What is a startup ecosystem?
A startup ecosystem is a group of people, startups and other organizations that interact with each other in a single location to develop and support further innovation and startup growth. Startups can be in different stages, from just being ideated to the maturity and exit phase. Other organizations such as businesses, government bodies, research institutes, etc. are also essential parts of a startup ecosystem.
Why do startups need a startup ecosystem?
Startups develop creative and innovative technology, they are agile and grow rapidly. However, they are often stalled by a lack of finance, funding, experience or networks. It is important for any country to encourage startups to thrive so that the economy can benefit from new technology and the inflow of money from their business activities. Startup ecosystems can support startups and help them survive until they can find their footing.
With the help of the other members of the ecosystem, startups can get funding, co-operate with universities to develop products and technology, network to find partners, suppliers and investors and work with the government to create a supportive business environment with good legal and business policies.
The Features of a startup ecosystem
Startup ecosystems are typically located in a single location: Places like Helsinki, Finland Silicon Valley, California and Hong Kong come to mind when one thinks of a startup ecosystem. Startup ecosystems are typically located in a single city where there is infrastructure, talent availability and economic advantages such as connectivity to other countries etc.
Startups are at different life stages: startup ecosystems are home to startups at any stage of the business cycle. Young graduates or coders discussing a startup share space with seasoned entrepreneurs who are seeing business growth and profitability. Part of the excitement of a startup hub is the constant change, growth and new entries into the market.
Large businesses are also important: Startups are agile and innovative, but they lack the leverage, experience and capacities of large businesses. Large businesses are also interested in innovation and are willing to work with small startups through funding, shared R&D and networking to help small startups develop their ideas. Big businesses also benefit as they access fresh and innovative tech. Nokia working with SMEs in Finland is a good example.
Universities are a key part member: Universities are important units as they house future talent, have R&D facilities, have a worldwide network and often work with governmental agencies. They can be valuable sources for the latest information, research and talent for hire. Startups and businesses can save money by doing research collaborations with universities.
R&D centres and institutes are important: Government-funded research and development centres assist businesses and the economy of the country by focusing on research without the intention of profit to develop technology in various fields such as health, agriculture, biotechnology, etc. For startups, R&D centres are valuable sources to develop technology in collaboration with these government funded institutes. Startups can collaborate and save money by accessing high tech laboratories and major equipment.
A network of mentors and advisors: A network of mentors and advisors such as business professionals, CEOs, government officials and other startup mentors form an important part of a startup ecosystem. Entrepreneurs need support, advice and a network to know if they are going on the right track, to get input on their decisions and processes and to find talent, suppliers and partners. A good startup ecosystem has a number of platforms and events for startups to get advice and meet with other members of the ecosystem, as well as to learn valuable lessons from professionals.
Governmental bodies, ministries interact with startups: Government and ministerial officials are accessible and open to suggestion by startups and make it easier for startups to carry out business activities by passing laws and easing restrictions for startups to operate.
It has an advanced telecom infrastructure: By nature, startups are tech oriented and innovative. In the current wave of tech trends digitalization is the major driver of innovation. Hence, a tech ecosystem must have well developed and accessible telecom infrastructure. It must also be affordable and high speed.
Funding services and providers here: Startups require funding to help run their operations, to purchase equipment, do marketing and develop products. Funding is one of the most important needs for a startup to be successful. A startup ecosystem must have a number of funding options, organizations and opportunities for startups to survive and thrive. There has to be a strong presence of angel investors, venture capitalists, government funding organizations and others.
Event organizers play an important role: Networking events, conferences and tech seminars are all vital events where startups can get information, showcase their company and products, network, and find funding. Event organizers manage and host such events where these activities are possible. A vibrant event-filled ecosystem is indicative of the presence and activity levels of startups in a country.
Culture: Startup culture is real and necessary in its own right. A startup ecosystem has a strong startup culture. Entrepreneurship is encouraged and there is a history of successful startup and entrepreneurial success. Social networking is also thriving where hiring tech talent, frequent meetings and events happen and entrepreneurs can get advised and mentored by experienced professionals. Leadership is fostered and encouraged and a culture of risk-taking and innovation is prevalent.
External factors: Startups cannot thrive without political and legal stability. A startup ecosystem must protect the IP of businesses and must allow trade and business activities to happen freely without excessive government intervention. Open markets and reasonable taxation, export and import duties are all important external factors that determine how healthy an ecosystem is.
Multiple players: Startup ecosystems consist of multiple players that interact with each other. Startups do not work in isolation. Here are the different players in the startup ecosystem:
- Large businesses
- Coworking space
- R&D institutes
- Funding organizations
- Service providers
- Event Organisers
- Network – mentors, advisors, investors, entrepreneurs
A startup ecosystem needs a complete and rich environment with many actors. Such an ecosystem can help nurture and develop fragile startups that hold the key to developing innovative technology and products that can change the world. At present, a digitalization wave is breaking over the world and it is the right time to enter and build products for smart city demands, IoT, AI, robotics, AR, VR and more.
For startups and businesses that are looking for the right place to develop, we at PrEver, provide information and help about the tech ecosystem in Finland in which we have helped launched 25+ Indian companies in the last 4 years. To start your own journey in Finland for tech product development and innovation, follow us on social media and contact us directly.