by: Valto Loikkanen
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How to develop a startup ecosystem?

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I came across this great article in Bloomberg Business week with a topic “Why Boulder is America’s Best Town for Startups“, the article talks about Boulder and how they have build their startup ecosystem and also what is a good role for government. I think this is a very timely topic to many cities around the world, so I wanted to also cover this topic here as well.

There’s no denying the power of the Silicon Valley as the global leader when it comes to startups. That said, it really does not help so much the people outside the Valley and even less the cities around the world that are trying to build their own vibrant startup ecosystem and that’s why I personally see the case for Boulder Colorado, much more appealing for cities around the globe to take a note.

The history of Silicon Valley goes all the way back to great gold rush, so it’s easy to understand, that the model to build a such ecosystem can not really be learned from the Valley alone.

There have also been many posts about this topic, like this Article by Fred Wilson “Startup Ecosystems Take Time“, where he also points to some other articles. The main point about these discussions is about “how long does it take?”

If Silicon Valley have been 50 years of making, Fred and others seem to agree that for any new ecosystem it will still take decades to build and get it work, but here’s where I disagree. – It does not need to take that long and that’s good news for cities that are just starting to see the undeniable change force of the entrepreneurship and are in their early days of building a functional local startup ecosystem.

I think this article in Bloomberg Business week explains a great example of how long (or short) in reality it can take to build a vibrant ecosystem, when it’s driven with passionate people and the whole city is behind it. As shown in Boulder it only took about 4-5 years and that’s half or less that what Fred and others are thinking.

So what are the new factors that accelerate the process of building the local startup ecosystem:

  • First, there’s no denying the power of the Internet here, access to information, tools, people etc. is just so much easier than what it’s been a decade ago, and this leads to faster cycles of learning everywhere. It’s got a some what similar effects of what you have in “living in a small town” where everyone knows each others and news, gossips etc. move so much faster.
  • In addition to this knowledge that is passed around faster and faster, it also means that those people that have already done the full startup entrepreneurial cycle: “entrepreneur-> serial entrepreneur & mentor -> mentor & investor” become aware of the ecosystems elsewhere and understand that there are new opportunities and also new and interesting things for them to learn as well.
  • This enables these new ecosystems to tap into these people as well to enable to accelerate their local ecosystem developments like never before, like the TechStars in Boulder have done as well.

To be honest I’m a bit surprised that Fred, who’s an active investor in many companies building these tools that enable legacy models to be disrupted and increase the flow of information, knowledge and everything that can be transferred as bits,-  don’t see the power of these tools that are also shaping the process of building the startup ecosystems in cities around the world.

My favorite method to showcase the fast pace of online is this video from Socialnomics author Erik Qualman, where he also describes the size of Facebook as; “if Facebook would be a country it would be the 3rd largest country in the world”.

This says a lot, but at the same time if all Internet users would be a country it simply would be the largest country in the world, and there too a startup ecosystem is needed and that’s why we are building the Grow Venture Community.

One of our messages when we are describing Grow Venture Community, is that we are building a Virtual Silicon Valley. That explains a lot about the way we think about the future of the startup ecosystems.

In that article, there’s also a great side note about what governments should do and this is a very important detail to take a note:

When I ask longtime players about local government, they shrug. When I ask them about state government, the common refrain is that the best thing it can do is invest in education and otherwise stay out of the way. The lesson here is that it doesn’t take billions in government spending to create a thriving industry cluster. Instead, with a little luck and lots of hard work by residents, local economies can be shaped from the bottom up.

I strongly agree, this is crucial for any government and other public organizations to understand – the best thing they can do is to facilitate, but other than that let people shape it.

In global level this is very much our own position as well, as it’s not about what we do – as it is about people coming together to start great things and to solve problems of all kinds. – So we too only build tools to facilitate this and host these activities for Virtual Silicon Valley, by taking our role to develop and serve the needs and activities for those using our platform. And we also want to open our platform for others to develop for it as well.

But we also want to help the local ecosystems to make it easier to tap in to global resources and that’s why we are building local platforms that are globally connected, because by combining the virtual an physical worlds and activities together, that will be the real winning combination for everyone.

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About the author

Valto Loikkanen Valto is a co-founder of Grow VC, an entrepreneur who has started several companies across Europe and the US in the web and mobile fields. Forward thinking and always seeking the next big web and mobile success, as an entrepreneur, investor and advisor. Follow Valto on Grow VC, Twitter, LinkedIn, Google+

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This entry was posted on Sunday, May 9th, 2010 at 8:00 am and is filed under Business Education, Entrepreneur Motivation, How to invest in startups, Online Startup Business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.