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Our perspective on all things digital and entrepreneurship
This is not an academic paper. It is a collection of practical observations collected from witnessing both successful and unsuccessful startup support initiatives in more than a half dozen different ecosystems across the past decade.
The team at AstroLabs has:
For more in depth case studies and recommendations we suggest reading a few books including:
1- Boulevard of Broken Dreams: Why public efforts to boost entrepreneurship and venture capital have failed and what to do about it (Josh Lerner)
For thorough analyses of initiatives around the globe and patterns of failure.
2- Startup Communities: Building an entrepreneurial ecosystem in your city (Brad Feld)
For practical tips for building a true thriving startup community that lays the ground for a healthy ecosystem based on Brad’s experiences in Boulder, Colorado and other work.
Few things worth building are actually built overnight; any initiative that expects overnight results is doomed from the start.
Building a successful ecosystem is a multi-decade exercise. However, just like a natural ecosystem (from where the analogy emanates) it is possible to see some early progress before the full “forest” is grown and healthy.
For this to come to fruition a few elements are important:
A few months ago, we met with someone who approached AstroLabs to potentially collaborate on programs for a relatively new entrepreneurship initiative. Twenty minutes into the discussion we find out the visitor is on a 12 to 18 months consulting project with the government entity he was representing. We immediately lost interest. The hard components of building an ecosystem do not align with the motivations of a short term consultant.
“Fertile soil period”: 2-3 years for some early wins
“Healthy herb garden with growing saplings”: 5 years to the first milestone
“The forest starts to take shape”: 10 years for the first significant success
“A sustainable living ecosystem”: 15 or more years for real impact
Considering the length of time that it takes to show significant progress in such long term initiatives it is important to sequence the early wins that will build momentum and catalyze the ecosystem as the flywheel effect takes hold.
For example, while kick-starting long term initiatives early is very important, the most impactful early wins are:
Creating a tech ecosystem is an immense and complex task. While doing something is sometimes better than doing nothing (though not always), the trap some initiatives fall into is that they search for the “low hanging fruit”.
While, theoretically, this is a great and recommended idea, in practice there are no shortcuts.
As a result, what we generally observe is the launch of a series of conferences and competitions with prizes for startups. It is easy to spend money on those types of programs but there’s no evidence that any of it has lead to any long term impact. (A longitudinal study of startup competitions in the region, would probably show that most have not generated any significant success, the winners are either non-existent a few years later or marginally successful, and the most successful startups in the region have never participated)
Just like building anything else, the toughest parts of the task must be accomplished first. Laying the foundation is important and tackling some of the areas that will pay off in the long term is better done earlier rather than later. Think about what will make a difference in a few years and get to it, only focusing on short-term programs will not move the needle. For example if building a deep-tech ecosystem is part of the mission then a top priority should be to make sure that students currently in middle-school are exposed and excited about STEM topics and have a immersive exposure to its impact on the world.
When startups build something without ever considering market demand or talking to real customers, the end product usually fails and the diagnosis is that they did not find a “product market fit”. The same goes for initiatives that target current or future founders. Understanding what the ecosystem lacks and what is the best method of fixing this, either directly or through other organizations is critical.
Something about technology and startups ecosystems attracts a tsunami of noise. This could be because it is “cool” and “trendy” to be associated with the ecosystem; some people think that having the title of “founder” or “angel investor” is prestigious and impressive. Others think that there’s money to be made when large organizations pump large sums, and probably others mean well but believe they are able to advise founders or opine on the state of the ecosystem before doing the hard work first.
There exists no successful startup ecosystem in the world that does not rest on a robust and replenishable sources of talent.
There are many examples of ecosystems that seemed to produce talent before the ecosystem started growing and very quickly talent shortages strangled most potential scale-ups that had to move their technical teams to other locales or relocate altogether. What looks like a deep pool of talent quickly disappears after only a handful of companies start hiring and reach the limit that the local ecosystem is capable of providing.
The common sources of high caliber talent vary but generally revolve around a few sources:
Startups are risky, and by extension initiatives that support them will not generate successes 100 percent% of the time. Be ready for it.
There is a big difference between supporting a “Theranos”, a case in which hype and bad governance extended to fraud, and supporting ventures who do not succeed.
It seems obvious but, from observation, it seems that entrepreneurial supporters at larger organizations expect a high rate of success thus driving focus on less risky startups. Avoid that.
A governance structure that is comfortable with the vision and trust the initiative leaders should allow for mis-steps as long as they were well intentioned mistakes and lessons are learned.
While the following two topics are important, we felt they are always given too much prominence in discussions around scaling startup ecosystems. These are the obvious topics that consultants and others bring up although in our opinion not the most impactful.
Below are some high level thoughts that we were still tempted to include:
Our recommendation on this front is to give some entrepreneurs who mean well and are doing their best some leeway. This is hard to implement, but no one said it was easy.
One potential alternative is to set a framework that is more open to new business models as opposed to a restrictive rulebook that constricts business.
We have seen many startups struggle, shutdown or not even set up in certain ecosystems because of intensely restricted activities even though a decision maker with judgement could have deducted that the activity being conducted poses very few risks to consumers and investors.
One of the most successful startups to launch out of our Dubai co-working spaces, Shedul, a global leading platform for salon and spa bookings, that has recently raised money from international investors at a $105 million valuation was on the brink of not being able to register for a company license because a compliance manager was concerned that taking customer payment for bookings was too much of a risk, a practice that is a standard when you buy a movie, concert or event ticket online.
No startup is risk free, but the risk of a default on a haircut should weigh less than the risk of strangling an ecosystem.
AstroLabs is dedicated to building digital capabilities through our academy and network of coworking spaces.
Since 2013, AstroLabs has been on a mission to develop the tech entrepreneurial ecosystem in the region, supporting hundreds of startups to set up and scale up in the United Arab Emirates and Saudi Arabia. Our academy offers specialized courses across a range of digital transformation topics, teaching global best practices anchored in local context. All AstroLabs courses are co-designed with and delivered by our network of practitioner instructors, resulting in a uniquely interactive training experience.
We offer open-enrollment courses through our academy on topics such as digital marketing, data insights and coding, and our Enterprise Academy partners with the region’s top corporate clients to design custom learning programs that upskill their teams. We also work with governments and large corporates to develop bespoke accelerator programs. The Accelerator Academy is a full-suite accelerator program solution, including design, startup sourcing, and expert-driven curriculum.
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