Innovation ecosystems for start-ups: highlighting the key ingredients for success

What makes a good digital innovation ecosystem for start-ups? What are the key ingredients and how can they be brought together to optimise ICT innovation among businesses? These are the key questions that EU4Digital has been addressing in its review of EU best practices in ‘ICT innovation ecosystems for start-ups and scale-ups’.

In recent months, the EU4Digital Facility ICT Innovation team has focused on efforts to promote a common legislative framework favouring ICT innovation among the Eastern partner countries, based on EU best practices. The aim is to identify the major gaps between the EU and its Eastern neighbours and to recommend actions to bridge the difference.

Each of the six partner countries selected a specific policy area, for which EU4Digital is establishing a gap analysis, to be followed by tailored policy recommendations and action plans for their implementation.

The Republic of Moldova selected ICT innovation ecosystems as its priority policy area. Based on the initial gap analysis, recommendations developed by the EU4Digital Facility will seek to strengthen the start-up ecosystem in Moldova by supporting the development of innovative networks and communities in the framework of national innovation policies or digital policies.

This article provides an overview of the EU best practices identified in Moldova’s chosen policy area – ‘ICT innovation ecosystems for start-ups and scale-ups’.

What is a start-up ecosystem?

According to Startup Commons, “a start-up ecosystem is formed by people, start-ups in their various stages and various types of organisations in a location (physical and/or virtual), interacting as a system to create new start-up companies”. 

Policy towards innovation ecosystem development draws from the understanding that the main sources of innovation ecosystem productivity are the quality of institutions (regulation and framework conditions for innovations), quality of the actors(competencies and skills) and the quality of links (networking and developing relevant organisational forms). 

Ecosystem builders

Startup Europe sees ecosystem builders (developers, operators) as those who:

– play a role in creating an inclusive network of entrepreneurs in the local community through running a co-working space, mentoring young entrepreneurs or organising networking events;

– play a role in government and are involved in making the policy that affects start-ups;

– play a role in the innovation and entrepreneurship infrastructure and service menu.

The detailed spectrum of services delivered by digital innovation ecosystem actors, as well as an extended description of organisations specialised in the support of digital innovations, was developed in the ICT Innovation Study (2018).

In the EU, there are activities both to build bridges between start-up players within European ecosystems and to train the innovation ecosystem builders:

• For example, Startup Commons provides ecosystem development consulting, and enables start-up ecosystem operators to drive digital transformation to connect and make data flow within and between start-up ecosystems globally. For ecosystem developers, Startup Commons offers key knowledge, consulting, software applications and digital infrastructure for connecting, benchmarking and KPIs, support functions and projects for data driven ecosystem development. For ecosystem operators, Startup Commons offers key ecosystem applications, digital ecosystem architecture development, digital transformation and team development support.
• Startup Europe organises soft-landing missions free-of-charge for ecosystem developers to explore other ecosystems, meet leaders, and establish long-lasting connections.

Supporting knowledge and innovation communities

Best EU practices on development of innovation ecosystems include activities to support communities:

• The European Institute of Innovation and Technology’s (EIT) Knowledge and Innovation Communities are the largest innovation networks in Europe and one of largest in the world. The Innovation Communities cover the entire innovation chain: training and education programmes, reinforcing the path from research to market, innovation projects, as well as business incubators and accelerators.
• One of the communities is EIT Digital, with two strategic parts. Part one focuses on pre-incubation services and aims at the creation of digital disruption (through venture creation) and digital transformation support (through the launch of a Minimum Viable Product (MVP)). Part two focuses on scale-up acceleration and aims at building a new generation of dominant European industry players.

Outside the EU, an operational mechanism for supporting the development of communities is well elaborated in the Startup Canada Communities –  the flagship programme of Startup Canada to support the connectivity, promotion and maturation of grassroots, entrepreneur-led communities.

