EU4Digital events highlight priorities to boost innovation and start-ups incubation

To boost the performance and growth of the innovation and start-up incubation ecosystem in the Eastern Partnership (EaP) region, EU4Digital Facility identified key priorities and presented them in two events. These online awareness sessions concluded intense study of Eastern partner start-up ecosystems’ performance, gaps and needs. Participants in the two events heard from regional ecosystem actors and discussed the key needs: Eastern partner countries should prioritise the empowerment of ecosystem builders and capacity building of incubators. 

Both events aimed to disrupt the stereotypes about the roles and functions of different actors in the innovation and incubation ecosystem and to provoke thinking about an active approach to building up the EaP ecosystem to a higher  level of performance.

Empowering ecosystem builders

The first event, ‘Importance of supporting national ecosystem builders’ actions through donor funding’ took place on 18 July 2023. This event explained the essential role of ecosystem builders and the need to empower them. 

The event was led by Jesús Lozano, the key ICT innovation expert for EU4Digital. He has more than 28 years of experience as an entrepreneur and investor and over 15 years in ecosystem building, including the development of high-performance incubation. He explained that the performance of innovation ecosystems can be measured by their capacity to take start-ups from one development stage to another – known as the ‘conversion rate’. This capacity can be enhanced by ecosystem builders – people and organisations that set up connections (‘build bridges’) between disconnected groups of innovation ecosystem actors and who create innovative organisational frameworks to enable the continuing growth of start-ups and innovative businesses. Start-up ecosystems can perform well if innovation-support actors – ‘wealth enablers’ such as universities, incubators, accelerators – have sufficient capacity to deliver the needed resources and services to start-ups. This capacity of wealth enablers is increased when ecosystem builders bridge between wealth enablers and regulators, donors, educators and investors and empower wealth enablers to better support start-ups and strengthen their impact. 

EU4Digital has analysed 24 Eastern partner organisations that are adopting the role of ecosystem builder to create, empower and boost the ecosystem. Jesús Lozano explained that this study revealed a need for further specialisation of ecosystem builders by specific sectors or target groups. Though ecosystem builders can be both from the public and private sector, they mostly have been acting as non-profit organisations. This is why they need support from governmental and international donors, but also from the conscious private sector – given that creating organisations and developing strong networks are resource and time consuming.

Donor funding plays a critical role in capacity building and empowering of the national ecosystem builders, Jesús highlighted. He emphasised that support should be channeled in a way that: involves national organisations in collaboration and the implementation of actions; builds expertise at the national level; and generates continuity in any ecosystem development actions. The mission of government and donors is to empower the capacity of specialised actors to support innovations in the country.

The guest speaker from EU, Álvaro Simón de Blas, is President of the National Association of European Business and Innovation Centres (ANCES) in Spain. He explained that ANCES has been active for 25 years, helping business innovation centres (BICs) to build up their capacity to support start-ups and academic and industrial spin-offs. This is done, for example, by teaching BICs’ staff how to develop a profitable and sustainable business model, and to cooperate with national institutions. Support from ANCES is complementary to the initial EU support that covers 50% of BICs’ costs. As an active ecosystem builder, ANCES takes the responsibility to build bridges with national innovation agencies, the trademarks office and other national level actors, and also to attract private investors and link start-ups with corporates. ANCES also provides a prestigious accreditation ‘seal’ for research-based companies, as well as special training for member BICs via the ANCES Academy. EU-funded projects contribute additional funding for specific needs that are flagged by ANCES members.

The EaP guest speaker, Natalia Bejan, is Executive Director at Startup Moldova. She described its journey on the path to become an ecosystem builder. Startup Moldova is an initiative driven by ATIC, the private sector association of Moldovan ICT companies; it was launched to support the country’s tech startup and digital innovation ecosystem. Three pillars were selected to support development of the tech ecosystem. The first is community building within start-ups, investors and community builders and overlapping networking between them. Startup Moldova started its ecosystem building activities by gathering a database of tech start-ups, promoting individual start-up founders and facilitating the building of various communities. Regular semi-formal meetings with other Moldovan ecosystem builders helped them to agree about the distribution of roles among actors in the country and to complement each other’s work. The second pillar is facilitating local start-ups to access funding. This does not necessarily mean providing funding directly, but making it easier to access funding from third parties. Training is provided to start-ups to teach them to get profit and raise funding from investors. The final pillar is providing resources that enable start-ups to develop, mature and scale up – mentors, cofounders, coworking space etc. Donor funding helps to accelerate development, compared to how it would happen in a situation of national resource constraints. For example, the Startup City Cahul project is offering grants and mentorship to start-ups in a specific region with a low investment capacity, funded by the Embassy of Sweden. As another example, supporting start-ups with legal advice and guidance helps them to avoid mistakes. Summing up, Natalia underlined that supporting ecosystem builders multiplies their capacity to enhance the start-up and innovation ecosystem and helps them to fill in operational and strategic gaps. Her core message is that support of start-ups needs to come with consistency and continuity of initiatives that are implemented by national ecosystem builders. 

The first event brought together more than 90 participants. These included national stakeholders that empower start-up ecosystems in Eastern partner countries, such as ministerial representatives, ecosystem builders, funding organisations as well as international donors: AmChams, East Europe Foundation, Embassy of Sweden,  European Fund for Southeast Europe, European Training Foundation, GIZ, Global Cleantech Innovation Program, Helvetas, OECD, UNDP, USAID, Western NIS Fund, World Bank and others.

