Start-up entrepreneurs key concerns on path of entrepreneurial innovation

Start-up entrepreneurs’ keyconcerns on path ofentrepreneurial innovationISPIM 2015Arto Wallin, VTT

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AGENDA

1. Introduction2. Research design & question3. Findings4. Implications5. Questions?

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Innovation management in the ’startup scene’ vs. IM in academic world

Digitalization changes the worldNational innovations born-global exponential startups (Ismail 2014)?innovation process of digitally-enabled startups is not yet well understood enough

Startup are crucial for our economy and startups are big trend but…

Introduction

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RESEARCH QUESTION:What are the key concerns of growth-seeking entrepreneurs in the

different phases of start-up innovation process?

Main research question

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Context of the studyThe research was conducted as a part of the international R&D&I project(Accelerate ITEA2), which aimed to develop tools to accelerate start-up innovationprocess.Interviews in Slush 2014 – biggest startup event in Europe

Case studyLiterature review on startup innovation processData collection

Short (10-15 minute) semi-structured interviews during SLUSHData analysis

analysed by the three researchers using content-coding and theme based categorization34 entrepreneurs were selected for the detailed analysis

Research design (1/2)

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Phase 0: Idea/vision - the initiating stage of the start-up and its innovationprocess where ideas are generated, initial idea to be implemented is selected,and the vision of the new venture is clarified.

Phase 1: Building MVP– Start-up is building MVP to test the value of thesolution and to understand more about the problem it is aimed to solve. Theaim is to find problem-solution fit.

Phase 2: Validating MVP(s)– Start-up is validating the solution at the marketwith an aim to find scalable business model and to prove product-market fit;

Phase 3: Scaling – Start-up is scaling business (with an aim to go tointernational markets in the context of this study);

Different phases of startup innovation process

Research design (2/2)

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Identified concerns in different phases of startup innovation process

Findings 1 - General

Phase 1:

Building MVP

Phase 2:

Validating theMVP(s)

Phase 3:

Scaling thebusiness

Funding 100% (6/6) 66% (6/9) 31,6% (6/19)

Network Building 33,3% (2/6) 33,3% (3/9) 36,8% (7/19)

Business and strategic capabilities 66,6% (4/6) 44,4% (4/9) 0% (0/19)

Scarce resources (lack of otherresources and capabilities)

16,6% (1/6) 0% (0/9) 31,6% (6/19)

Other concerns 33,3% (2/6) 22,2% (2/9) 15,8% (3/19)

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Funding concerns in different phases of startup innovation process

Findings 2 - Funding

Phase 1:

Building MVP

Phase 2:

Validating theMVP(s)

Phase 3:

Scaling thebusiness

Currently in need of external funding 100% (6/6) 66% (6/9) 31,6% (6/19)Main use of funding

General/respondent didn’t name 50% (3/6) 83,3% (5/6)

Operations 33,3% (2/6)

R&D 16,6% (1/6)

Sales & growth &internationalization

16,6% (1/6) 16,6% (1/6) 83,3% (5/6)

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Managerial implications:• Fundraising should be considered as a key activity• Entrepreneurs who seek business mentors and/or strategic advisors may be

overwhelmed by the numerous support activities that are currently available• Let go to grow - the scaling of the business may not be possible if the CEO

tries to stick to the practices that worked when the start-up consisted only of“three guys in the garage

Managerial Implications

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Policy implications:from the entrepreneur’s perspective support is needed especially ininternational contextstrategic support actions

first time entrepreneurs with technological background express need forbusiness and strategic supportInterestingly interview data shows that start-ups in the scaling phase don’texperience this as a concern anymore (0/19).likely reason is that start-ups in the scaling phase have already considerablebusiness expertise through investors acting in the start-up board or as anadvisor, and often the team has also grown in business capabilities if thefounders have had technical background.

Policy implications

QUESTIONS?

THANK YOU!Arto WallinSenior scientist, project managerTechnical Research Centre of Finland [email protected]