Startup Estonia
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This document profiles Valto Loikkanen, an experienced serial entrepreneur and startup advisor. It discusses his background founding multiple companies over 20 years and mentoring over 2000 entrepreneurs. The document also outlines Loikkanen's work developing tools and platforms to support startup ecosystems through his company Grow VC Group. It provides an overview of key stages in startup development and emphasizes the importance of measuring ecosystem services to continuously improve support for entrepreneurs.
Startup Estonia
- 1. Startup Estonia Valto Loikkanen Grow VC Group ++ www.growvc.com ++ @growvc ++ Copyrights © Grow VC Group 2014
- 2. About me
- 3. As an Entrepreneur ● 20 years as international Serial Entrepreneur (US, EU, Asia) & Portfolio Entrepreneur, with personal hard earn success & failures ● 17 years experience in developing web based tools for various business processes ● 6 Years of developing equity crowdfunding model globally via Grow VC Group (scaling risk funding) ● 5 years for Startup Ecosystem online support tools, platforms & metrics ● For past year, being part of three EC Horizon 2020 Groups: ○ Access to Risk Finance, ○ Spreading Excellence & Widening participation ○ International Cooperation
- 4. As a Business Advisor ● 10 years of startup mentoring with over 2000 one to one mentoring sessions and workshops with 1000+ entrepreneurs and hundreds of startups around the world at various development stages and industries ● 10 years developing Startup Support services, with entrepreneurial mind and lean methodology (fast ideation, implement and measure cycle) ● 5 years of “living lab” development for Startup Ecosystem in Finland with City of Helsinki
- 5. About Grow VC Group "The global pioneer of securities crowdfunding, peer to peer marketplaces and new investment models."
- 6. Other Business Verticals Real estate, P2P loans etc. Consulting in specific areas Local Investors Startups Startup Ecosystem Global Investors
- 7. Other Business Verticals Real estate, P2P loans etc. Local Investors Startups Startup Ecosystem Global Investors Consulting in specific areas
- 8. Startup Development Phases & Startup Ecosystem Development
- 9. Where Does Innovation Happen?
- 10. Innovation Ecosystem Research IPR Innovation via Big Companies & Public Sector. Closed process & Internal resources Innovation by Startups Funding Sources Customers
- 11. Megatrend Innovation process is moving away from “closed structures” and big companies to more open and collaborative startup ecosystem.
- 12. Research IPR Innovation via Big Companies & Public Sector. Closed process & Internal resources Innovation by Startups Research IPR Innovation via Big Companies & Public Sector. Innovation by Startups Open, collaborative & external resources Funding Sources Service Providers Support Organizations Funding Sources New Funding Solutions Innovation Ecosystem Startup Ecosystem Customers Customers
- 13. Startup Ecosystem Research IPR Innovation via Big Companies & Public Sector. Innovation by Startups Open, collaborative & external resources Funding Sources Service Providers Support Organizations New Funding Solutions Customers
- 14. Difference between innovation & startup?
- 15. “Innovation is about developing a new product, service or business model.”
- 16. “Startups do innovation AND also develop a new growing company & business.”
- 17. Why this megatrend? ● The megatrends of innovation is focusing more and more around startups ● The old world is about ideas, research and big companies creating the innovation (products and services from these). ● The old models is already working at it’s best and is difficult to improve - as such, little growth can be achieved in that area ● The new world is about making the innovation happen via Startups, where innovation is also more openly and independently exposed to markets ● Startups are “outsourced innovation” for big companies and biggest group generating new jobs ● Startups are fast, flexible, highly motivated, cost effective and supported by private and public parties ● Smart big companies are moving more and more away from traditional innovation models towards more open innovation and working with and buying most promising startups after they have validated scalable innovation.
- 18. Why Startups?
- 19. Recent study by Kauffman Foundation and the Institute for Competitiveness & Prosperity.
- 20. “Over the last twenty five years, almost all of the private sector jobs have been created by businesses less than five years old.”
- 21. “Between 1988 and 2011, companies more than five years old destroyed more jobs than they created in all but eight of those years.”
- 22. What is a Startup?
- 23. Startup “A startup company or startup is a company or temporary organization designed to search for a repeatable and scalable business model” - The term became popular internationally during the dot-com bubble http://en.wikipedia.org/wiki/Startup_company
- 24. “New Startup” High Growth Ambition and very scalable business model A B C D Low Growth Ambition and/or Non Scalable business Market validated business model Unvalidated business model "a kiosk" "new startup"
- 25. Startup stages
- 30. Startup Key Milestones -2. Ideation -1. Concepting 0. Commitment 1. Validation 2. Scaling 3. Establishing
- 31. From investors and startups point of view
- 32. “Investor” - anyone that makes meaningful resource investment purely for ROI money, work, project, time, skills, contacts etc..
- 33. Valuation? ● typically used and know from investing money to company ● is needed also for other calculation purposes ● is also needed for founders ownership % estimates & sweat equity investments (for work, services, contacts etc.) ● acts as a measure of company development ● is a core "deal tool" at all stages
- 34. About valuation ● for cash investment the valuation is typically lower than for other types ● is only as real as validated with an actual deal(s) made - anything else is "guesstimate" ● typical valuation levels do exist for different stages ● early stages more based on promise and later stages more based on results so far + estimated development curve
- 35. Ideation ● Potential scalable product/service idea ● Some initial business models for how it would make money ●One person or vague team ●no real commitment confirmed ●and/or no right balance in the team structure yet -2 -1 0 1 2 3
- 36. “Investors” view "pie in the sky" – a lot of work to get involved....
