A startup ecosystem is formed by people,
startups
A startup or start-up is a company or project undertaken by an entrepreneur to seek, develop, and validate a scalable business model. While entrepreneurship refers to all new businesses, including self-employment and businesses that never intend t ...
in their various stages and various types of
organization
An organization or organisation (Commonwealth English; see spelling differences), is an entity—such as a company, an institution, or an association—comprising one or more people and having a particular purpose.
The word is derived from ...
s in a location (physical or virtual), interacting as a system to create and scale new
startup companies
A startup or start-up is a company or project undertaken by an entrepreneur to seek, develop, and validate a scalable business model. While entrepreneurship refers to all new businesses, including self-employment and businesses that never intend t ...
. These organizations can be further divided into categories such as universities, funding organizations, support organizations (like incubators, accelerators,
co-working spaces etc.), research organizations, service provider organizations (like legal, financial services etc.) and large corporations. Local Governments and Government organizations such as Commerce / Industry / Economic Development departments also play an important role in startup ecosystem. Different organizations typically focus on specific parts of the ecosystem function and startups at their specific development stage(s).
Composition of the startup ecosystem
![StartupEcosystemDynamics](https://upload.wikimedia.org/wikipedia/commons/6/64/StartupEcosystemDynamics.png)
*
Idea
In common usage and in philosophy, ideas are the results of thought. Also in philosophy, ideas can also be mental representational images of some object. Many philosophers have considered ideas to be a fundamental ontological category of being ...
s,
invention
An invention is a unique or novel device, method, composition, idea or process. An invention may be an improvement upon a machine, product, or process for increasing efficiency or lowering cost. It may also be an entirely new concept. If an i ...
s and
research
Research is "creativity, creative and systematic work undertaken to increase the stock of knowledge". It involves the collection, organization and analysis of evidence to increase understanding of a topic, characterized by a particular att ...
i.e.
Intellectual property rights
Intellectual property (IP) is a category of property that includes intangible creations of the human intellect. There are many types of intellectual property, and some countries recognize more than others. The best-known types are patents, cop ...
(IPR)
* Entrepreneurship Education
[
* ]Startups
A startup or start-up is a company or project undertaken by an entrepreneur to seek, develop, and validate a scalable business model. While entrepreneurship refers to all new businesses, including self-employment and businesses that never intend t ...
at various stages
* Entrepreneur
Entrepreneurship is the creation or extraction of economic value. With this definition, entrepreneurship is viewed as change, generally entailing risk beyond what is normally encountered in starting a business, which may include other values th ...
s[
* Start up team members][
* ]Angel investor
An angel investor (also known as a business angel, informal investor, angel funder, private investor, or seed investor) is an individual who provides capital for a business or businesses start-up, usually in exchange for convertible debt or owners ...
s
* Startup mentor
Mentorship is the influence, guidance, or direction given by a mentor. A mentor is someone who teaches or gives help and advice to a less experienced and often younger person. In an organizational setting, a mentor influences the personal and p ...
s[
* Startup advisors][
* Other business-oriented people
* People from other organizations with start-up activities
* Startup events
]
List of organizations and/or organized activities with startup activities
* Universities
A university () is an institution of higher (or tertiary) education and research which awards academic degrees in several academic disciplines. Universities typically offer both undergraduate and postgraduate programs. In the United States, t ...
* Students
* Advisory and mentoring organizations
* Startup incubators[
* Startup accelerators
* ]Coworking
Coworking is an arrangement in which workers for different companies share an office space. It allows cost savings and convenience through the use of common infrastructures, such as equipment, utilities and receptionist and custodial services, a ...
spaces
* Service provider
A service provider (SP) is an organization that provides services, such as consulting, legal, real estate, communications, storage, and processing services, to other organizations. Although a service provider can be a sub-unit of the organization t ...
s (Consulting, Accounting, Legal, etc.)
* Event organizers[
* Start-up competitions][
* Startup Business Model Evaluators
* Business Angel Networks][
* ]Venture capital
Venture capital (often abbreviated as VC) is a form of private equity financing that is provided by venture capital firms or funds to startups, early-stage, and emerging companies that have been deemed to have high growth potential or which ha ...
companies[
* ]Equity Crowdfunding
Equity crowdfunding is the online offering of private company securities to a group of people for investment and therefore it is a part of the capital markets. Because equity crowdfunding involves investment into a commercial enterprise, it is ...
portals
* Corporates (telcos, banking, health, food, etc.)
* Other funding
Funding is the act of providing resources to finance a need, program, or project. While this is usually in the form of money, it can also take the form of effort or time from an organization or company. Generally, this word is used when a firm uses ...
providers (loans, grants etc.)
