Entrepreneurial Ecosystems.

Prepared by Michael Tyrimos

Defining an Entrepreneurial Ecosystem/Cluster

A set of interconnected: §  Entrepreneurial actors §  Organizations §  Institutions §  Processes which formally and informally coalesce to: §  Connect §  Mediate §  Govern - the performance within the local entrepreneurial environment (Definition by Prof. Colin Mason and Dr. Ross Brown, at OECD)

Meet Silicon Valley

Case 1 Silicon Valley

Facts that defined the creation of Silicon Valley: §  Its development started in early 20th century at the

Santa Clara agricultural region in California, US §  The contribution of the US Air Force was pivotal

towards the region’s development §  This led exchange of knowledge, flexible work

ethos and specialization

§  Soon the region made leaps towards the creation of the semiconductor industry

Case 1 Silicon Valley (Cont.)

§  Fairchild Semiconductors is created and leads to the birth of

pioneers (Intel, HP) §  The region becomes heavily concentrated by technology experts,

who exchanged knowledge and innovated

§  Significant initial population increase: 1940 to 1980 à 175 k to 1,25 m (Sexenian, 1985)

§  University-industry relations are evident: Stanford, Berkley and others

§  In the 1980s the microcomputer industry begins to boom

§  Silicon Valley outperforms the significant and established tech-cluster of Boston’s Route 128

Source:  Saxenian,  1996    

Yes, clusters/ecosystems diversify

*  Interes)ng  fact:  Venture  capital  in  2014  the  US  investment  hit  its  highest  levels  since  the  first  quarter  of  2001  –  WSJ  

The  focus  ‘shi5s’  from  semiconductors  to  microcomputers,  to  so5ware  and  then  the  internet    

What  is  currently  trending?-­‐  Investments  by  industry  2012  -­‐  14  –  Source:  Fenwick  &  West  LLP,  2014    (analyzed  174  venture  financings  by  companies  headquartered  in  Silicon  Valley)  

Could the Silicon Valley model be recreated in other regions?

The ‘recipe(s)’ to make an Entrepreneurial Ecosystem/Cluster

§  Policies and incentives to support investors and

entrepreneurs (Porter and Stern, 2001) – E.g.: Seed Enterprise Investment Scheme in UK

§  The right policies matter, else the wrong policies can harm the cluster (Chatterji, Glaeser & Kerr, 2013)

§  Geographical concentration of individuals with common

interests, specialization and also ancillary economies (Krugman, 2001)

§  Cooperation between the public and private sectors

(Bresnhan, Gambardella & Saxenian, 2001)

The ‘recipe(s)’ to make an Entrepreneurial Ecosystem/Cluster

§  Openness in exchange of ideas and knowledge

(McEvily & Zaheer, 2003)

§  “Far from being isolated from what lies outside them, firms are embedded in networks of social and institutional relationships that shape and are shaped by their strategies and structures (Granovetter, 1985)”

§  Knowledge injection from entrepreneurs and

specialists that operated elsewhere – the case of expatriates (Saxenian 2006)

Entrepreneurial regions have similarities but each one is unique

“Policymakers shouldn’t be trying to copy Silicon Valley. Instead, they should be figuring out what domain is (or could

be) specific to their region.”

- MARC ANDREESSEN Cofounder, Netscape Communications & Andreessen Horowitz

Meet Silicon Fen

Case 2 Cambridge, UK (Silicon Fen)

§  Launched by a private initiative in

1960

§  3 Cambridge graduates decided to utilize the University’s talent to benefit of the British economy (Morgan, 2010)

§  Success stories include –

Cambridge Silicon Radio, Acorn Computers, ARM, Autonomy and so forth

Source:  Professor  Alan  Barrell,  Cambridge  University  Judge  Business  School    

More recent cases of entrepreneurial clusters

§  Silicon Wadi – Israel §  Silicon Alley – New York

§  Silicon Roundabout (TechCity) - London

§  Silicon [Add name] – is

next?

What about Cyprus?

What happened in the last 3 years? §  Organic growth of a promising entrepreneurial ecosystem

§  Led by private initiatives, the government is now becoming involved as well

§  Angel investments, in software and internet startups, are happening (CYBAN invests in Teach’n’Go and StudentLife)

§  The number of entrepreneurial competitions + events, and startups on the island are increasing

§  There is still a lot of space for improvement (in terms of culture, legislation, funding and general support)

Who is involved? (cont.) §  Entrepreneurship-related organizations (Cypriot Enterprise

Link (CEL), Junior Achievement and CARIE) §  Accelerators (Chrysalis Leap)

§  Universities (University of Nicosia, UoC, CIIM)

§  Events (Meetups/workshops by CEL, Chrysallis, IEEE etc, Hack Cyprus Insights Conference, Open Coffee, Startup Grind, Startup Live, Startup Weekend, TEDxNicosia, GEW CYEC, Code School)

§  Hackathons and Hack Spaces (CEL’s Hack Cyprus, Hack 66)

Who is involved? (cont.) §  Corporations/organizations that facilitate – banks, audit/

accounting firms (big four), other firms (e.g.: CYTA, MTN) §  Angel Investors (CYBAN)

§  Co-working spaces – Capital Impact §  The government and legislators (e.g.: Cyprus Business Angel

Law)

§  Most importantly: Startups (ENERMAP, Avocarrot, Teach’n’Go, Funifi, DIYFUL, Student Life and AtYourService etc.)

Conclusions §  An entrepreneurial ecosystem grows via the interaction of its

participants – value and diversification is created this way

§  Contribution is required by both the public and the private sector

§  It takes decades to built and operate an entrepreneurial ecosystem effectively, as to achieve tangible results

§  At the bottom, each ecosystem is unique – There are the classic examples (SV, Cambridge, Israel) and newer examples (Silicon Alley, Silicon Roundabout)

§  Cyprus has a growing entrepreneurial ecosystem

§  There has been significant development over the past 3 years, but still there is a lot way to go and work to be done