And why not? Given the choice, who wants to invest in high risk, early stage teams and untested ideas.
The rise of startup ecosystems poses challenges - precisely because of an uneven focus searching for investable ideas and teams.
Helsinki is considered one of the world’s leading tech cities producing innovative companies and teams of global renown. By way of an example, in recent work done by Grow Advisors with the City of Helsinki, it is estimated that from a total of 25,000 ideas among 2,500 teams, 10 companies valued at US$1billion were eventually created. Additionally, the data shows us how many startups drop out at each development stage (by sector), which services were the most supportive and effective, and which were under or overused.
In research done by Grow Advisors and Startup Commons in Helsinki, from a total of 25,000 ideas among 2,500 teams, 10 companies valued at US$1billion were eventually created.
We are now beginning to understand the critical metrics, but more importantly how different services are connected in a Startup Ecosystem, so as to deliver better prepared companies and faster development cycles. Created by Grow Advisors, Startup Commons, and the Grow VC Group, the starting point is Startup Development Phases.
It shows the lifecycle phases of a company - from ideation through to later stage growth. This provides a simple framework to which all supporting organisations and services can be mapped. In other words to map which services are needed at each development stage. Before doing so, we define two categories of services. Those aimed at developing the idea into a business and others that support transforming ‘the team into a company.
The following ecosystem map doesn't show all the required services in any given ecosystem. However, it can expose services that are duplicated and those that are missing. This integrated approach impacts all stakeholders, not just those tasked with ecosystem policy or design.
From 10,000m above, it can be shown that there are service gaps in Hong Kong, just as there are in other Tech ecosystems in their infancies. We are able to track the community and gauge its efficiency - and make future projections to success.
At Grow Advisors, we work with all stakeholders of an ecosystem to ensure ideal positioning relative to other organisations.
If there is a growing offer from accelerators, who is assisting with developing ideas and teams at early stages and ensuring follow-through? Investing at the beginning of the innovation funnel is often expensive and time consuming, it also offers no immediate ROI. That responsibility often falls under the remit of local government and public funds. In work done by Grow Advisors for the European Union as part of the EU2020 Project, one of the biggest challenges is adapting the front-end of the funnel to ensure there is enough local talent to be ‘incubated and accelerated’ at subsequent stages. It’s an important challenge and one that affects many tech communities around the world. Business schools for example, teach how to run companies yet rarely teach how to create them. Universities innovate through R&D yet the handover to create new companies is often not very efficient.
Why does this matter?
Today it’s not too difficult to find 30 teams twice a year to run an accelerator in Hong Kong. Imagine London, New York, Berlin, Amsterdam, Hong Kong Singapore, [...] all looking for the next FinTech unicorn. The risk of taking unprepared startups to fill quotas will appear.
One way will be through a combination of more efficient ecosystems and bigger frontends feeding them. At Grow Advisors we have developed tools and policies that help ecosystems around the world. From FinTech hubs to general tech spaces, and the different organisations within them. We help set long term goals, track and measure using data analytics and in-house tech platforms.
In Helsinki, by targeting change at a handful of key points in the ecosystem, it is possible to double to number of tech successes from 10 to 20. That may seem small, but the effect on the economy is magnified and success becomes self-fulfilling. It leads to more success.
Whether you're running an accelerator or overseeing policy at a community level, get in touch. See how we’re helping Hong Kong and others become the world class Tech hubs of tomorrow.
A Grow Advisors article originally produced for FinTechHK
Grow Advisors is proud to support the growth of FinTech around the world. We offer consulting and professional services on crowdfunding, crowd investing and p2p finance globally. Our advisors develop platforms that connect startup ecosystems, set-up marketplaces and co-investment models, structured investment instruments, and find innovative ways to create finance solutions globally.