Startup ecosystem

A startup ecosystem is formed by people, startups in their various stages and various types of organizations in a location (physical or virtual), interacting as a system to create new startup companies. 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. Different organizations typically focus on specific parts of the ecosystem function and startups at their specific development stage(s).

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Startup Ecosystem

Composition of the startup ecosystem

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Startup Development Phases

• Ideas, inventions and research i.e. Intellectual property rights (IPR)
• Entrepreneurship Education
• Startups at various stages
• Entrepreneurs
• Start up team members
• Angel investors
• Startup mentors
• 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

• Advisory and mentoring organizations
• Startup incubators
• Startup accelerators
• Coworking spaces
• Service providers (Consulting, Accounting, Legal, etc.)
• Event organizers
• Start-up competitions
• Startup Business Model Evaluators
• Business Angel Networks
• Venture capital companies
• Equity Crowdfunding portals
• Other funding providers (loans, grants etc.)
• Start-up blogs and social networks
• Other facilitators

Investors from these roles are linked together through shared events, activities, locations and interactions. Start-up ecosystems are generally encompass the network of interactions among 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 start-up ecosystems. These interactions help to create new potential startups and/or to strengthen the already existing ones.

External and internal factors

Start-up 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 which progress from formation stages to periodic disturbances (like the financial bubbles) and then to recovering processes.

Start-up 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 start-up 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 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.

Start-up 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. Start-up 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.

In 2012, Startup Genome released a comprehensive study that compared startup ecosystems. It found the top three startup ecosystems to be Silicon Valley, Tel Aviv, and Los Angeles, but it omitted Asian markets due to lack of data.

References

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