- 38. Business Potential More Potential Big Market Market growing Market pull Scalable Less Potential Small market Market shrinking Market Push Not scalable
- 39. Concepting ● Have set some clear meaningful target ● clear direction (3y+) with key milestones to get there ● …36, 24, 12, 6, 3 months -> 3, 6, 12, 24, 36 months… ● Team of two or three core people ● but can also have additional team with lighter commitment -2 -1 0 1 2 3
- 40. “Investors” view “hmmm..., maybe there is something here...” still very risky.... money does not really help here...
- 41. Valuation level $0 - 100k
- 42. Commitment ● Committed skills balanced founding team ● Able to develop the product/service (without dependency of uncommitted external resources) ● OR already have initial product/service developed ● Shareholder agreement with “right things” in it ● milestones & committed time/money usage ● founding team commitments for min. 2+ years with vesting, etc. -2 -1 0 1 2 3
- 43. “Investors” view “Looks like this may have real potential..? Time to get in for a good deal...? Still very risky..... Maybe join as Advisor...?”
- 44. Valuation level $300 - 500k
- 45. Team Validation More Potential Good Team Balanced Skills Committed Doer Attitude Right Culture Less Potential Solo Entrepreneur Uneven Skills Not committed Talker Attitude Wrong Culture
- 46. Validation ● Can already show some user growth and/or revenue (initial traction) ● And/or continue to attract external resources (money / additional people/work) for equity or future revenues -2 -1 0 1 2 3
- 47. “Investors” view “This is starting to get interesting...” Join now? - Later I may not get in or it's going to be out of my range…
- 48. Valuation level $500k - 2M
- 49. Between Previous & Next Stage ● Is where assumptions get validated ● If selected market and team is good… -> The idea and business models can be (and often is) changed or pivoted several times
- 50. Scaling ● Showing clear and growing user/market traction, momentum and or growth ● And/or is able to attract significant funding -2 -1 0 1 2 3
- 51. “Investors” view awesome! :) OR Oh, I missed the boat :( earliest time when good VC's start to get interested....
- 52. Valuation level $1 - 10M
- 53. Establishing ● Pretty clearly is going to make it ● Often wants to culturally continue behaving like a "startup" for as long as possible ● No longer need to "try" get resources and can get those easily ● Continue to grow ● Founders make exit or continue biz as usual -2 -1 0 1 2 3
- 54. Valuation level $5 - 10M+
- 55. Success idea + plan + action + timing = reaching a set target
- 56. Success idea + plan (set of initial assumptions) + action ((volume x testing assumptions - failures) + (volume x testing improved assumptions - failures)) + timing = reaching a target
- 58. "What are the keys to help get successful results?"
- 59. ● To new growth ambition startup creation ● Pre-startup and early stage startup support services ● get more research, inventions, ideas and other IPR to be utilized by startups ● develop individual services in balance & context with entire ecosystem Focus
- 60. Startup Ecosystem A startup ecosystem is formed by people, startups in their various stages and various types of organizations in a location (physical and/or virtual), interacting as an organic system to create new companies. Different organizations typically focus on specific parts of the ecosystem function and/or startups at their specific development stage(s). Learn more: http://www.startupcommons.org/understanding-startup-ecosystems1.html
- 61. Startups & Ecosystems Startups develop in startup ecosystems through the development phases in constant interaction with various organizations, services & people. The more dynamic, transparent and balanced the ecosystem is the more successful startups ecosystem can create.
- 62. Three steps of ecosystem development 1. map out starting position 2. Identify and fix gaps and bottlenecks 3. implement measurements Iteratively improve; measure and learn
- 63. Using key stages tool ● Map out ecosystem ● Describe ecosystem ● Common Language To Label items; ○ startups, services, events, funding instruments, blog posts, tools, ideas, suggestions, etc.
- 65. Startup Development Public services & funding Knowledge vs. Money Private service providers & investors -2 -1 0 1 2 3
- 66. Map your startup ecosystem services here! -2 -1 0 1 2 3
- 67. Organization B Service A Organization A Service A Organization A Service B -2 -1 0 1 2 3
- 69. Idea evaluation NOTE: as a public sector! High Job Creation Potential (need of people) A B C D Low Job Creation Potential Low Demand Potential Very few and/or low paying limited region customers High Demand Potential a lot of potential well paying international customers No Value Idea High Value Idea Medium Value Idea Low Value Idea
- 70. High Growth Ambition and very scalable business model A B C D Low Growth Ambition and/or Non Scalable business Market validated business model Unvalidated business model "a kiosk" New Startup at Stage 0 Startup Early Startup at Stage 2
- 71. Use together with development phases criteria
- 72. About Metrics ● Ecosystem as a big service offering and a path ● Find bottlenecks ● Develop in balance ● Input and output volumes of each service ● Measure & iterate to improve services
- 73. Single most valuable tool to improve your ROI Free to use under creative commons licence Original www. startupcommons.org Licence terms http://creativecommons. org/licenses/
- 74. Recap ● Develop startup ecosystem as a whole ● Measure “everything” to learn and improve ● Improve iteratively
- 75. “Only the things that are understood can be developed”
- 76. “When more people and organizations are developing things together, there needs to be a common language and understanding about what is being developed.”
- 77. “Systematically implement common language to your ecosystem and other things will start to follow naturally.”
- 78. “Only things that can be measured, can be improved.”
- 79. “Any missing knowledge you can buy.”
- 80. “Plenty of EU funding available.”
- 81. Valto Loikkanen valto@growvc.com +358 400 421 551 (FIN) +1 415 854-0546 (US) Grow VC Group ++ www.growvc.com ++ @growvc ++ Thank You! #startupecosystem