What do you need to grow the startup community to USD $15 billion?
Bowei started off his talk with a fascinating insight. Today, 7 out of 10 “Unicorn” companies are IT related. This, compared to only 1 out of 10 in 2007. A “unicorn” company is one that has over USD $ 1 billion in valuation.
Then he noted that while there are a lot of startups worldwide, fully 82% of the unicorns are concentrated in only two countries – the US and China. See the breakdown below. It led me to wonder why these two countries had higher ‘success’ ratio.
As if he read my mind, Bowei then went on to compare two different approaches. One was by Startup Weekend and the other by K9 Ventures portfolio. He examined these two programs’ investment and relative impacts.
Startup Weekend spent USD$27m but only had around USD $1 billion, while K9 invested USD$6.25m and got over USD $ 15B. What can we learn from these contrasting styles? One obvious lesson is that we can do more with less. But where to target the needed investments? And how does one manage such a program?
According to Bowei, here are the three things Governments should ask to create a successful and sustainable startup ecosystem:
- What is our realistic goal?
- What are our hard metrics?
- How do we collect and maintain and analyze data?
Bowei suggest that Governments start by setting a REALISTIC goal. What are Governments after? Is it more foreign direct investment? Or is it Job creation? Are Governments also looking at increasing tax reveneus or simply want greater publicity?
Use the right metrics
Depending on a Government’s goal, the next step is to find and use suitable metrics. These metrics should be easy to collect, and it should be undisputable, otherwise, it is not a good metric. Some sample metrics might include tracking the amount of Foreign Direct Investment, the number of jobs created, the Earning per $ spent and finally, the tax revenue collected.
You can’t manage what you don’t measure.
Admitting that job creation as a metric might skew startups’ tech focus, Bowei clarified that the job creation metric was merely an example of a tangible metric, and not a hard metric per se. In addition, the use of Tax revenues as a metric might not be feasible in countries like the Philippines. Tax compliance is low in these countries and the full impact might not be reflected.
Collect, Maintain and Analyze
One common problem faced by government agencies is how to collect and maintain the data? Bowei reminds the audience that these data must be maintained continuously throughout the lifetime of the program. Governments should also provide full transparency and accountability. Lastly, governments should make the collected data easily accessible for all to use.
One key rule of thumb is to also use data analytics as part of the program budget. It will be useless to collect data, if no one is analyzing this.
Looking at the Philippines experience, Ms Emmy Lou Versoza-Delfin, eInnovation group, DICT shared the government’s initiative called the SeedPH program. This program is focused on advocating the startup culture. As such its metrics include the number of schools participating at the Philippine Startup Challenge as well as the number of mentors trained on the Lean Startup method. The yearly SeedPH budget is a paltry PHP 5m.
One success story from SeedPH program is illustrated below:
“For 20 year old Queeny Jane Cabizares, projects of DICT like Alpha Startups Bootcamp, Launchpad, Philippine Startup Challenge and Geeks on a Beach helped her develop, improve, validate and scale her startup idea. “I will not be where I am if not for the seedPH Program of DICT. It was just a dream for me, I have no knowledge on the business side but the mentors whom DICT introduced had helped me a lot in a way I can’t even discuss in a few words.” Now, Queeny has established customer base and continues to get support from industry experts and investors.”
I hope the SeedPH program can have larger funding and continue to help startups grow faster. Maybe DICT Usec Monchito Ibrahim can tap Bowei Gai’s experience and networks. Who knows where the conversation might lead to? They used to chat about these things, but not lately, not anymore.
The keynote was delivered during the Plenary session on Fostering a healthy Investment climate with better data. Bowei’s session was moderated by Cosmas Zavazava, (ITU). Other panelists included Alexandre Barbosa (Cetic.br), Johannes Bauer (MSU), Jinqiao Chen, (China Academy of Information and Communications Technology), Mohammed Hamdi, (El Ghazala Comm Cyberparc) and Mansour Al Shehry , (Communications and Info Tech, Saudi Arabia).