A sales funnel, a cornerstone of marketing and sales, mirrors the journey from broad audience capture to conversion by narrowing down prospects through various stages. Similarly, startup ecosystems and entrepreneurial communities share essential principles for growth and success.
In 2020, Mikko Korpela and Toni Pienonen delved into Startup Estonia’s framework. They showcased the country’s startup ecosystem as a funnel with four key stages: 1) Startup Mindset, 2) Pre-startup, 3) Startup, and 4) Scaleup. Each stage boasted a unique blend of activities, programs, events, communities, and services. Some organizations spanned multiple stages, while others specialized in specific segments.
From this approach, here are three vital insights for all startup ecosystem builders and community enthusiasts that we feel are important.
1) Embrace the Funnel: Quantity Drives Quality
Visualizing the ecosystem as a funnel helps you to understand how many participants and innovation actors you actually need to engage in different stages.
- Startup Mindset: At the widest point, engage 10,000 individuals through meetups, after-work sessions, co-creation events, hackathons, and idea competitions, inspiring and empowering them for future involvement.
- Pre-startup: Approximately 1,000 aspiring entrepreneurs join entrepreneurship programs and incubators, taking their initial steps towards startup creation.
- Startup: Around 100 individuals transition from pre-startup to establish their startups, often seeking coworking spaces or acceleration programs.
- Scaleup: Finally, 1-10 sustainable startups emerge from the startup stage, harboring the potential to become scaleups.
This perspective highlights the need for a constant influx of participants at every stage to ensure a thriving ecosystem. And if only few make it to the last stage, the entire society benefits from exposing people to entrepreneurial thinking and learning how to build new things.
2) Mindset stage: Investing in social capital
One crucial lesson from the funnel model is the significance of the mindset stage – a stage often overlooked in many ecosystems. Without the wide funnel, there’s lack of qualified startups at the other end.
- Mindset builds social capital: The currency of the future is not just monetary; it’s social capital – whom you know? Trust and relationships are the bedrock of successful ecosystems. To build this vital social capital, proximity and face-to-face interactions are essential. Unfortunately, the COVID-19 pandemic disrupted these crucial connections. Organizations that focused in this part, such as entrepreneurship societies, were especially disrupted.
- No quick wins: Ecosystem builders should resist the temptation to rush to the pre-startup and startup stages. Without a solid mindset foundation in a region / ecosystem, regardless of the resources, funding, or services available, the impact will be limited. Patience and investment in building a strong entrepreneurial culture pay off in the long run.
All ecosystem developers need to maximize the potential for serendipitous encounters.
3. The nature of ecosystems: Someone’s output is someone’s Input
Ecosystems are not linear; they’re dynamic and circular.
- Reciprocal flow: Recognize that the output of one stage becomes the input for another. Successful scaleups can become mentors or investors for startups, and startups can inspire the next wave of aspiring entrepreneurs. Encourage this feedback loop to keep the ecosystem vibrant.
- Collaboration is key: Innovation actors need to openly ask each other what they are offering for others and what they expect to get from others. Nobody cannot control the ecosystem. We have seen examples in some Finnish cities, where powers that be have decided that ”project X” or ”platform Y” has monopoly on a certain stage, but that’s not how it works. All actors, whether they are NGOs, private or public can play a role.
- Ecosystems are ever-evolving; activities and platforms may fade, and new ones inevitably rise. That’s why it’s difficult to get a grasp of things, but all innovation players need to be interested in what others are doing. Don’t assume, ask.
Crazy Town has been active player in different stages of the ecosystem
We’ve organized dozens of hackathons across Finland and Europe, where participants have co-created solutions and learned entrepreneurial skills. We’ve also organized dozens of matchmaking events between talent, ideas and research teams.
In Oulu, we for example operate a pre-startup incubator with Business Oulu, where teams create new startups in 100 days with the help of a community
All Crazy Town locations across Finland offer startups and scaleups a community-driven environment
We also train ecosystem builders in our Community Manager Academy and consult them.
- Toni Pienonen, firstname.lastname@example.org
- Mikko Korpela, email@example.com