Entrepreneurship Ecosystem:- 2016 has been ended, I worked harder than ever with Startups of all sectors, technology, knowledge and maturity stage, and have concluded a set of ideas that I hope will be of value to all those you start a business project in 2017, And which I will detail in the following points:
Entrepreneurship Ecosystem for 2017
1.- Business Idea is not Enough
I do not want to extend much in the first conclusion, as in previous post ” ideas weigh little in the business success ” made it clear that the ideas are worthless, only the ability to execute we make of them. It is difficult for me to explain to people again and again, I do not even want to call them entrepreneurs, who after a creative occurrence think they have discovered the solution to a big problem.
But I want to go further, and without being pessimistic, I have to tell you that I have seen over and over how great business ideas have been transformed into business models but whose business end is very high probability closing. In these cases it is not for lack of execution, but for lack of a deep knowledge of the sector where we operate.
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Make no mistake, there are very few startups that are born and consolidate in sectors whose founding partners did not know in depth, and on the contrary, there are many occasions when entrepreneurs tell me how they will revolutionize a sector through different innovation Disruptive “Disruptive innovation” how easy it is to say, and how extremely difficult it is to achieve it.
Entrepreneur, or you enter in a sector in the way that you consider opportune before undertaking to know it in depth, or you can go faster through an ally that already operates within that sector. You may find it useful to list your startup stakeholders and find allies among your suppliers, customers, or channels.
An industrial partner can always be a good opportunity to get a deeper knowledge of the sector as to its formal and non-formal rules, as long as you do not allow yourself to be vitiated by it in the solution of the problem. The Corporate Venturing is the tool for big companies to become your industrial partner. IEBS Venture Lab is a service business innovation that advises companies on such strategies.
2.- The business creation ecosystem is not yet mature enough
Incubators, Accelerators, Business Angels, Venture Capital, crowdfunding platforms and equity funding are just some of the existing structures in Spain who support entrepreneurs in their development, but In all? , the answer is no.
We have excellent structures for the generation of ideas, validation and initial growth phases. I am talking about the best business schools, excellent incubators of ideas, specialization in verticals accelerated by sectors or technology that are already starting to be more numbers, and venture capital funds, mostly founded by successful entrepreneurs after their Exits.
However we are still very green as an ecosystem to grow in size and volume to our Startups. We are still a country of micro-enterprises, and this has to change as soon as possible. To improve this, we need structures that advise on methodologies Growth Strategy , but new venture capital funds entering companies with ratings of more than 100 million euros, and large companies of this country bet indeed for corporate innovation are also needed Through Startups. We will never be able to compete if our technology companies are still comparatively small.
From the public side, it requires more volume of technology development funds from the same CDTI , but more efficient. A real commitment from Europe to finance business projects of high growth potential could be another solution, and perhaps in this way we could also resolve some of the thousands of people called ” or nis ” to join a new world of work more technological. We need them trained and with attitude.
In addition to financial aid, it is necessary to encourage mergers, acquisitions and partnerships between technology companies throughout Europe if we really want to compete with other places like the American or Indian. The fiscal consolidation should not be an obstacle in Europe, but not the only problem to solve. If we are European, I let us be real and seek the best companies in every corner of the continent, and I’m not just talking about fairs, I’m talking to seek new business connectors. I do not know how, but I know we need it.
3.- Culture and skills remain a pending subject
In many forums, congresses and conferences, I come back to listen as “experts” talk about the qualities that every entrepreneur must have: leadership, teamwork, vision, ability to execute, empathy, emotional control, bla, bla, bla … There are very few times I’ve seen a person change. Yes, you can, but it is so unlikely that the best thing again is to seek allies in the form of partners that add capabilities that one does not have. Again , collaboration and partnerships are key to success, as I commented from the post ” Failure is the result of a person. Success is the team. “
And the ambition? , I see very little ambition among young people today , and continue to see short – term culture, and this is synonymous with failure. When Startups have validated its business model and discovered “something”, or make you grow or decrease. There’s no more.
In addition, it is perhaps this lack of ambition that prevents good entrepreneurs from becoming excellent entrepreneurs. Being good mathematicians prevents us from being excellent mathematicians, being good entrepreneurs will not let us be excellent entrepreneurs, being good people prevents us from being excellent people. Being good prevents being excellent.