Private sector support for high-performance incubation

The second event, ‘The role of the private sector in the development of the high-performance incubation in the EaP countries’ took place on 8 August 2023. This addressed the need to rethink the concept and advance the efficiency of innovation incubators in the Eastern Partnership region. It specifically targeted large corporations, banks, representatives of academia and incubators, and gathered more than 100 participants.

Jesús Lozano reviewed the scope of activities that are currently undertaken by EaP incubators to support start-ups and asserted that this spectrum is not sufficient to address their needs. This lack of efficiency is illustrated by lower conversion rates of EaP start-ups successfully passing from one stage of development to another, compared to Central and Eastern European countries. Lower performance of EaP incubators is a gap that needs to be addressed through capacity building and additional resources for incubators, to foster their specialisation and the scope of expertise they can provide or channel to start-ups. A very important service that needs to be mastered by EaP incubators is outreach to investors and markets. This helps start-ups to understand at an early stage what are the actual needs of their sectoral customers and the market sales opportunities. Generally, the incubators should provide opportunities for start-ups to ‘fail quickly and cheap’, by providing timely access to idea validation with target customers as well as grants or ‘soft’ (no guarantee) loans covering the testing needs. The private sector will gain direct benefits from supporting start-ups at the early stages, including access to specific talent; market intelligence; new revenue streams and brand visibility. 

This session also featured a roundtable discussion to exchange knowledge about EaP best practices:

• Traian Chivriga, Partner at XY Incubator, Moldova, explained how this incubator helps entrepreneurs with ideas to find a team, validate their business idea and get connected to local corporations. XY mentors are people with practical knowledge in specific sectors who represent some type of corporation like a bank or telecom company. Reflecting on the design of training programmes, Traian mentioned the need to have an iterative approach involving the mentors’ feedback on actual market needs, as well as practical skills like business idea validation.
• Ketevan Ebanoidze, Co-founder of Impact Hub Tbilisi, Georgia, shared how they introduced and popularised the concept of co-working in 2016, fostering collaboration between like-minded individuals from diverse industries. The pre-acceleration and acceleration programmes of Impact Hub Tbilisi are complemented with outreach to potential investors, including corporate sector companies and the angel network. Their pre-acceleration programmes have attracted “almost every other successful enterprise entrepreneur who is working in Georgia and has their own company”, Ketevan said, so start-ups can learn from actual experience.
• Aliona Rotaru, Executive Director at Dreamups innovation and entrepreneurship accelerator, Moldova, explained that the first programmes implemented by Dreamups to support start-ups were brought from Silicon Valley back in 2016 and localised. Now the full spectrum of programmes required by the start-ups are rolled out – from education, talent growing, working with schools and universities, to accessing capital through the angel investors network and private sector collaborations. Aliona emphasised the need to develop specific entrepreneurial mindsets, which is the reason for Dreamups to create programmes for school pupils, who will be the future generations of start-ups. They are taught how to generate products oriented to customers, including design thinking and the use of technology.
• Nazar Podolchak, CEO and founder of Tech Startup School, Ukraine, indicated that the organisation’s location at the Polytechnic National University – one of the biggest universities in the country – helps in uniting a community of smart people and providing start-ups with access to technological facilities for prototyping. There are currently 15 programmes implemented by Tech Startup School for different target groups in various sectors of the economy, and a special funding programme that attracts co-funding from the regional government.
• Pegor Papazian, Chief Development Officer at TUMO Center for Creative Technologies, Armenia, introduced TUMO Labs. This works as a wide-spectrum service provider in terms of incubation, tailored to specific areas such as health or green tech. Pegor highlighted that already at the idea discovery stage, TUMO is “almost forcing” incubation participants to interact with the business sector. This methodology helps to “internalise the ethics of working with business to generate ideas, rather than coming up with ideas off the top of their head”. Additionally, TUMO labs reaches out as an organisation to local and international tech companies and asks them to formulate strategic (yet not critical) challenges in their area, to inspire teams of young people to work on those problems and set up their first connections with lead users. 

Talking about best practices, the EaP roundtable speakers shared the need to support team building, for example by concentrating on matchmaking and the mutual discovery of different potential founders. They also highlighted the value of using a problem-oriented approach in generating new support programmes, a hands-on approach and learning by doing in educational programmes, understanding the inner motivation of each start-up founder, and taking an individual approach to mentoring and accelerating of each start-up team.

Highlighting partnerships and collaboration

Both awareness-raising sessions highlighted the role of partnerships between innovation ecosystem actors in building high-performing ecosystems with efficient and impactful innovation and business development ‘pipelines’ or ‘highways’, as well as service toolkits for start-ups and scale-ups. 

Anna Pobol, the EU4Digital ICT Innovation stream leader, introduced participants of both events to the EaP Startup Ecosystem platform, which was launched by EU4Digital in partnership with Dealroom in 2022. This helps start-ups to get connected with investors that are interested in the region. The platform also offers a practical toolkit for ecosystem builders and regulators, revealing trends in the start-up ecosystem development and current gaps, and for data-informed policy interventions. Incubators and innovation support actors in Eastern partner countries are called upon to appeal to their hosted start-ups to make active use of the platform as an important step to support their visibility, and are invited to use the guide provided to help extract the maximum value from the platform.

Further information

The following presentations from the events are available to download (pdfs):

• Jesús Lozano 
  – ‘Importance of supporting national ecosystem builders’ actions through donor funding’ (18 July)                  
  – ‘Role of the private sector in development of high-performance incubation in the EaP countries’ (8 August)
• Álvaro Simón de Blas – ‘Spanish national BICs’ association ANCES’
• Natalia Bejan – ‘Why are ecosystem builders needed? Through the lens of Startup Moldova case study‘

Speakers’ Info (18 July) (8 August)