Building specific eco-systems

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Building specific eco-systems Introspection by Village Capital in New York yields insights into the roles and activities of entrepreneur support organisations

 Most entrepreneur support focuses either on the founder or on the investor. But it is important to identify the specific role in the middle of the “Pioneer Gap”: the ecosystem builder, says a report for the Kauffman Foundation by Village Capital in New York. The people who run accelerators, incubators, seed funds, and other entrepreneur support organisa­tions (ESOs) play a critical role in their communities’.

(Village Capital works by identifying real-world problems, and finding, training and investing in entrepreneurs, and building communities around them and their ventures – to improve opportunities for growth and success. Since 2009, when it opened its doors, it has supported over 500 ventures in 45 programmes.)

The report ‘s special contributions are around the qualities to select for and to work on in founders; and on enhancing mutual understandings between startups and funders. And Village Capital’s comments on their latest inclinations (at the end of this paper).

MIT is not alone is asserting that accelerators contribute to local development, stimulate economic growth by bringing jobs, financial opportunities and people to their area of operation.

One of the report’s findings is that programmes that are sector specific raise more funds, attract better entrepreneurs and are more likely to run, and to succeed. Significantly, they attract more targeted and more useful mentors and partners.

Few entrepreneur support organisations find that they can pay for this work in full, says the report, and need to find/use revenues from other sources, such as consultancy or other services, grants (from private or public organisations), or from other benefits that they provide (eg meeting local needs).

In designing their curriculum, ESOs should be clear about their objectives: to what extent are they about product validation, developing strategic partnerships, creating quality jobs, solving sectoral problems or making money as quickly as possible. They should use measurable targets.

In curriculum design and in selection, while most accelerators rely simply on advertising their programme to attract applicants, evidence strongly

suggests that quality is more important than quantity, that you should look to draw on sectors that your accelerator will hope to stimulate, and aim to find matches between entrepreneurial potential and business type (can Myers Briggs tests help, asks the report). ESOs should strive for transparency, collaboration and communication, and peer feedback.

Village Capital’s research examined eight common characteristics of founding team members:

  • Acumen – knowledge of business and market
  • Adjustment – emotional and psychological adjustment/self control
  • Ambition – need for achievement; drive to accomplish
  • Originator – individualistic; spontaneous decision-making style
  • People-focus – perceived level of concern for people
  • GRIT – confidence, resilience, perseverance
  • Persuasion – perceived ability to get things done through others
  • Team build – perceived ability to energise, motivate and inspire team members

And added three riders:

  • Spontaneity has a negative correlation with successful leadership
  • Self-awareness has a positive correlation
  • Female founders outperform their male counterparts.

The report stresses the importance of founder awareness in curriculum planning – in terms of

  • self-awareness
  • actionable feedback (including from peers)
  • realistic milestone planning.

Village Capital’s founding philosophy is about peer selection and ranking, in order to mitigate investor bias (and skewed power dynamics), to empower entrepreneurs, and to evaluate startups and startup leadership on their own merits (eg in terms of market potential, team strength, founder coachability, go-to-market strategy, traction and execution.).

VilCap has put a lot of work into building tools for the better assessment of teams and companies – especially in terms of venture investment readiness and awareness. This has included a definitional matrix – of stages of progress, designed to help entrepreneurs and investors use the same language, entrepreneurs to become more self-aware, and to enhance entrepreneur-investor conversations.

Village Capital’s model now emphasises

  • spending less time on the curriculum and more on teams working on their own;
  • emphasising networking and collaboration (eg in your sector);
  • startups should focus on developing com-munications, networking and organisational structures; and less on financial skills;
  • mentor quality and matching are the keys to success;
  • peer investment selection.

The VilCap Model is available as a toolkit – for those seeking to make use of Village Capital’s knowledge and experience.

See:

* VilCap.com – Reports. A year of Vilcap communities: how ecosystem builders can best help entrepreneurs succeed, 2016.

* And a previous blog of mine about Village Capital at https://wp.me/p3beJt-lN Oct 2017.

John Whatmore, March 2018

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A lab head and product developer

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A lab head and product developer

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)

Jackie Ying was eager to push her already productive lab at MIT into the life sciences. Todd Zion was first attracted to her lab because of her fanatical work ethic, and her business-minded approach appealed to his nascent interest in becoming an entrepreneur – she says that every graduate student should tackle a project not only of tremendous scientific interest, but also of great commercial potential.

He was asked by Ying to see if the same technology her lab had used to make a nano-emulsion to coat the turbines in jet engines could create a platform for delivering insulin to treat diabetes. He spent two years trying to find a material that prevented the insulin from leaking out before he realised that the secret lay in chemically modifying the insulin itself. The discovery led to SmartCells, a company he and Ying co-founded in 2003, which was later sold to Merck for an undisclosed sum.

His business savvy drew the attention of Lita Nelsen, the longtime director of MIT’s technology licensing office because of the way he had run the company as a tight operation, and he was soon back starting another company with his former colleagues.

Ying says that roughly a quarter of her MIT students have founded companies or gone to work for a startup, but she has chosen not to take that path. ‘What interests me’, she says ‘is bringing the technology to a certain level where you can spin it off and then playing an advisory role to make sure that things are running smoothly.’

Andrey Zarur, one of Ying’s first graduate students who developed the technology that Zion later modified to create SmartCells says Ying ‘would take me with her on visits to companies to get funding for the lab. And I would make the presentation. People thought she was taking advantage of me because she made me do three PhD projects, but this was preparing me for the life I want’.

Ying went on to become the founding director of the Institute for Bioengineering and Nanotechnology in Singapore (‘IBN’) – to spread the twin gospels of top-flight research and entrepreneurship that she had learned at MIT. Her record over the past 12 years suggests that she has done exactly that. IBN has generated more than 300 patents, 80 licences, and eight startup companies.

Sometimes, she suggests, faculty members need help in finding a project with commercial promise, and sometimes she needs to find partners in industry to help with a project. Overall she hopes to find a way for IBN to help nurture new companies without losing all the scientists who did the technology’s foundational work. ‘We will continue to help the firms with research’, Ying says, ‘and maybe they will give us not just royalties but some shares to the people involved.’

John Whatmore, February 2016

Related news:

* It is rumoured that Telefonica’s Wayra Lab is in discussions with Isis, Oxford University’s technology transfer organisation, to set up a unit in Oxford like that of the former’s Accelerator in London.

* Imperial College now has at least four accelerators, each in a different field, each designed to encourage an entrepreneurial environment alongside high quality academic research and teaching. (A full description of these will appear shortly in my blog series.)