Startup ecosystem - the future of economy?
There is no commonly accepted definition of startups. One thing everyone agrees on is that startup's key feature is its ability to grow by satisfying new human needs. It is a team of people with a shared idea to improve the living, an idea that is worth spreading and investing in. Even though startups are usually tech oriented, the essence of the company is a fresh vision and a finger on the pulse of the future. How startups shape our world today and in the future? What is its impact on a local and global economy? This article investigates the issue of future of work and entrepreneurship.
What is the startup?
There are several different ways to approach the subject. Startups are a newly established business offering new approach or solution. Those young companies do not have a guaranteed return of investment and rocketing the financial income. As Neil Blumenthal, co-founder and co-CEO of Warby Parker, puts it: “A startup is a company working to solve a problem where the solution is not obvious and success is not guaranteed." Startups are supposed to hack the world offering the fix that improves the living. As internet and smartphones have ceased daily human life, almost every part of life has to be integrated into the new digital systems. This type of entrepreneurship is a natural Millennials' answer to the inconsistencies and old-school way of performing tasks. Startups are devoted to slashing the current development and trying out the need for new innovative solutions. Determining the challenge that a company is to overtake is one of the hard ones. Therefore, one of the main reasons for the startups' failure, namely 42% according to CB Insight study, is the “lack of market need for their product.”
Anyone can start the business. For success, it is essential to equip with the reliable team, funding, and the will to keep going forward. Thus, while establishing own organization is opened for everyone, environment place significant roles increasing the probability of success. Genom has looked into global distribution of Startup Ecosystem Value and Exit Values. They found that 11 ecosystems of the 55 accounts for 78 percent of global Ecosystem Value. Those 11 ecosystems are the product of seven countries. As no surprise, Silicon Valley is a global leader, followed by New York and Boston. At the same time, Sydney and Shanghai are on the top of the growth with 6.3 and 5.5 indexes respectively. The success of the leaders is based on a well-operating system with open communication, well-established mentoring program, access to the ventures, and collaborative spaces.
After startups have gone through the phase of starting and making their product and service to the market, they have the hardest part of sustaining the business. How to keep the volume acquired on the first stages of the development? It requires an approach and skills different from what is needed for launching products. Strong strategy, clear action plan and further concentration on the clients help to develop customer loyalty and long-term success. Thus, there two types of entrepreneurs - those who work for an idea and those who work for profit. When does young fast growing company succeed and stop being just a startup? As formulated by Forbes, a startup is mature, after: "acquisition by a larger company, more than one office, revenues greater than $20 million, more than 80 employees, over five people on the board, and founders who have personally sold shares. Somewhat ironically, when a startup becomes profitable it is likely moving away from startuphood."
While the major ecosystems are based in the developed economies, the rest of the world might be a more interesting follow. For instance, Indian Government has recognized the startup ecosystem benefits for the growing economy. In January 2016, the StartupIndia Action Plan was launched establishing the steps of creating the efficient ecosystem for innovative entrepreneurship. “I see startups, technology, and innovation as exciting and effective instruments for India’s transformation,” says Shri Narendra Modi Prime Minister of India. Since then the startup ecosystem is booming. Investments in Indian Startups are doubling yearly reaching $4.7 billion in Q1 2017.
Start-ups do not necessarily have to be a separate team. Moreover, some companies recognize the strong potential of entrepreneurship as a part of their organization. Namely, IKEA is starting its own start-up accelerator program "Co-creating a better everyday life." IKEA Boot camp together with Danish entrepreneurship organization Rainmaking is currently recruiting teams for autumn 2017 that can solve the Big Problems. The company, as the largest furniture retailer, recognizes the opportunity of making the world better while leading the own business processes forward. As a part of the program, IKEA sets a goal of innovating the approaches by world demands: affordability, circularity, and accessibility. Start-ups have a liberty of bringing new wave for anything from virtual reality applications to food innovation, or drone-based logistics.
“We haven’t found any existing accelerator that fits our IKEA DNA. We’re not interested in future stakes in these companies. We want to establish business relationships with new companies and technologies that IKEA could license, for example,” said Tony Sandelius, New Business and Development Manager, Innovation, IKEA, to DiDigital.
The essence of the startup is the core of the creative economy. While most new fast-growing businesses are tech oriented, they create a new business system with reinvented business processes and thinking overall. In creative economy people get to innovate, experiment, test, collaborate and rely on the scientific approach. According to EY report, cultural and creative industries 29.5 million jobs worldwide in 2013. The market size is to grow exponentially in the future as white- and blue- collar jobs are substituted with automation and robotics. In this case, startups play their role in the both ends, as the innovators of new business models and automation processes, and as generators of new types of entertainment and virtual world.
John Hawkings, the author of three books on creative economy, is now helping China to develop their own creative environment to boost and improve the economy and living. Before, he worked with Tony Blair developing a concept and plan for policies boosting the creative transformation. John says: "The rise of the creative economy marks another sea-change in our lives. It is leading to new ideas about how and where people work and is beginning to re-shape our cities. It is disrupting relationships between workers and managers and investors. It is driving the new digital start-ups, affecting education, and changing the nature of jobs and employment."
Creativity and a new set of mind are one of the most demanded skills in the future labor market. Startup founders are like nobody else know how to create something out of nothing, experiment, and find a new solution to existing problems. Under the confident lead of mentors, a new generation is ready to create their own vision of the future and they will make it in their own enterprenal way.
#startup #accelerator programs #startup ecosystem #Ikea Bothcamp #creative economy #future trends