* Start-up blog
A blog (a truncation of "weblog") is a discussion or informational website published on the World Wide Web consisting of discrete, often informal diary-style text entries (posts). Posts are typically displayed in reverse chronological order ...
s and social networks
* Other facilitator
A facilitator is a person who helps a group of people to work together better, understand their common objectives, and plan how to achieve these objectives, during meetings or discussions. In doing so, the facilitator remains "neutral", meaning t ...
s
Investors from these roles are linked together through shared events, activities, locations and interactions. Startup ecosystems generally encompass the network of interactions between people, organizations, and their environment. Any particular start-up ecosystem is defined by its collection of specific cities or online communities.
In addition, resources like skills, time and money are also essential components of a start-up ecosystem. The resources that flow through ecosystems are obtained primarily from the meetings between people and organizations that are an active part of those startup ecosystems. These interactions help to create new potential startups and/or to strengthen the already existing ones. There are a few common mistakes that entrepreneurs make that end up costing them their business, like inability to secure adequate funding, sudden market downturn and a poor scaling plan.
External and internal factors
Startup ecosystems are controlled by both external and internal factors. External factors, such as financial climate, big market disruptions, and significant transitions, control the overall structure of an ecosystem and the way things work within it. Start-up ecosystems are dynamic entities that progress from formation stages to periodic disturbances (like the financial bubbles) and then to recovering processes.
Several researchers have created lists of essential internal attributes for startup ecosystems. Spigel suggests that ecosystems require cultural attributes (a culture of entrepreneurship and histories of successful entrepreneurship), social attributes that are accessed through social ties (worker talent, investment capital, social networks, and entrepreneurial mentors) and material attributes grounded in a specific places (government policies, universities, support services, physical infrastructure, and open local markets). Stam distinguishes between framework conditions of ecosystems (formal institutions, culture, physical infrastructure, and market demand) with systematic conditions of networks, leadership, finance, talent, knowledge, and support services.
Startup ecosystems in similar environments but located in different parts of the world can end up doing things differently simply because they have a different entrepreneurial culture and resource pool. The introduction of non-native peoples' knowledge and skills can also cause substantial shifts in the ecosystem's functions.
Internal factors act as feedback loops inside any particular startup ecosystem. They not only control ecosystem processes, but are also controlled by them. While some of the resource inputs are generally controlled by external processes like financial climate and market disruptions, the availability of resources within the ecosystem are controlled by every organization's ability to contribute towards the ecosystem. Although people exist and operate within ecosystems, their cumulative effects are large enough to influence external factors like financial climate.
Role of employee diversity
Employee diversity also affects startup ecosystem functions, as do the processes of disturbance and succession. Startup Ecosystems provide a variety of goods and services upon which other people and companies depend on. Thus, the principles of start-up ecosystem management
Ecosystem management is an approach to natural resource management that aims to ensure the long-term sustainability and persistence of an ecosystems function and ecosystem service, services while meeting socioeconomic, political, and cultural need ...
suggest that rather than managing individual people or organizations, resources should be managed at the level of the startup ecosystem itself. Classifying start-up ecosystems into structurally similar units is an important step towards effective ecosystem managing.
Startup ecosystem studies
There are several independent studies made to evaluate start-up ecosystems to better understand and compare various start-up ecosystems and to offer valuable insights of the strengths and weaknesses of different start-up ecosystems. Startup ecosystems can be studied through a variety of approaches - theoretical studies, studies monitoring specific start-up ecosystems over long periods of time and those that look at differences between start-up ecosystems to elucidate how they work.
Since 2012, San Francisco-based Startup Genome has been the first organization to release comprehensive research reports that benchmark startup ecosystems globally. Currently led by JF Gauthier and Marc Penzel, the San Francisco-based startup has been the first organization to capture the requirements of a startup ecosystem in a data-driven framework. Startup Genome's work influenced startup policies globally and is supported by thought leaders such as Steve Blank
Steve Blank (born 1953) is an American entrepreneur, educator, author and speaker based in Pescadero, California.
Blank created the customer development method that launched the lean startup movement, a methodology that recognized that startups ...
and has appeared in leading business media such as The Economist
''The Economist'' is a British weekly newspaper printed in demitab format and published digitally. It focuses on current affairs, international business, politics, technology, and culture. Based in London, the newspaper is owned by The Econo ...
, Bloomberg Bloomberg may refer to:
People
* Daniel J. Bloomberg (1905–1984), audio engineer
* Georgina Bloomberg (born 1983), professional equestrian
* Michael Bloomberg (born 1942), American businessman and founder of Bloomberg L.P.; politician and m ...
and Harvard Business Review
''Harvard Business Review'' (''HBR'') is a general management magazine published by Harvard Business Publishing, a wholly owned subsidiary of Harvard University. ''HBR'' is published six times a year and is headquartered in Brighton, Massach ...
.
References
Notes
{{reflist
Further reading
A Beginner's Guide to the Nordic Startup Ecosystem – Forbes
Knowledge Commercialization and Valorization in Regional Economic Development
Startup Weekend: How to Take a Company From Concept to Creation in 54 Hours – Marc Nager, Clint Nelsen, Franck Nouyrigat
Startup Ecosystem Angel Network
Entrepreneurship
Venture capital
Ecosystems
Types of business entity