4.- Excessive concentration in two cities: Madrid and Barcelona
The epic struggle between Madrid and Barcelona for being the epicenter of the entrepreneurial ecosystem in Spain makes no sense if Spain itself is not the center of anything. Spain is much more than two cities, and we have talent in all of them. We forge an ecosystem of support the entrepreneur so that Madrid and Barcelona are important, but also generate new nodes in a network structure in which cities like Valencia, Seville, Bilbao or A Coruña can have relevance, and of course value. Even with this, saying that according to the study by EU-Startups , Barcelona is the first Spanish city as entrepreneurial hub in Spain in fifth place, while Madrid appears right behind in sixth.
Concentration is fine, but if we live in a digitally connected world, let us think of the fact that the best talent for my company does not have to be in my city or in my country. It can be anywhere in the world. One of the keys to entrepreneurship will be managing and coordinating work teams distributed in different spaces, cities or countries, with different cultures and languages. But just that diversity will provide an even greater value to startups.
5.- Repeat and repeat the same mistakes
There are many more projects that fall when compared with successful projects therefore easier to study the causes of failure that causes success . At this point, the errors I see most often are as follows:
- A friend or relative is not your best partner, seeks similarity in values but complementarity in training and skills.
- Failure to make a good partner pact is critical to overcoming the first problems.
- The product is never finished is something common from engineering people, and it is a deadly trap.
- Bad financial forecasts, such as forgotten expenses and upbeat earnings.
- High burden of fixed costs. Outsourcing exists, use it.
- To think that your product will be viral is something recurrent, and very, very, very unlikely.
- Think only about attracting investment, and not so much on revenue.
- An original idea is not a business, it’s just an idea and nothing more.
- Losing focus at critical times of growth
6.- On the value of the companies
This section deserves reflection in greater depth, but why the minimum value of all Startups I’ve met this year was one million euros? I hope it is not to be able to make the mental calculation as to the percentage negotiated, because if it were, leaves much to be desired of the entrepreneurs.
If you want to be rigorous, elegid a form of valuation and justify it . And the best way to value it is through the positive cash flows of the coming years. Estimate your EBITDA for the next 5 years, attach them and apply a multiplier. This figure is also subjective, but of course it is much more consistent to defend and argue than the standard million euros. In addition, it will seem to you what you have worked right?
7.- And if we talk about education and training
At this point the subject becomes even more complex if it fits. I teach for entrepreneurs in both private business schools as IEBS , and public universities like the University of Castilla – La Mancha and this allows me to have an idea of both in parallel.
In this case I will tell you as a friend of mine says that life is not black or white, but color . I have heard on numerous occasions that in Spain we have the best private business schools because we have the worst public university, and I do not entirely agree. I think yes, we are among the countries with the best business schools but certainly not caused by the public university, is caused by its own management and good work of excellent professionals, and good lobby, if I may say. And regarding the public university from the context of entrepreneurs, because if, it is much, much work to do . Classes remain unidirectional student teacher, many students should be in vocational training if the system was as it should, and teachers demand refresher training at least those who still passionate about what they do, they are not all. Lack updating content on many subjects, and missing digital subjects in each and every degree , as technology is horizontal to all areas of knowledge.
According to a study by the BBVA and the Valencian Institute of Economic Research (Ivie) foundation , the training of Spanish entrepreneurs has experienced a breakthrough in recent years. However, we still have a very high rate of entrepreneurs only compulsory education , 37% versus 18% on average in Europe, and as for the self – employed, only higher education have 35% of them.
University-Enterprise technology transfer systems work only in some cases, and it is a subject of people. Those who get involved make it work, that simple.
The university system is not obsolete, I do not think so, what I think is that it has to improve a lot, and I also believe that it can do it with attitude. Without this there is nothing to do.
By the way, the bad university-business relationship is not only a problem of the university, it is also of the company. Companies often have much more culture inwardly out, and I think it is time the Open Innovation concept by which the company opens its innovation processes out of herself, a much richer concept.
8.- The role of incubators, accelerators and Venture Builders.
The first left over, i.e, already have more than enough incubators of ideas , both public and private, much more than the first because the incubators themselves do not have a business model.
As for the accelerator, to say that I know very well, and in most cases, if speed is by sheer coincidence , because they do not have a methodology acceleration. Mentors and capital are not efficient if they do not have a continuous discourse, that is, an end, a history or a plan, whatever you want to call it. The accelerator will have up-righted by sector or technology to add value, but still need of true methodologies .
The Venture Builders is the latest, and they have their mission, and I think they are well executed, by very capable people.
I also believe that the key to accelerators and venture builders now, at this time, to bring them to the big company, to make them corporate. I would go for this approach to Corporate Venturing .