Existing Innovation Ecosystems
Innovation ecosystems are the environment in which all startups begin. In this chapter, we cover one of the most powerful tools in the creation of ventures – incubators and accelerators. We first define what an incubator and accelerator is in this context
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Existing Innovation Ecosystems
Emergence of Innovation Ecosystems A business venture starts in a context just as every organism does. They also have life cycles. They are born in the minds of philanthropists, entrepreneurs and technologists. They consume capital to grow, become self-reliant and grow more. Eventually, they may become public, offering either stock or tokens (coins) that give the public an opportunity to buy part of the venture (initial public offering or IPO). They can be bought by a larger player, merged with a peer or extend into new markets. Or they can die, taking dreams and money with them. All of this happens within the context set by governments, industries, technology, supporters and detractors. This creates a complete environment and it is why we call it an innovation ecosystem. Successful enterprises thrive in the most supportive ecosystems. Supportive ecosystems provide several shared services so that the founders can focus on what they should be doing best – building an awesome product. This enables them to lean on each other, learning common lessons. The ecosystem will also contain those entrepreneurs that have learned from each, and move faster towards building products, and talk to users to meet the desired market need. These ecosystems have been evolving over a period of time and are now more mature than ever. Fig. 5.1 shows a high-level journey taken by the industry in this regard. Long research and experience give us a solid basis for knowing rates at which new ventures succeed. Data from that research performed over the last 20 years holds new technology venture success rates at lower than 5%. This means that out of 100 starts, fewer than 5 will succeed. Thriving ecosystems produce more starts, but do not, in the absence of other factors, show better success rates. The reasons for these failures are outside of the scope of this work, but what has emerged is that during the early stages, ventures need a higher level of support. The most effective form of that support has proven to be incubators and accelerators.
© Springer Nature Switzerland AG 2019 S. K. Sharma, K. E. Meyer, Industrializing Innovation-the Next Revolution, https://doi.org/10.1007/978-3-030-12430-4_5
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5 Existing Innovation Ecosystems
Startup ecosystems are evolving over past 25 years … but a wide variability exists Dynamic Interplay of Evolving Business Drivers • • •
Focus
Industry specific Tech-specific General
• • •
Funding
Public Public + Private Private
• • •
• 2010s - 2020s … • • • • •
Financial Models
Real Estate (lease) Accelerator (equity) Work Place (combo)
Smart Hardware IoT, AI, Data, VR … Digital transformation Shared economy 4thIndustrial revolution
• 2005 - 10s
• Early 2000s • Early 1990s
• State funded basic infrastructure • Software park culture evolved • Internet enabled connectivity
• Web 2.0 & Social Networks • Private capital infusion • Industrial e-Businesses
• Public-private capital • e-Commerce boom • Access to global markets
Fig. 5.1 Evolution of innovation ecos
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