Mapping the start-up ecosystem
THE past six articles have been about the design elements of a start-up ecosystem. The next step after identifying the design elements is mapping the start-up ecosystem. six elements that were discussed are used for mapping the start-up ecosystem. Start-up ecosystem mapping is the process of unveiling and connecting local start-up support services to make them more accessible to a community’s start-ups. Accelerators, chambers of commerce, loan funds and other entrepreneurial support resources are only useful when made visible and accessible to start-ups. This article will discuss the following; ecosystem mapping; categories of information required; steps involved in the mapping exercise; finding and collecting the information; creating and sharing the ecosystem map and; ecosystem map recommendations.
Ecosystem mapping
Ecosystem mapping involves creating a map of interconnections between all the people, organisations, ideas and other factors that impact your problem. Ecosystem mapping is the practice of observing, analysing and visualising a start-up ecosystem. Both the mapping process and the actual map are used by the community as a catalyst to collaboratively strengthen the ecosystem. It can help to understand the interactions between different issues and sectors to find new opportunities for action and impact. Ecosystem maps can serve as a resource guide for start-ups in the community.
A map can also be an effective guide for all actors in the ecosystem. It can be used as a storytelling tool to enable ecosystem organisations to see the different paths that different founders take and identify what is working as well as gaps that need to be addressed. Ecosystem mapping can be a catalyst for collaborations. Thriving, healthy ecosystems are defined more by the health of their interactions and connections between the elements than individual elements. Effective mapping initiatives can reveal opportunities, partnerships and collaborations.
Start-up ecosystems thrive when people and resources are connected and working together to develop new approaches and solutions for serving start-ups. It is important that the players in the ecosystem are able to find knowledge and resources available. So, there is need to map out the resources in a visual representation that provides everyone with an overview or lay of the players in the ecosystem. The ability to find knowledge and resources is so important because start-ups face challenges on a daily basis and they need knowledge to make their start-ups successful. For an ecosystem to thrive, start-ups need barriers reduced. They need to know what resources exist and where to find them. Mapping out the ecosystem is essential for getting the community more engaged and connected. Assessing who the players are in the ecosystem and what they are doing points out the resources and also helps identify the gaps.
Categories of information required
The process of mapping the ecosystem is valuable. It requires planning. There is need to define the scope and target of the project. There is need to identify who the map is for, for example, is it for the country, or a province or a certain industry? There is also need to identify the categories of organisations and entities that will be included.
The kind of information to look for can include; accelerators, incubators, entrepreneurship training programmes and workshops, co-working spaces, universities, pitch events and competitions, networking events and meet-ups, venture capital firms, angel investors, government and other civic programmes and mentors. So the information will be about resources, programmes, organisations, persons that support and help start-ups.
For the purpose of mapping, three elements are used, the business environment and investment climate, its interacting actors, and the evolving culture and attitudes. The business environment is defined as, ‘a complex of policy, legal, institutional and regulatory conditions that govern business activity. It includes the administration and enforcement mechanism established to implement government policy, as well as the institutional arrangements that influence the way key actors operate.
After assessing the business environment there may be need to introduce reforms which include: simplifying business registration and licensing procedures; improving tax policies and administration; enabling better access to finance; improving labour laws and administration; improving the overall quality of regulatory governance; improving land titles, registers and administration; simplifying and speeding up access to commercial courts and to alternative dispute-resolution mechanisms; broadening public–private dialogue; and improving access to market information.
The business environment is a subset of the investment climate, which takes a broader view of a country’s competitiveness. As part of the investment climate, there are seven domains. These are: financial markets, which include access to finance, financial regulations, etc. the rule of law, meaning legal rights which can, for instance, inhibit corruption or regulate the business registration process; human resources (HR) and skills, e.g. the technical and vocational education and skills of actors, etc.; economic predictability, meaning the overall macro- economic stability and growth path; infrastructure.
These mean the technical structures, e.g. roads, telecommunication, energy; political situation, which ensures planning security and increases risk tolerance among MSMEs; labour markets, meaning the availability of skilled workers and sufficient matchmaking between the work supply and the work demand. Both the business environment and the investment climate influence a start-up ecosystem and have to be taken into account in its analysis. In addition, the mapping should take a closer look at the most relevant, being the ones that could be targeted with interventions, investment climate components, which would be: economic predictability, political situation and labour market. One can assess the business environment and investment climate on various levels — on the regional, national, and sectoral level.
Most analyses and reports mainly focus on the national level. The Doing Business Report (DBR) published annually by the World Bank is one of the most established benchmark reports focusing on the business environment at country level. Its basis is a set of indicators that measure the costs that derive from regulation, such as starting a business (measured in number of days and number of procedures) or dealing with bankruptcy. The data the DBR provides on country level is useful when it comes to assessing this element of a country’s ecosystem. A well-known benchmark report, the World Economic Forum’s (WEF) Competitiveness Report, not only takes into account existing policy, rules and regulations, but also other factors that influence a country’s competitiveness such as the macroeconomic environment (inflation, government debt, government budget balance), the market size or health and primary education. Therefore, it is a suitable source to use when planning to analyse the broader investment climate.
A start-up ecosystem provides a stage for a variety of actors that influence the conduciveness of a place towards entrepreneurship by different means. This is why many ecosystem mapping approaches look at the actors and their roles in the ecosystem. It is important to know which actors either constrain or foster entrepreneurial activity and whether there are any relevant actors missing.
The actors can be; individuals, such as business founders or investors; organisations, meaning a social unit of people set up and managed to achieve specific goals or serve certain purposes (e.g. companies, universities, banks); or institutions, which are – in a sociological sense – long standing and stable patterns of behaviour which guide humans (e.g. values, family, religion).
