Scaleups: some vital new signposts

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Recent research suggests that specialised support programmes could facilitate the development of hi-growth SMEs

Recent research showed that the more successful teams in Accelerators tended to be existing ventures, with well qualified teams, focused on the adoption of their products/services, and on building their organisation.        Innovate UK should foster the development of programmes that support the timely and progressive changes in management practices that new research reveals distinguish the development of hi-growth SMEs.

Village Capital in New York – a not-for-profit founded in 2009 (1) – has just published research (what’s working in startup acceleration), based on its own programmes, on what makes Accelerators more effective.

The research, which compares and analyses its more successful programmes with its less successful ones, was carried out with a US university, a local network of development entrepreneurs and a consortium of public and private funders – building on a programme that works with accelerator programmes around the world.

Its main findings that are of general application are:

*       Accelerators have better results with ventures that have some initial revenues, but need to accelerate their development.

*       The high-performing programmes had smaller applicant pools on average. However, their applicants tended to have more intellectual property and more educational, entrepreneurial and senior management experiences.

*       High performing groups tended to spend more of their time out and about and less with other members of the cohort, mentors etc

*       Programmes need to focus more on building entrepreneurial networks, and less on delivering content.

*       While understanding financials is clearly necessary for investment readiness, high-performing groups focused more on presentation and communication skills and networking, and on organisation structure and design.

*       High-performing groups tended to have more mentors, but alumni were less valued as mentors than those from potential customers/users.

*       Partner groups needed to be engaged and to have a serious interest in supporting their startups.

Moreover these findings are echoed very closely in the just-published Barclays Scaleup Report (Barclays/scaleup).

This report also comments that support for hi-growth SMEs needs to be sustained and ‘heavyweight’ so as to achieve timely progressive changes in management practices as they develop and grow. Incubators – with their premises, their staff and their existing occupants – could develop specialised support programmes that do so.

John Whatmore, April 2016

(1) Village Capital’s focus is on social enterprise, and its model subverts the common approach of commercial accelerators in that it focuses first on objectives, and only then on resources. It sees capital as a resource in the service of its mission rather than as a determinant of new businesses; and puts projects and teams together on the basis of what will best achieve the social objectives it espouses, such for example as enhancing private educational facilities in Indian schools.

 

 

SMEs need someone to act as ‘chair’

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SMEs need someone to play the chairman role even more than do bigger businesses Lead mentors have the ability to ask the right questions and to turn up with someone who has just the expertise you are about to need.

Wayra Lab, Startupbootcamp and Techstars all attach mentors to their young businesses so as to provide feed-back and advice at the moment it is needed – on a proactive basis, not just when it is sought. This is in sharp contrast to Incubators such as those at Sussex Innovation Centre, Imperial College and UCL’s IdeaLondon and others, where advice or help is provided when it is sought – on a reactive basis.

There are topics that early-stage businesses know little about (eg development grants, intellectual property); there are things they don’t know how to do (eg 3D printing, ‘chatbot’ publicity); there are tasks of which they have little experience (eg strategy and management), where someone who has ‘done it before’ is invaluable. And in a world of disruptive advantage, time is not their ally.

Jim Milby who mentors several small businesses, recently retired as a Director of Barclays Bank, where he has ‘seen a few businesses’ and ‘knows a lot of people’. It is his extensive experience, his connections and importantly his independent voice that make him highly valued by the SMEs he works with. He has always insisted on having a regular review of progress – once a week ‘because you don’t want to go pitching for funding before you’ve got some customers.’ While the team, he says, are preoccupied with driving towards their current objectives, he might be asking questions about whether it is time to change something – in the product, or the target market segment, the key customer benefits, the strategy for getting there, or even the team itself.

John Whatmore, April 2016

The Super-hiway’s myriad of byways

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The information super hi-way develops a myriad of by-ways

Sophisticated communications are becoming one of the main beacons of successful innovations – as was evidenced by five separate stories about new products and services published on a single day in a heavyweight US daily.

Images under your very nose Fashion houses are showing off their latest wares closer and closer to their customers.

