Smart City Expo 2014: How to generate more innovation and improve return on investment from your innovation ecosystem
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The document outlines the expertise of Valto Loikkanen as an entrepreneur with extensive experience in startup ecosystems, equity crowdfunding, and mentoring over 2000 entrepreneurs. It discusses the shift towards open and collaborative innovation driven by startups, contrasting it with traditional innovation models of large companies. Additionally, it emphasizes the importance of a dynamic startup ecosystem for job creation and investment readiness, highlighting methods for ecosystem development and improvement.
Smart City Expo 2014: How to generate more innovation and improve return on investment from your innovation ecosystem
- 1. smart city expo 2014 Valto Loikkanen Grow VC Group ++ www.growvc.com ++ @growvc ++ Copyrights © Grow VC Group 2014
- 3. About me
- 4. As an Entrepreneur ● 20 years as international Serial Entrepreneur (US, EU, Asia) & Portfolio Entrepreneur, with personal hard earn success & failures ● 17 years experience in developing web based tools for various business processes ● 6 Years of developing equity crowdfunding model globally via Grow VC Group (scaling access & availability of risk funding) ● 5 years for Startup Ecosystem online support tools, platforms & metrics ● Past year, being part of three Horizon 2020 Groups: Access to Risk Finance, Widening participation and International Cooperation
- 5. As a Business Advisor ● 10 years of startup mentoring with over 2000 one to one mentoring sessions and workshops with 1000+ entrepreneurs and hundreds of startups around the world at various development stages and industries ● 10 years developing Startup Support services, with entrepreneurial mind and lean methodology (fast ideation, implement and measure cycle) ● 5 years of “living lab” development for Startup Ecosystem in Finland with City of Helsinki
- 6. About Grow VC Group "The global pioneer of securities crowdfunding, peer to peer marketplaces and new investment models."
- 7. Other Business Verticals Real estate, P2P loans etc. Consulting & knowledge Services Local Investors Startups Startup Ecosystem Global Investors Enable online investment platforms and marketplaces Online infrastructure to manage and measure startup ecosystems
- 8. Other Business Verticals Real estate, P2P loans etc. Consulting & knowledge Services Local Investors Startups Startup Ecosystem Global Investors Enable online investment platforms and marketplaces Online infrastructure to manage and measure startup ecosystems
- 9. "How to generate more innovation and improve return on investment from your innovation ecosystem."
- 10. Where Does Innovation Happen?
- 11. Research IPR Innovation via Big Companies & Public Sector. Closed process & Internal resources Innovation by Startups Funding Sources Innovation Ecosystem Customers
- 12. Innovation process is moving away from “closed structures” and big companies to more open and collaborative startup ecosystem. Megatrend
- 13. Research IPR Innovation via Big Companies & Public Sector. Closed process & Internal resources Innovation by Startups Research IPR Innovation via Big Companies & Public Sector. Innovation by Startups Open, collaborative & external resources Funding Sources Service Providers Support Organizations Funding Sources New Funding Solutions Innovation Ecosystem Startup Ecosystem Customers Customers
- 14. Research IPR Innovation via Big Companies & Public Sector. Innovation by Startups Open, collaborative & external resources Funding Sources Service Providers Support Organizations New Funding Solutions Startup Ecosystem Customers
- 15. Why this megatrend? ● The megatrends of innovation is focusing more and more around startups ● The old world is about ideas, research and big companies creating the innovation (products and services from these). ● The old models is already working at it’s best and is difficult to improve - as such, little growth can be achieved in that area ● The new world is about making the innovation happen via Startups, where innovation is also more openly and independently exposed to markets ● Startups are “outsourced innovation” for big companies and biggest group generating new jobs ● Startups are fast, flexible, highly motivated, cost effective and supported by private and public parties ● The big companies themselves are moving away from traditional innovation models towards more open innovation and working with and buying most promising startups after they have validated scalable innovation.
- 16. Difference between innovation & startup?
- 17. “Innovation is about developing a new product, service or business model.”
- 18. “Startups do innovation and also develop a new growing company & business.”
- 19. "What are the keys to get successful results?"
- 20. ● To new growth ambition startup creation ● Pre-startup and early stage startup support services ● get more research, inventions, ideas and other IPR to be utilized by startups Focus
- 21. Why Startups?
- 22. Recent study by Kauffman Foundation and the Institute for Competitiveness & Prosperity.
- 23. “Over the last twenty five years, almost all of the private sector jobs have been created by businesses less than five years old.”
- 24. “Between 1988 and 2011, companies more than five years old destroyed more jobs than they created in all but eight of those years.”