Connecting ecosystem actors

There are a number of platforms connecting ecosystem actors:

• ScaleUp EU is an automatic match-making tool based on investor and company profiles, that facilitates partnerships between EIC-funded companies and investors. ScaleUp EU is open to active investors established in the countries that participate in Horizon 2020 (Horizon 2020 Associated Countries include Armenia, Georgia, Moldova and Ukraine).
• A number of private platforms are active to connect start-ups, business angels and venture investors – F6S, EuroQuity, AngelList, Gust, Onevest, Our crowd, Funders club and many others – together channelling the dynamics of investments within the ecosystem.

There are initiatives connecting similar ecosystem players (same types of stakeholders or sharing same interests). At EU level, these include the Startup Europe Partnership (SEP) Investors Forum fostering a more scale-up-friendly ecosystem in Europe, European Digital Forum (EDF), Seed Funds and Early Stage Market Players (EBAN), Business Angels Europe, Accelerator assembly, Unicorns forum, Startup Europe Universities Network, EU Cluster Partnership Platform (part of the Executive Agency for Small and Medium-sized Enterprises), and the EU-wide network of Digital Innovation Hubs (DIHs).

Other initiatives connect certain types of ecosystem actors with each other. The Startup Europe Partnership (SEP) links European start-ups with large and medium corporates who are committing capital, seniority and procurement channels. Erasmus for Young Entrepreneurs gives new or aspiring entrepreneurs the chance to learn from experienced entrepreneurs running small businesses in other Participating Countries. Among Eastern partner countries, local contact points exist in Armenia and Ukraine.

Other initiatives connect all the possible types of ecosystem actors, to enable their joint endeavours across sectors:

• Startup Europe is an initiative of the European Commission that intends to connect local start-up ecosystems around Europe and enhance their capacity to invest in other markets such as Silicon Valley or India. The initiative has a Startup Europe Club that brings together start-ups, investors and ecosystem developers.
• The Startup Scaleup initiative aims to remove barriers to scaling up in the single market with ecosystem building projects, and to enhance the start-up ecosystem by connecting local ecosystems across Europe. The initiative also includes activities to help start-ups find international outreach. Through the Startup Europe One Stop Shop, start-ups and ecosystem developers have easy access to all the funding services and other support offered at EU level.

Special activities to connect the diverse ecosystems of European regions include:

• Events where local action and policy making can be showcased: Startup Europe Week (250 cities connected by a single event across the EU with 400 simultaneous actions), Startup Europe Awards (‘Eurovision’ for startups), European Maker Week (startup fair);
• Prize methodology at five different levels (local, county, regional, national and European); 
• Mapping of local ecosystems via websites: EDCI (European Digital City Index), Startup Hubs, Startup Europe Map, European Startup Initiative.

Several programmes have been created to empower start-ups and scale-ups internationally: SEC2SV (Silicon Valley), SEU-IN(Startup Europe India Network), SEC2LATAM (Startup Europe Latin America Network), SEC2A (Startup Europe comes to Africa).

Two Startup Europe Networks under the Startup Europe Initiative have resulted from EU activities on connecting the ecosystems:Startup Europe Central and Eastern Europe Network and Startup Europe Western Balkans Network, with an Eastern Partnership Network coming soon.

Next steps

The full report developed by the EU4Digital ICT Innovation team on EU best practices in the area of Innovation ecosystems for start-ups has been used to develop the gap analysis framework for Moldova; on the basis of the gap analysis, a set of policy recommendations is currently being drawn up, which will be aligned with national counterparts. 

These recommendations will then form the basis for the elaboration of an individual national policy implementation action planfor Moldova. The action plan will identify concrete stakeholders in the partner country, EU tools, platforms, and practices that can be accessed and adopted, and possibly concrete counterparts in EU countries. Further activities by the Facility (training, study visits, networking events, promotion activities, etc.) will then support the interested stakeholders in their further activities on overcoming the gaps.

Adopting EU best practices in this way will help to boost the development of a mature ICT innovation and start-up ecosystem with well-functioning support organisations in the Eastern Partnership countries.

Ultimately, a common legislative framework will enable Moldova to benefit from the EU Digital Single Market, and to exchange and develop new innovative ideas with counterparts from EU member states.

The policy recommendations and national policy implementation action plan for Moldova can be downloaded from the EU4Digital library here.