Startups don’t just need cash, a good idea and a great team. They often need an ecosystem of support to plug the gaps in their internal capabilities.
The international development community recognised that entrepreneurship was a powerful lever to help developing countries grow and that this ‘ecosystem’ of business development services was a critical enabler (accounting, marketing, business planning etc.). To stimulate this ecosystem they invested significant amounts of money – surveys to determine needs of companies and then funding the delivery. This went on for decades and many millions of £/$/Euro was spent.
However, reviews showed that the overall impact of these programmes was low:
1) Giving services for free created a ‘hand-out’ mentality from entrepreneurs, so when the funding stopped, the ecosystem died
2) The services provided were not what the entrepreneurs needed since it catered for the ‘average’ perceived need
3) The services provided were often over-engineered and expensive and could not be supported by the entrepreneurs once subsidy ran out
To overcome this, the international community recognised that vouchers were a potential solution – they would not only stimulate market demand, but subsidise only part of the service provision, with subsequent vouchers covering less of the cost. This led to different dynamics:
1) The entrepreneur had a choice on what service to acquire and from whom
2) The entrepreneur always paid something (and over time paid proportionately more) and as such was less inclined to foster a hand-out mentality
3) A market for business development services was created (through the voucher cash injection) which tailored offerings based on need and ability to pay, and market competition created better providers
So what is the relevance to this challenge? When I watched Commissioner Kroes’ interview in the brief, she mentioned spending 80bn Euro and that their role was an ‘enabler’ and ‘cataliser’. It is not inconceivable that part of that money could be spent on developing these types of business support ecosystems, and if so I hope this inspiration gives some thought starters on the design choices!
As we think about this more, it would be helpful to get the community’s view on a couple of questions:
What (if any) business development services are needed by web start-ups?
Are these needs being fulfilled well by existing providers (i.e., the right type at the right quality and price)?
For further info, these guys have done much of the thinking in this space: www.springfieldcentre.com