Friday 29 May 2015

What are the indicators of a Pro startup Ecosystem?

What are the indicators of a Pro startup Ecosystem?

Past few years in India have been exciting for startups & entrepreneurial community. India is expected to be second largest startup ecosystem in the world in next two years period according to a recent report published by NASSCOM.

According to the report, in 2014, India witnessed over 800 new startups. The total amount of funding received by startups since 2010 is exceeding over USD 2.3 Billion. Apart from private equity & venture capitalists, there are over 60 angel investors & over 80 startup incubators & accelerators are active in the country. As this connection between entrepreneurs & organizations providing support to them deepens, the strength of entrepreneurial ecosystem grows. Add to this the rejuvenation added by budget for 2014-15 which has several proposals announced by finance minister. Budget surely promises to be encouraging for entrepreneurs & shows some serious commitment from government towards unlocking India’s entrepreneurial power to fuel desperately-needed jobs and economic growth.
Research has shown that the job creating potential of new, young & growing companies is essential for the economy of the country.

Typical methods used for evaluation of entrepreneurial ecosystems focus on sizing up risk capital, incubators, a supportive culture, etc. However there is significant room for improvement if we focus instead on the relationships between these elements and if we measure how the ecosystem has evolved over time.

What are good indicators of a good startup ecosystem?

1.       Connected Entrepreneurs

Connections between entrepreneurs is extremely important & valuable. A good community/ forum for learning & support, observing each other’s performance & to provide a feedback is a good way to stay connected. Communication or interaction may not be between entrepreneurs working in the same field (obviously, due to competition anyone would want to hold the information to themselves).
Experienced entrepreneurs can guide the novice entrepreneurs & help them avoid common pitfalls or help with a typical problem.

2.       Connections between support organizations

Highly collaborated & co-ordinating support organizations are essential for a good startup ecosystem. Discussions & interactions between support systems can avoid unintentional & unnecessary overlap of support for specific companies.
New & upcoming support organizations, or changes in leadership of an existing support organization point towards constant changes in support organization. This indicates that injecting the missing elements to the support is not sufficient to create a healthy ecosystem, but relationships between the support elements is more crucial & matters the most.

3.       Relationship between Entrepreneurs & support organizations

A support organization could be helping an entrepreneur either by mentoring or with the financial support. While incubators work closely with startup on functional aspects of the business model, venture capitalist & private equities are focused mere towards financial viability & success of the business model. A right mix of both these types of support organization is key to success of any new venture. This is mainly because both the aspects are interlinked & cannot be considered in isolation.

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