent.
· Relaxed norms of public procurement for startups.
· Faster exits to be facilitated for startups. Bankruptcy Bill to be introduced in parliament.
· Increased participation of women in startups.
· Tax exemption on investments above fair market value.
· Core innovation programmes in 500k schools.
At Startup Commons we are happy to see initiatives whose objectives are to help startups grow faster, create further job opportunities and attract investment. Most of these policies are pointed in the right direction. Nevertheless, we are intrigued to see how all of them are applied and through which policies or specific steps.
Taking into account the current maturity level in India’s startup ecosystem (early stage), one key objective would be to get the fundamentals right. This involves focusing on the beginning stages of the ecosystem, which are phases -2 to 0 range in the startup key development phases, and on how to improve the quality and volume of the committed founding teams with an aligned vision and high potential for innovation. In order to do that, the real challenge is to work closely with different cities and regions that have various dimensions —culture, environment, funding, innovation, talent, etc.— that have a strong impact on the pipeline.
Another important challenge is to find correlations between the pillars of the ecosystem (innovation, talent, entrepreneurship, support, money, growth) and dimensions (volume, quality, velocity, ROI) to maximize the number of innovative startups and future successes.
There are also specific questions that come to mind, which are directly related with the government’s proposal; for example, how is India going to increase participation of women in startups? Other points seem shadier, such as the “no government inspections in startups for three years”. Will that mean that basic labor rights will be overlooked? There could be many negative implications in that sense.
One single point of contact for the whole of India has positives. For instance, matching stakeholders (startups with investors, teams with entrepreneurs, research with innovation, etc.) would be easier and more efficient. In a country as big and diverse as India it might damage certain regions that were starting to develop their ecosystem in favor of others that are already more advanced and have better resources, but it would certainly foster healthy competition between cities and regions as well.
Therefore, DIPP’s vision for developing infrastructure for the startup ecosystem to connect all knowledge hubs, startups, investors and mentors for collaboration and growth is a positive advance, as network connectivity within and between the ecosystems is the single most important contributor to growth. However, time will tell how all aspects of the ambitious initiative pan out and if the infrastructure will be able to collect, produce and analyze data to introduce transparency and improvements to the whole ecosystem, as well as optimize the allocation of resources, revenue generation and benchmarking.
Connecting the dots always helps in nurturing talents, creating job opportunities and empowering economy. We look forward to see booming startup ecosystems in developing nations across Asia and how they create unique opportunities for the global economy. Are they going to get the fundamentals right? Will they be able to effectively connect their ecosystems and how will they measure it? All of these questions are part of measuring innovation and developing a high maturity level that can help in the effective use of resources.
Countries in Asia are now ambitiously competing amongst each other to develop their startup ecosystems and attract international investors. The implementation of the AEC is the ASEAN's most ambitious undertaking, and will boost the region's GDP by 5 percent by 2030, with Singapore benefitting the most as a percentage of GDP growth, said HSBC Global Research.
It will offer opportunities in the form of a huge market of US$2.6 trillion and over 622 million people. Southeast Asia is buzzing with global investors and has gathered attention around the globe, with most technology companies having a regional HQ in Singapore to take care of their entire Asian market.
In addition, assets managed by private equity and venture capital fund managers in Singapore are valued at around $28.3 billion, with venture capital being US$1.8 billion of that total for 2014.
Governments across Asia, then, are working on promoting entrepreneurship, skill enhancement, job creation and boosting their economies. The implementation of startup portals for mapping talents, investors and startup community members will surely play a crucial role, because connectivity is fundamental, as mentioned earlier.
At the end of the day, there is fierce global competition to attract talented people and international resources, and many regions are missing opportunities while others are accelerating the process by enabling smart startup ecosystem development strategies. It will be exciting to see how other government organizations react to India’s policies and implement their plans on a grass-root level and come up with strategies to become the next startup hub.
One best way to accelerate the growth of the economy is to help SME’s to get capital for growth. European Financial Forum’s panel just highlighted that a better access to capital for SMEs is a key question for the European economy. Business angels and VC’s are an answer to some companies, but most of SMEs are not suitable or relevant for the risk capital equity finance. It has become harder to get bank loans and banks typically want to get some collateral. How to really help all kind of SMEs to get finance?
Young companies have no credit scores, no financial history and if they are, for example, software or service companies, they have no tangible assets. Some of their can target angel or VC funding, but it is suitable only for companies that look for significant scalable growth, at least 90% of young companies doesn’t belong to that category, but they are still important for the local economy and employ people. Crowdfunding and p2p lending offers more flexibility, but also investors in those services want to see evidences the company can survive and grow.
The bank lending became much harder to get after the finance crisis in 2008. Also the banking regulation and capital requirements limits banks to lend to companies without solid risk analysis. At least, banks like to have collaterals or someone (for example, entrepreneurs) to guarantee the loan. Sometimes also some 3rd parties, like government, export finance agency, or other SME loan guarantee programs, can guarantee loans. But they also need some criteria to select companies for those guarantee programs.
