A Public Funding Model

By PxHere

A good public funding model starts with an ecosystem framework

If you are an economic development financier driving innovation and entrepreneurship, one of the crucial aspects is to maximize the impact of the public funding flowing within the ecosystem.

It is assumed that they have a great understanding about the startup journey and that they have accurate data and information to support their decisions towards implementation. The reality is quite different. And we, as entrepreneurs, know that assumption is the mother of all mistakes, in one form or another. Only things that can be understood, can be developed.

Here's a process followed by many ecosystems with different size and maturity levels that helps, among other things, minimize the mismatch in the public funding:
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1.- Understand the startup journey​, from "idea to product, to growing business" and from "talent to team, to real organization" in balanced manner

2.- Understand the key focus area from ecosystem perspective

3.- Understand the service targets that are needed to support startups in their different phases. Services in the ecosystem should focus on:

• ​Support ideation to create new potential innovations in technology, business models, processes etc. and to develop these to actual growing businesses and
• To support the team formation and further development for actual effective organization. Below is a chart of some typical services and to what part of startup development those are most relevant, along with some ecosystem level focus areas in context to these services.

4.- Understand the balance between public and private support. ​​The balance between public services or publicly funded support providers tend to focus in earlier phases, while private and for-profit type of service providers are focusing on later phases of the journey, where the business is starting to have more clarity, shape and ability to pay more for these services.

5.- Map your ecosystem to identify what the current services are, how they are related, their dependencies and the missing ones

6.- Based on your data, decide in which area you want to impact

• If you want to impact in the Formation phase, everything here is about inspiring and attracting new talent and providing access to entrepreneurial education, ideas and knowledge to help build the right mindset, understanding and abilities for the journey ahead, typical issues to avoid or solve, what steps to take in what order and about available support along the way. A public funding model for both services and startups would be:

• If you want to impact in the Validation phase, it is where the support focus shift to initial product development, strengthening core team via mentoring or new team members, supporting team and product validation and customer development. A public funding model for both services and startups would be:

• If you want to impact in the Growth phase, the focus becomes mostly about additional resourcing, understanding growth KPIs, creating processes for scaling various business operations, improving financials and help expand business internationally. A public funding model for both services and startups would be:
  

7.- Collect standardised KPIs related to startups progress and contributing factors; service intake, output, efficiency & feedback; and outcome of ecosystem development actions

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Following the process above can help you separate your assumptions from your decision-making and to implement what is really needed vs what is trendy. This process is what we recommend to use for all decisions related to startup ecosystem development, and it becomes more powerful the more it is adopted among the different ecosystem actors.

And, when things don't turn out how you hoped they would, then you should evaluate how the decision was made. There might be different reasons but lack of data and resources are usually behind them.
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If you have questions about applying the ecosystem framework, want more examples of how it was implemented, or you even want to propose improvements, please reach out: info at startupcommons.org​