In a fashion world in which the hackneyed routine of the cat walk is in the process of being disrupted, one fashion house is currently using the internet, video and film (soon in 3D), to present its designers and creaters, its models and stars showing off its latest styles. But it envisages a future even beyond virtual presentation eg by OculusRift, in which the model for example will be seen in your own living room showing off the latest apparel that has captured your eye.

Ads sneeking in everywhere More and more aspects of our lives are being used as triggers to provide us with related information.

Messaging apps, Facebook, Snapchat and their ilk, reluctant to risk adherents switching off through the inclusion of out-and-out advertising, are allowing advertisers to experiment with devious ways of intruding their messages into chat forums – such as overlays, insertions (like branded emojis), virtual characters and clickthroughs (to videos, offers and contests, even bookings), and ‘chatbots’ (robot conversationalists). These are based on their intimate knowledge of users’ likes and dislikes and on their particular moment-to-moment situations (like showing the name of a local curry house that offers Singha Beer to two mates planning a Friday night out).

Brands building ‘relationships’ In an increasingly crowded commercial world, brands are seeking to forge ‘relationships’ with their clients.

In the world of marketing, one way forward is illustrated by the CEO of a luxury brand which is aiming to build relationships with its clients by relating to them and engaging them based on their personal tastes; and bringing them into its world – in which its own and its sponsored activities and events epitomise the brand and the lifestyle that promotes its products.

Data mines getting personal Data sources are becoming more tractable and more adapted to their users.

A new service coming out of public offices in the US enables the acres of data that have recently been made public to be searched by key words and by types of analysis (such as New York: economy/demographics/education), transforming data into stories along with colourful graphics and short sentences. The site makes assumptions about its users and programs those assumptions into its software.

Deliveries out of thin air The first delivery service of healthcare supplies by pre-programmed drones launches.

A specially designed fleet of drones, created by a Silicon Valley startup, will shortly start to deliver urgent supplies of blood and pharmaceuticals in an African country. Similar projects have been touted in other countries, but have been hampered by walls of regulation and conflicting rules. Rwanda has a poor infrastructure but its simple decision-making regime has enabled it to be the first country to set up such a service. Using SIM card instructed route plans and GPS controlled guidance, a small staff will deliver 50-150 medicines a day to 21 hospitals and clinics, using paper parachutes to deliver their cargo.

From the International New York Times, 4 April, 2016

John Whatmore, April, 2016

Imperial’s multi-themed Incubator

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Imperial College’s Incubator and its sector-themed components

Imperial’s Incubator houses some 20 SMEs and has four other components, all of which aim to help bring specific expertise, contacts, space and finance to incubate and accelerate ideas – de-risking them and pressure testing them against the ‘real world’ of customers.

Two of the four are focused on the commercialisation of emerging technologies (Synthetic Biology and Cleantech); and two are university-related idea-development facilities (a ‘deep science’ pre-seed Accelerator and an Advanced Hackathon).

The Incubator is home to some 80 young businesses, where the success ratios quoted and the financial returns indicated are very high; but the number of new businesses generated is not.

 

 The Incubator’s main aim is to encourage an entrepreneurial environment alongside high quality academic research and teaching. Students are encouraged to try, experiment and sometimes fail in a stigma free environment. All the four examples below utilise Lean Canvas/I-Corp-like (1) approaches and stress early customer engagement as a key attribute.

Imperial’s Incubator, active now for ten years, is multi-faceted: it is a large area on two floors, with offices in a figure of eight around an atrium, with some technical facilities, a strategically placed coffee machine (with free coffee) and a small open plan kitchen – and thus full of ‘bumper car opportunities’. (A similar space is currently under construction at the White City campus.)

Its 80 young businesses are at all sorts of stages of development. Some 20 SMEs form the core occupants, in many of which Imperial Innovations has invested and taken an active part in their development – they stay for 2 to 5 years, (average three) and two or three new ones are able to enter each year. There are some 30 virtual businesses (that hot desk); 10 ‘cleantech’ businesses, and 10 very early stage businesses in synthetic biology; and finally, it is now host to the winners in an annual competition for startups.