Apart from finding out whether all types of actors are present in an ecosystem and whether they engage, enable or hinder entrepreneurs, one may analyse their capacities and their interconnectedness. Whereas some individuals and organisations are interconnected through collaboration, mutual support or other relationships, others solely coexist or are unaware of each other’s existence.
Collaboration among individuals, organisations and institutions depends on various factors, including: all cooperating partners expect a benefit for themselves; the results achieved by the cooperation cover the associated costs; the cooperation partners are able to create new potential for all by using their individual strengths.
A mapping of the start-up ecosystem illustrates the actors’ roles, which indicates their importance and the interconnectedness between them. There are various visualisation methods that can be used to assess the start-up ecosystem’s actors element, e.g. their geographical distribution or mapping them according to the different stages of a business (from ideation to growth and scale). Yet another point to keep in mind when observing the actors’ element, is that an actor’s role and importance can change over time. The role and the behaviour of actors is mainly determined by their genuine interest and their position within an ecosystem, but also recognises that they are influenced by rules and norms. The culture of a society has a large impact on the start-up ecosystem.
It affects individuals’ attitudes towards entrepreneurship and therefore the likelihood of becoming an entrepreneur. In development co-operation, it is increasingly recognised that culture and attitude, alongside social protection schemes, are important factors that determine a country’s level of entrepreneurship.
Some of the relevant questions to pose when assessing how open a society is to entrepreneurship include: Are behavioural patterns favourable for entrepreneur ship?; Is the society open towards entrepreneurship-related characteristics such as networks or innovation?; Is starting a new business a desirable career choice?; Do the media promote entrepreneurship through stories of new and successful businesses?; Are MSMEs with experience of failure judged by society?; Conversely, do successful entrepreneurs have a high level of status and respect?
The Global Entrepreneurship Monitor (GEM), which is a central reference in entrepreneurship studies globally, provides information on these questions. In addition to analysing the business environment, policy level, entrepreneurial culture and ecosystem stakeholders, there is need to focus on markets access and human capital, both of which are critical resources for start-up growth.
The three components, business environment and investment climate, the interacting actors, and culture and attitude form the start-up ecosystem. The business environment and investment climate form the legal, administrative and regulatory framework in which the actors, interact with each other. There is a constant interplay between the business environment and investment climate and the actors, which determines both the exact framework’s design as well as the actors’ interactions; therefore, all actors are mutually dependent.
The third component, culture and attitude, constantly resonates with the business environment and investment climate and the actors’ interaction. When conducting the ecosystem mapping, there are overlaps between these three elements. Looking at the ecosystem from these different angles will help one discover the main challenges that entrepreneurs face and the potential entry points for interventions.
Finding and collecting
the information
The best source of information is the people in the community, the start-ups and other ecosystem builders. One needs to find the most connected ecosystem builders and start-ups in the community by reaching out to them and getting their knowledge about resources in the community. This also includes meeting with entrepreneurial support organisations in the community. There may be a need to meet with other partners and stakeholders in the community to share the analysis and findings with them. People support what they help create so the stakeholders are co-creators and co-owners. The significance of ecosystem mapping is in the collaborative process of activating conversations in the ecosystem. There will be a greater impact in the community to focus on cultivating community collaborations before creating the map.
Creating and sharing the
ecosystem map
There is need to create a printable version of the ecosystem map, but for maximum reach and availability, a digital version should be available. One needs to make it easy to update as the ecosystem evolves over the years, there will be need to add and delete things. The map needs to have graphics so as people to get a visual representation of the ecosystem.
The community needs to leverage the map and view it as a step in the process and as a catalyst to activate cross community conversations and inform inclusive initiatives to improve the ecosystem. These analyses and maps take time to develop due to the in-depth and broad-based information that must be collected, processed and verified.
The analysis is used to; Identify gaps and opportunities for new interventions on all three levels; and as a communications tool to help find a common purpose among ecosystem players.
Another type of mapping tool focuses on the different relationships in the ecosystem. These maps measure connections between entrepreneurs or relationships between entrepreneurs, financial organisations and ESOs. The map analysis helps to; Identify the ‘champion entrepreneurs’ and the most active ecosystem players; Identify isolated pockets and the necessity for establishing collaboration there and; Visualise and understand the interactions and the organic functioning of an ecosystem.
Another type of mapping tool examines the maturity of ecosystems. Some of these tools focus on the growth stages of companies within the ecosystem. Yet another approach to maturity analysis addresses the different players and ESOs in the system and the stage of the venture that they support.
The map analysis helps to; See what stage the ecosystem is currently in; See gaps in support for the different stages of support for entrepreneurs and; Grade an ecosystem versus another based on a standard scoring mechanism. Many ecosystem maps show the various ecosystem players and organise them into different categories. For example, they categorise; entrepreneurs by industry or technology; ESOs by the type of entrepreneurs they support and; financial organisations by where they invest, how actively they invest and the type of investments they make; Identify strengths and weaknesses in the ecosystem in terms of stakeholders; Identify the organisations working in a specific part of the ecosystem and; Identify individual ventures in particular sectors.
Ecosystem mapping recommendations
There is need to thoughtfully design the approach, by understanding and defining the reason for the mapping and who the map is for. There is need to have diverse group of partners at the table who co-own the initiative. Ecosystem mapping is the start of a journey, not a final destination, emphasising an on-going process that informs community action. Ecosystem mapping reveals gaps in a community’s resources and opportunities for collaborative, inclusive and impactful interactions.
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