Being in the world of startups and accelerating their development, we often get asked about the ingredients to a healthy ecosystem which can really promote innovation and encourage entrepreneurship. While we are focused on Berlin-based startups, we do like to keep track of how different tech hubs are doing to support their innovation efforts — so for this week’s post, we thought it might be a good idea to share a little on the kinds of institutions and factors which we think can contribute to an environment where great ideas can flourish.
Accelerators and exchange
Two reliable indicators of support in the local ecosystem are the amount of accelerators, and number of opportunities for knowledge exchange and networking (such as the number of relevant meetups in the industry space).
Accelerators provide mentorship, funding, and work space to push startups forward in their journey, and meetup spaces allow ideas to be combined and create network effects for mutual learning. The more there are, the more frenzied the activity is likely to be.
Universities and research labs
Not that all great ideas are born out of universities and research labs, but their presence are sure signs of the strength of the talent pipeline available. Highly ranked universities are magnets for bright minds across the world, and their research departments can also offer interesting ideas for entrepreneurs to take advantage of.
Similarly, research labs — sometimes run by corporations, government, universities, or some combination of them all — are hotspots for innovative ideas. These ideas go on to affect the kinds of projects which spawn in these areas, so we often take the number of highly ranked universities and research labs to measure the support for creativity in a particular area.
Goes without saying, really. But it still has to be said. Startups can be cash hungry and eager to grow, meaning they also need to have good access to willing funders. Sometimes, projects could get off the ground with government grants, but the taps of public funding can be slow to open. It can be a bit of a chicken and egg scenario, really, but a good startup support system should see a healthy number of venture capital firms, seed capital providers, or corporate venture capital arms (the investment divisions of big corporations).
Having just said that public funding taps can be slow to open, we think of government policy as an essential metric for ecosystem health. While the funding mechanisms might be more risk averse than the world of VCs, regulatory bodies and innovation committees have enormous power to catalyze innovation through policy control. By lowering administrative barriers, setting up innovation funds, facilitating collaborations, and offering incentives such as tax breaks or friendly immigration policies for high-tech talents, government policy can massively accelerate, or hinder, innovation.
Every system is different
An important thing to remember when assessing the health of an ecosystem is that every place is different. Each support structure has different strengths, and local conditions or historic factors play large roles in affecting the kinds of support and specialties of the particular context of the ecosystem in question. Additionally, an ecosystem is ultimately a system of many components — meaning that you have to take a holistic view of all the pillars of support to assess its merits.