Support (ie advice, introductions etc) is available, mostly in the university, through the Incubator Manager, who meets CEOs and teams at intervals and by happenstance, and asks them how he can help them (ie in reactive mode); but it is down to them to figure out what they don’t know that they need to know (eg about business) – business experience from outside the university plays little active part in the Incubator.

Advancing the development of synthetic biology. SynbiCITE is one of seven ‘Innovation and Knowledge Centres’ established in the last few years in different places round the UK, and supported mainly by the Research Councils, whose aim is to develop emerging technologies that have the potential to become major industries. Synthetic Biology – creating manufacturable agents by digitally engineering their biology – is in its very early stages: the Centre is still in the process of identifying challenges for which there may be commercialisable solutions (such as in chemicals, advanced materials, energy, health and environmental protection); and seeks to generate a wide variety of collaborations (it embraces 27 UK universities and 67 large companies) that will advance its development (see also 2); and to provide computer-based design, construction and validation of the constructs in the science. It already has ten early stage businesses located in the Incubator. http://www.synbicite.com/.

Developing innovations in cleantech and climate change Imperial’s Climate accelerator programme – also housed in the Incubator – focused on cleantech commercialisation (and the only such programme in the EU) is an 18-month ‘real life’ business school for cleantech entrepreneurs which teaches tools and techniques with the help of intensive coaching. In addition, it offers participating entrepreneurs Master Classes, a Venture competition, and connects them with customers and investors (see also 3). The ClimateLaunchpad is Europe’s largest cleantech business idea competition designed to unlock Europe’s cleantech potential and support innovations in climate change. Its incubators provide opportunities to work with experts and partners, both on the supply and the demand side, and offers startup tours, travel and support etc. http://www.climate-kic.org/for-entrepreneurs/. 

 Student focused ‘deep science’ pre-accelerator. The Incubator is running the fourth of its competitions for startups, whose fifteen winners will have space free of charge for one year in the Incubator, where they will progress towards becoming investable businesses. Out of 170 applicants, 22 were selected to enter the 12- week programme (a classic Accelerator programme (4)); and 7 will pitch to the judges, one of whom will win a £10,000 prize. It is designed to enable scientists to turn their inventions into new products and ventures, especially in slower paced and higher cost sectors such as hardware, cleantech and biotech; and only 15% of the present cohort are digital businesses. For contacts and supporters, the programme relies intensively on Imperial Innovations and Imperial College’s networks. http://imperialcreatelab.com/.

Advanced Hackspaces provide a community of innovators with a network of prototyping workshops and labs eg in electronics, digital manufacturing, metal working, computing and chemistry, offering use of equipment and opening up opportunities for collaboration with “like-minded makers” for prototyping concepts, either for basic research, product development, personal projects or entrepreneurial ideas. By bringing together top academics, professionals, technical and practical experts, Hackathons tackle large scale problems and grand challenges that would benefit from networked science solutions – which can be followed by more focused Hackathons. https://www.imperial.ac.uk/advanced-hackspace/.

Imperial Innovations technology transfer team sit at the front end helping to identify and protect IP where needed, and at the other end, taking opportunities to commercialise IP.

John Whatmore, March 2016

 

     (1)Steve Blank’s I-Corps Biotech Boot Camp

Hallowed publication ‘Nature’ reports on a nine-week ‘Biotech Boot Camp’ in the US, funded by the National Institutes of Health, which aims to get entrepreneurial scientists to get out there and ask potential customers what they want. http://wp.me/p3beJt-av

     (2)A promoter of collaborations to tackle serious issues

Ian Downey at the European Space Agency puts consortia together for innovative projects enabled by Satellite technology. To combat the recent sharp rise in Lyme’s Disease he had brought together researchers into malaria in Africa and in the UK, GPs and hospitals in Scotland, and pharmaceutical companies – in a project funded by the Agency at Harwell.

     (3)A lab head and product developer

At MIT she encouraged her students to tackle issues that could have commercial appeal as much as scientific value, and helped them to realise their commercial capabilities as well as produce great science. (Science 12 June 2015) http://wp.me/p3beJt-dw

     (4)Accelerators as short, managed development programmes for a small number of young businesses, working in a communal space, and with a plethora of supporters, to reach a stage where they have a business proposition that can attract further funding.