The fundamental problem with the finance decision is, how to evaluate a new business that has no real history, no real revenue, and only nice promises in a business plan. Finance decisions are normally based on data (even the human aspect is also relevant e.g. with business angels), and these young companies have no data. Can we improve this?
It is not totally true, there is data from those companies and entrepreneurs, but it has been difficult to get the data and use it. For example, the entrepreneurs might have had earlier businesses or participated in their university or college to a program to start their own business, they have used e.g. local city’s or region’s entrepreneurship support services and made business plans for those, maybe they have applied grants to start a company, they can have some advisors or participated in an accelerator, and they have participated in events to pitch and market their business. All that have created data to know their plans, but also see, how they have performed since first plans and what is the performance of the entrepreneurs. This data can already create a timeline, what the team has done, what they have achieved, and have they kept they promises, or learned from failures. Also the history of other similar companies is relevant.
The problem has been this kind of data is in many places, complex to combine and maybe no way to get and analyze it in one place. Startup Commons is operating especially in this area. It offers tools and databases that all relevant organizations that work with SMEs can share information and also companies can get a better service. It is a digital infrastructure for governments, entrepreneur services, accelerators, investors and others to connect, measure and benchmark SME ecosystems for progress tracking, service flow management, financing and international benchmarking.
Of course, this data is different from traditional credit scores or many years audited accounts. But it is much more than a one-page business plan or marketing slide deck. And it offers concrete data to develop new metrics and tools to evaluate companies and how financeable they are. And now it is interest of all parties from governments and banks to entrepreneurs to better collect that data and develop metrics to improve the access to finance.
Startup Commons is now working with many SME ecosystems around the world, and one part to develop is the access to capital. At the same time we want to involve more parties to work together with this. Data, metrics and financing criteria requires cooperation from many parties, from government and regional programs to banks, accelerators and private investors. We invite all parties to participate in this work.
Data is the key to develop the future finance services, as e.g. McKinsey emphasizes in its report. For new and young companies we need new solutions to collect and analyze data. Digital SME infrastructures offer a solution for this and it is also the best interest of entrepreneurs and SMEs to get this data to effective use. By developing this infrastructure, data collection and new metrics, we all can make the SME financing work better.
Startup ecosystems are blooming everywhere. However, it takes many joint public-private efforts to make them successful. A good example of this effort is the Serbia Innovation Project, a joint collaboration between the Serbian Government, the European Union Delegation and the World Bank that has taken place since 2011.
This pilot project’s goal puts its focus in three parallel strategies that aim at long-term results for the whole Serbian economy:
- Funding and training early-stage startups (Mini Grants Program)
- Matching more mature SME’s with strategic partners (Matching Grants Program)
- Investing in R&D and cultivating the entrepreneurial spirit of academia and RDI management teams (Serbia Research, Innovation and Technology Transfer Project)
There are two elements that make the Serbia Innovation Project highly relevant. The first one is its long-term ambition, as it wants to completely transform Serbia’s economy for the mid and long-term future. This is the reason why the review process of the potential awardees has been made as transparent as possible with the Independent Investment Committee, which specifically looks for high market and global export potential projects. But more importantly, it has drawn up a strategy to bridge R&D and RDI’s (Research and Development Institutes) into the equation, recognizing the importance of bringing to the market relevant and commercially viable technology. For any effort to be successful it is essential to bridge the gap between research and entrepreneurship and be able to bring the brightest and most sustainable ideas to the marketplace.
Secondly, the pilot seeks to create an institutional infrastructure that will continuously support the development of a “high-tech knowledge-based society in Serbia” and unlock Serbia’s potential systematically and institutionally. This direct and consistent government support for developing, monitoring and improving startup ecosystems is an essential element to their success.
On the other hand, the involvement of institutions such as the World Bank has provided very valuable recommendations for the institutional reform processes.
As stated by Shuki Gleitman, one of the project’s strategic advisors, “responsible governments need to act as enablers and build innovation ecosystems with mechanisms of active support for promising new technologies”.
All this joint effort is starting to produce results. 17 of the awardees have generated revenues from their products and 9 of them have established international cooperation. We would like to see further metrics and results from this that effectively measures the ROI of Serbian innovation, however, these are fantastic first steps for the country’s new economy.
If you’d like to learn more about startup ecosystems, feel free to download our Whitepaper.
This is originally posted by Startup Commons Team. You are free to re-edit and repost this in your own blog or other use under Creative Commons Attribution 3.0 License terms, by giving credit with a link to www.startupcommons.org and the original post
Supporting governments startup ecosystem development, from consulting to digital infrastructure for connecting, measuring and international benchmarking.
Subscribe to our mailing list
and get startup ecosystem development updates, with news, tips and results from cities around the world.
Are you interested to join our global venture to help develop startup ecosystems around the world?