Things to Consider When Building a Startup City
For any entrepreneurial efforts, surrounding ecosystem does play if not critical, but nevertheless important role. It creates density, competition and accessibility for all ‘invisible hand’ elements: mentorship, legal advisory, hiring and others. Over the course of last decade, we have witnessed innovation spurring in all parts of the globe and still the question remains whether one should replicate the model of Silicon Valley. The panel discussion at Startup Istanbul is a good way to start: according to its participants, one should fine elements of ‘Silicon Valley’ culture that can be recreated in local context.
Three things play an important role when talking about build-up of a startup city. Firstly, visibility for startups is really important in smaller markets. Take for instance Turkey: 76% of all M&A transactions in Turkey are at a value of $50 million or less. That means that the lions share of all exits do not get massive media headlines and as such most investors don’t fully realize their asset allocation options and possible returns.
Secondly, culture is what can make or break an ecosystem. If participants instill a culture of trust, openness, mentorship, helping and sharing – the ecosystem can flourish. This is what’s unique to most entrepreneurial ecosystems is the conditions under which bonds are formed and networks established.
Thirdly, scale can play an important role too. If an ecosystem is full of investors money with necessary incentives already being in place – good job. But if not, you have to think about creating linkages between important institutions that can create those incentives. Here, close linkage between government policies on innovation is important: in Europe, we see the European Investment Fund being a key limited partner in many VCs. Purchasing in procurement and government inclusion – these solutions can provide an active leeway to the ecosystem building.