- 25. What is a Startup?
- 26. Startup “A startup company or startup is a company or temporary organization designed to search for a repeatable and scalable business model” http://en.wikipedia.org/wiki/Startup_company
- 27. Startup “The only essential thing is growth. Everything else we associate with startups follows from growth.” http://en.wikipedia.org/wiki/Startup_company
- 28. A B C D High Growth Ambition and very scalable business model Low Growth Ambition and/or Non Scalable business Market validated business model Unvalidated business model "a kiosk" "new startup" “New Startup”
- 29. Startup stages
- 33. ScaleProduct Market Fit Growth Time Ideation Scalable product or service idea for a big enough target market. Some initial business models for how it would make money. One person or only a vague team; no confirmed commitment or no right balance of skills in the team structure yet. Concepting Clear and meaningful target with direction for at least 3 years with milestones how to get there, -> 3, 6, 12, 24, 36 months… Team of two or three core founding partners with balanced ownership. Can also already have some extended team with lighter commitment (stock options and or cash compensation) Commitment Committed and balanced founding team. Able to develop the product or service (Minimum Viable Product) without dependency of uncommitted external resources, or already an initial product or service in place. Existing signed shareholder agreement between founders, with milestones, committed time and money use, for at least 2+ years with vesting. Validation Can demonstrate some user growth and or revenue (initial traction). Continue to attract additional resources (money or sweat equity) for equity or future revenue. Looking for clear market validation (Product Market Fit), to move into scaling. Scaling Showing a clear, growing and measurable user and or market traction in a big or rapidly growing target market. Can and wants to scale fast. May have attracted significant funding. Establishing Achieved great growth, that can expected to continue. No longer needs to struggle to get resources and can acquire those easily. Continues to grow and often wants to culturally continue behaving like a "startup" for as long as possible. Founders exit or continue business as usual. Minimum Viable Product (MVP) This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit http://creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA. Startup Key Stages By www.startupcommons.org Vision & Mission -2 -1 0 21 3 Target
- 34. Startup Ecosystem A startup ecosystem is formed by people, startups in their various stages and various types of organizations in a location (physical and/or virtual), interacting as an organic system to create new companies. Different organizations typically focus on specific parts of the ecosystem function and/or startups at their specific development stage(s). Learn more: http://www.startupcommons.org/understanding-startup-ecosystems1.html
- 35. Startups & Ecosystems Startups develop in startup ecosystems through the development phases in constant interaction with various organizations, services & people. The more dynamic, transparent and balanced the ecosystem is the more successful startups ecosystem can create.
- 36. Case Helsinki
- 37. Challenge was ● Not enough (high) growth companies in Finland ● Growth services were a total mess ● Growth potential or stage was not systematically identified ● Angel investing was not systematically organized ● Poor investment readiness ● Ecosystem concept and understanding as a whole was missing ● ROI at single service and ecosystem level is unclear
- 38. Level 1: Identify problem ● Growth potential and development phases should be systematically identified ● Need more high growth companies to Helsinki ● Clear guidance to right growth paths ● Matching growth potential with most fitting services, people and accelerators should be systematically coordinated ● Improved investment readiness ● Ecosystem should be visualized to be understood
- 39. Level 2: Take action ● Make Startup development phases more broadly used as "canvas" for ecosystem service design ● Get common terminology more broadly to be used ● Identify service gaps and development new services to fix them ● Improve ecosystem level understanding and communications among the ecosystem parties ● Define handovers between services and iteratively improve ● Implement online ecosystem infrastructure to BETA use
- 40. Level 3: Finalize and start iterating ● Common metrics identified ● Ecosystem IT infrastructure in use ● Metrics implementation ● Metrics in use and shared with the ecosystem ● Iterative ecosystem development and validation by metrics
- 41. Midterm results ● Less unknown ● Silos are braking ● ROI becomes more measurable and understandable target ● Growing supply of “investment ready” startups ● more new companies creating jobs and attracting international investments into region
- 42. Three steps of ecosystem development 1. map out starting position 2. Identify and fix gaps and bottlenecks 3. implement measurements Iteratively improve; measure and learn
- 43. With help of key stages tool ● Map out ecosystem services ○ Public & Private ● Describe ecosystem target ● Label items; ○ startups, services, events, funding instruments, blog posts, tools, ideas, suggestions, etc.
