Entrepreneurial innovators’ growth ambitions

– Case of Finnish technology start-ups

ISPIM 22.6.2016

Arto Wallin, Katja Henttonen, Kaisa Still

Technical Research Centre of Finland, VTT

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AGENDA

1. Introduction

2. Research design & question

3. Findings

4. Implications

5. Questions?

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… what start-up entrepreneurs actually experience and say?

What is the image about Finnish growth-startups…

http://www.forbes.com/sites/jaymcgregor/2014/12/12/after-nokia-5-finnish-startups-to-watch/#326653217d86

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RESEARCH QUESTION:

How technology entrepreneurs participating to the start-up event

express their growth-ambitions (behind the scenes and in public)?

Main research question

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Context of the study

The research was conducted as a part of the international R&D&I project

(Accelerate ITEA2), which aimed to develop tools to accelerate start-up innovation

process.

Interviews in Slush 2015 – biggest startup event in Europe

Case study

Literature review on startup innovation growth-ambitions

Data collection

Short (10-15 minute) semi-structured interviews during SLUSH

Document analysis

Data analysis

27 interviews analysed by the three researchers using content-coding and theme based

categorization

21 Finnish entrepreneurs were selected for the detailed analysis

Research design (1/2)

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Start-ups in different phases of startup innovation process

Research design (2/2)

Table 1. Context information of the 21 Finnish start-ups studies

Year

founded

2010 or before

2011

2012

2013

2014

2015

5 companies

1

4

5

4

2

Phase Ideation

Problem-solution fit

Product-market fit

Scaling

2 companies

2

10

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”Start-up is company searching for scalable and repeatable business model” - Steve Blank

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Expressed growth-ambition levels very from very modest to high

Findings 1 – Expressed ambition levels

Table 2. Growth ambition levels of the companies

Growth

ambition

Description Examples

Low

Modest growth expectations,

pessimistic view on the success

of product/company in large

scale

”should test with international clients”

“[in five years we have] products in the market”

“we focus so far on Finnish markets, international scaling will be on later phase”

”concentrating on core business”

Moderate Clear international growth

expectations, but the ambition level is not particularly high

“maybe double the turnover”

”international player”

”turnover to millions”

High

High long term growth

expectations, or rapid short term growth with an aim of buyout

”leading supplier in Europe”

”from 200 000 users to 1,4 million”

“Multiplying our turnover.. ..”

Very high

Seeking rapid exponential

growth, global market leadership

“more than 100 million downloads”

”we have customer already in 87 countries

and our aim is to become global leader in [chosen market segment]…”

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Findings 2 – Why ambition levels differ between companies?

1. Target market changes everything

Size and phase of the market

Growth potential,

Entry barriers (e.g. regulation),

Network effects

2. Business model design choises

Partners, revenue, cost structure, customer segments, channels

3. Personal characteristics and experience of entrepreneur

4. Different external stakeholders supporting growth

Accessability of public funding vs. private funding

Incubator and/or accelerator programmes

Need to show growth ambition to be accepted

Co-residence and influence of other entrepreneurs

Guidance from coaches and stories from successful entrepreneurs

Press and media

People don’t want to hear about mediocrity

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Findings 3 – Growth-ambitions differ also within companies?

1. Different ambition levels between founders

the personal characteristics, risk aversive behaviour, and perception of barriers for

growth

2. Context of presenting growth estimations

” you need to have at least three slide decks with different growth projections:

(pessimistic/realistic) steady growth projections for banks, middle-of-the-road estimations

for the public funding authorities, and overly positive for business angels and venture

capital organizations.”

3. Phase of the start-up innovation process?

In early phase - entrepreneurs may be inclined to downplay their high ambitions?

Culture?

When seeking funding / scaling aggressively - when start-up starts to get some

traction and needs media coverage and/or external funding, it may have incentives to

highlight the ambitious growth goals.

Is it the AMBITION that changes along the way OR the way how the ambition is

PRESENTED in public?

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• Entrepreneurs’ may have different stories/numbers about growth ambitions that are

targeted to different audiences

• It is neither realistic nor beneficial to expect same level of growth ambition from start-

ups that aim to different types of markets by executing business models that are very

different from the scalability perspective.

Practical Implications

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Institutional approach on entrepreneurship & innovation management

Growth ambition shouldn’t be seen as a single measurement, but more complex

socially constructed concept

Entrepreneurs’ social contexts (culture, previous work, networks,..) can be seen as

an institutional template that defines:

How high you should aim

How you should express your growth-ambitions

Temporal differences

Strategic support actions

different types of start-up companies have different needs and therefore the support

provided to those start-ups should be different.

worth considering whether all kinds of start-ups need equal support or should

support be mainly targeted, for example, to high-growth-ambition companies

Theoretical and political contribution

QUESTIONS?

THANK YOU!

Arto Wallin

Senior scientist, project manager

Technical Research Centre of Finland VTT

Arto.wallin@vtt.fi