blog & news

Why we need startup ecosystems?

May 23, 2013.

The startup way, process or success path can be (most of time) a hard road for those who have the courage to try, to fail, to take the risk and pursue the goal of be called heroes, entrepreneurs and status changers.

Even with some exceptions around the globe, it is true that startup ecosystems may help a lot and improve the success rate of the projects, but how? There are a lot of key points beginning with the prepared ecosystem to grow the seed that entrepreneurs are creating every day.

Since the generation and consolidation of the Silicon Valley as the Hollywood of entrepreneurship, a lot of people are trying to replicate the SV conditions to their own cities to develop the ecosystem, generate high value companies or even attract talent.

Some cities in the world are known by the emerging of new startup environments, this cities, measured by their entrepreneurial density [( no. of entrepreneurs + no. of people working for startups or high growth companies) / adult population] proposed by Brad Feld on his book Startup Communities, are competing to have the best startup community, the major amount of success cases and of course, to be the focus of the startup reflectors.

One of the most important benefits, like Feld says, is that companies are co-located in an area benefit from “external economies of scale”. Emerging companies need certain common inputs, for example: infrastructure, specialized legal and accounting services, suppliers, labor pools with specialized knowledge base, that reside outside of the company. Companies in common geographic area share the fixed costs of these resources external to the company. In others words companies are not alone trying to survive in the desert.

To develop a success community all the actors must be convinced about the vision, generate a commitment and be clear about the role and tasks for each group. This must be a job not only for the entrepreneurs, the government, or the universities, but all of them adding the investors, the mentors, service providers and large companies must work together. If one of those groups is not developed, the other groups need to work on it, to find the people, the answers and the way to get a balanced ecosystem.

by Luis Almanza