smart city expo 2014 Valto Loikkanen

Grow VC Group ++ www.growvc.com ++

@growvc ++

Copyrights © Grow VC Group 2014

For twitter

@valto

#startupecosystem

About me

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

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

About Grow VC Group"The global pioneer of securities crowdfunding, peer to peer marketplaces and new investment models."

Other Business VerticalsReal 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

Other Business VerticalsReal 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

"How to generate more innovation and improve return

on investment from your innovation ecosystem."

Where Does Innovation Happen?

Research IPR

Innovation via Big Companies & Public

Sector.

Closed process & Internal resources

Innovation by Startups

FundingSources

Innovation Ecosystem

Customers

Innovation process is moving away from “closed structures” and big companies to more open and

collaborative startup ecosystem.

Megatrend

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 resourcesFundingSources

Service Providers

SupportOrganizations

FundingSources

New Funding Solutions

Innovation Ecosystem

Startup Ecosystem

Customers

Customers

Research IPR

Innovation via Big Companies & Public Sector.

Innovation by Startups

Open, collaborative & external resources

FundingSources

Service Providers

SupportOrganizations

New Funding Solutions

Startup Ecosystem

Customers

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.

Difference between innovation & startup?

“Innovation is about developing

a new product, service or business model.”

“Startups do innovation and also develop

a new growing company & business.”

"What are the keys to get successful results?"

● 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

Why Startups?

Recent study by Kauffman Foundation and the Institute for Competitiveness

& Prosperity.

“Over the last twenty five years, almost all of the private sector jobs have been created by businesses

less than five years old.”

“Between 1988 and 2011, companies more than five years old destroyed more jobs than they created in all

but eight of those years.”

What is a Startup?

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

Startup“The only essential thing is growth. Everything else we associate with startups follows from

growth.”

http://en.wikipedia.org/wiki/Startup_company

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”

Startup stages

http://en.wikipedia.org/wiki/Startup_company

Startup Development?

?

Startup Development

Improved Startup stages

ScaleProduct Market Fit

Gro

wth

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)

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Startup Key StagesBy www.startupcommons.org

Vision & Mission

-2 -1 0 21 3

Target

Startup EcosystemA 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

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.

Case Helsinki

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

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

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

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

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

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

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.

ScaleProduct Market Fit

Gro

wth

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 StagesBy www.startupcommons.org

Vision & Mission

-2 -1 0 21 3

Target

-2 -1 30 21

Public services & funding

Private service providers & investors

Supporting Startup Development

Startup Knowledge - Money & Connections

Map your current startup ecosystem support

services

-2 -1 30 21

Business idea

Team

Online Communities and tools on connected platform (Startup Commons)

Business

Com

pany

Sample set of services

-2 -1 30 21

Business idea

Team

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)

Business

Com

pany

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

Evaluating things

Business Idea Potential

More PotentialBig MarketMarket growingMarket pullScalable

Less PotentialSmall market

Market shrinkingMarket PushNot scalable

Team Validation

More PotentialGood TeamBalanced SkillsCommittedDoer AttitudeRight Culture

Less PotentialSolo Entrepreneur

Uneven SkillsNot committedTalker AttitudeWrong Culture

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

A B

C D

High Job Creation Potential (need of people)

Low Job Creation Potential

Low Demand PotentialVery few and/or low paying

limited region customers

High Demand Potentiala 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

Use together withdevelopment phases

criteria

About Metrics● Ecosystem as a funnel ● Input and output volumes of each service● Compare each service ROI separately

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

● Develop startup ecosystem as a whole● Measure “everything” to learn and improve● Improve iteratively

Recap

Single most valuable tool to improve your ROI

Free to use under creative commons licence

Original www.startupcommons.org

Licence termshttp://creativecommons.org/licenses/

“Only the things that are understood can be developed”

“When more people and organizations are developing things together, there needs to be a common language and

understanding about what is being developed.”

“Systematically implement this common language to your ecosystem and

everything follows naturally.”

“Only things that can be measured, can be improved.”

“Missing knowledge you can buy.”

“Plenty of EU funding available.”

Just take the first step...

Valto Loikkanenvalto@growvc.com

+358 400 421 551 (FIN)+1 415 854-0546 (US)

Grow VC Group ++www.growvc.com ++

@growvc ++

Twitter

@valto

#startupecosystem