The Role of the Startup Ecosystem: A Tree Must Have Good Soil To Grow

Building a state-starting system and creating conditions for the ecological system to develop is an issue that has received a lot of attention from the main classes as well as introduced in recent years, especially when the industrial revolution context 4.0 is creating new opportunities and formulas for all countries. Ecosystems even have similarities with a common ecological system

What Is Startup Ecosystem?

According to the Organization for Economic Co-operation and Development (OECD), a startup ecosystem is defined as: the aggregate of formal and informal linkages between start-up actors (potential or current), start-up organizations (companies, venture capitalists, angel investors, banking system) and related agencies (universities, government agencies, public investment funds) and The start-up process (business establishment rate, number of businesses with good growth rate, number of startups) directly impacts the local startup environment.”

Thus, from the above definition, it can be seen that the startup ecosystem refers to a community consisting of symbiotic entities, sharing and complementing each other, creating a favorable environment to promote the formation of new businesses. innovative and fast-growing startups. The main members of the startup ecosystem are obviously startups. Other members often considered part of the ecosystem include funds and investors, incubators, accelerators, and other service providers (both public and private). and private) as well as other processes, events and entities (such as exchange meetups and contests).

The role of the startup ecosystem

Like biological ecosystems, a startup ecosystem consists of different elements, not only individuals, groups, forming a community by interacting with each other, but also elements decisive environment that affects how these actors act and connect with each other; In the startup ecosystem, it can be laws, policies or cultural norms.

Vietnam 2021 Map for National Innovative Startup Ecosystem Source: National Program No.844 

The startup ecosystem plays an important role in achieving economic growth goals. It provides new opportunities for individuals and organizations in the system. The startup ecosystem not only helps growth in job opportunities but also promotes the formation of new industries. This will again diversify job opportunities and help experienced and talented individuals find work.

The more the startup ecosystem supports innovation in new industries, the more it will boost production, improve quality, increase income for local people, and create huge opportunities for export markets. . The more supportive the startup ecosystem, the faster it grows and ensures that the locality that owns it can lead the world in entrepreneurship and innovation.

The development of entrepreneurship is not only focused on business but also at the educational institution level. A good startup ecosystem needs to transition away from traditional education and ensure future generations are educated about modern industries, emerging technologies, and experiential learning to embrace entrepreneurship for young people; It is necessary to remove the negative stigma surrounding non-traditional types and methods of education and to encourage organizations to empower students to pursue their own ideas and business plans.

Startup Ecosystem Lifecycle Model

The startup ecosystem is moving in an open direction with more and more powerful participants and interactions. With this operating mechanism, this ecosystem will be the key to helping businesses transform, develop and build a strong innovation startup ecosystem in the future. According to an assessment by Startup Compass, the Startup Ecosystem Cycle model consists of the following 4 stages:

1. Emergence

This first phase of the Startup Ecosystem begins “when a city gathers or assembles the necessary resources for a startup ecosystem to come to life”. Ecosystems at this stage are characterized by slow (organic) growth and are likely to lack many important features such as venture capital, service providers, serial entrepreneurs or advisors, and startup-friendly policies. According to the model, the best way to support this type of ecosystem is to “foster a vibrant, entrepreneur community is to nurture it with many types of events” in order to catalyze face-to-face collaboration and community. 

2. Activation

Ecosystems at this stage of development have most of the key components of successful ecosystem in place. Typically ecosystems at this stage adopt “Catch Up Growth” processes, i.e. importing best practices from other successful ecosystems

3. Integration

Ecosystems at this stage are characterized by inorganic growth as they focus on attracting more resources across the region and global economy with the help of success stories and notable exits. According to the model authors, “exits are the crucial performance indicator needed for a startup ecosystem to attract all the key stakeholders and resources required for further growth in the Integration phase.” Ecosystems at this stage are directly competing against other ecosystems for the same resources. This means that there is likely to be room for only one or two fast-growing ecosystems in most countries. If an ecosystem manages to become internationally attractive, the main challenge will shift on attracting and supporting the influx of talent (e.g. with immigration and housing policies). 

4. Maturity

At some point, an ecosystem may exceed the limits of its resources and enter a phase of slower growth. At this stage, the ecosystem should focus on strengthening its (national and international) linkages, identifying future waves of innovation, and differentiating itself from its competitors. 

The startup ecosystem is constantly evolving through different stages. In parallel with the rapid development of the startup ecosystem, the need to update comprehensive and timely information to capture new trends, new cooperation and investment opportunities of startups, businesses investors … also become more urgent than ever. However, up to now, many startups, large companies and investors still have a lot of difficulties in finding official and reliable reference sources to serve for business strategy planning and development and connect with potential partners.

>> Read more about Vietnam Open Innovation Landscape in 2022 at: http://ldp.to/BBUreport2022_register07