- 44. ScaleProduct Market Fit Growth Time Ideation Scalable product or service idea for a big enough target market. Some initial business models for how it would make money. One person or only a vague team; no confirmed commitment or no right balance of skills in the team structure yet. Concepting Clear and meaningful target with direction for at least 3 years with milestones how to get there, -> 3, 6, 12, 24, 36 months… Team of two or three core founding partners with balanced ownership. Can also already have some extended team with lighter commitment (stock options and or cash compensation) Commitment Committed and balanced founding team. Able to develop the product or service (Minimum Viable Product) without dependency of uncommitted external resources, or already an initial product or service in place. Existing signed shareholder agreement between founders, with milestones, committed time and money use, for at least 2+ years with vesting. Validation Can demonstrate some user growth and or revenue (initial traction). Continue to attract additional resources (money or sweat equity) for equity or future revenue. Looking for clear market validation (Product Market Fit), to move into scaling. Scaling Showing a clear, growing and measurable user and or market traction in a big or rapidly growing target market. Can and wants to scale fast. May have attracted significant funding. Establishing Achieved great growth, that can expected to continue. No longer needs to struggle to get resources and can acquire those easily. Continues to grow and often wants to culturally continue behaving like a "startup" for as long as possible. Founders exit or continue business as usual. Minimum Viable Product (MVP) This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit http://creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA. Startup Key Stages By www.startupcommons.org Vision & Mission -2 -1 0 21 3 Target
- 45. -2 -1 30 21 Public services & funding Private service providers & investors Supporting Startup Development Startup Knowledge - Money & Connections
- 46. Map your current startup ecosystem support services
- 47. -2 -1 30 21 BusinessideaTeam Online Communities and tools on connected platform (Startup Commons) BusinessCompany
- 48. Sample set of services
- 49. -2 -1 30 21 BusinessideaTeam Private Advisory: Multiple advisors In search of co-founders SHA Workshop Group Advisory Private Advisory: One advisor Pitch Training & feedback General networking In search of team members Startup Info (stages & service matching) Company registration, VAT etc. basics advisory Co-working space and pop up advisory Pitching events: for advisors, funding, sweat equity & visibility Recruiting support & advisory Biz Model Canvas MVP & metrics workshop Customer Development Online Communities and tools on connected platform (Startup Commons) BusinessCompany Random events, meetups & presentations in the ecosystem Media as a Service Marketing ServicesMarketing Workshop Subsidised specialist grants (UX, design etc. etc.) Sales as a Service Subsidised specialist grants (accounting, legal etc.) Startup Weekend etc. Accelerator Bootcamps Public sector as a customer
- 51. Business Idea Potential More Potential Big Market Market growing Market pull Scalable Less Potential Small market Market shrinking Market Push Not scalable
- 52. Team Validation More Potential Good Team Balanced Skills Committed Doer Attitude Right Culture Less Potential Solo Entrepreneur Uneven Skills Not committed Talker Attitude Wrong Culture
- 53. A B C D High Growth Ambition and very scalable business model Low Growth Ambition and/or Non Scalable business Market validated business model Unvalidated business model "a kiosk" New Startup at Stage 0 Startup Early Startup at Stage 2
- 54. A B C D High Job Creation Potential (need of people) Low Job Creation Potential Low Demand Potential Very few and/or low paying limited region customers High Demand Potential a lot of potential well paying international customers No Value Idea High Value Idea Idea evaluation NOTE: as a public sector! Medium Value Idea Low Value Idea
- 55. Use together with development phases criteria
- 56. About Metrics ● Ecosystem as a funnel ● Input and output volumes of each service ● Compare each service ROI separately
- 57. Other tools ● Ecosystem development workshop ● Development support ● Mapping and agreement templates ● Ecosystem IT infrastructure ● Knowledge on demand (for all levels) ● Library of best practices service models
- 58. ● Develop startup ecosystem as a whole ● Measure “everything” to learn and improve ● Improve iteratively Recap
- 59. Single most valuable tool to improve your ROI Free to use under creative commons licence Original www. startupcommons.org Licence terms http://creativecommons. org/licenses/
- 60. “Only the things that are understood can be developed”
- 61. “When more people and organizations are developing things together, there needs to be a common language and understanding about what is being developed.”
- 62. “Systematically implement this common language to your ecosystem and everything follows naturally.”
- 63. “Only things that can be measured, can be improved.”
- 64. “Missing knowledge you can buy.”
- 65. “Plenty of EU funding available.”
- 66. Just take the first step...
- 67. Valto Loikkanen [email protected] +358 400 421 551 (FIN) +1 415 854-0546 (US) Grow VC Group ++ www.growvc.com ++ @growvc ++ Twitter @valto #startupecosystem