More and more start-up and innovation ecosystems are evolving. This has evolved the set of challenges to be solved by maturing start-ups. These challenges are often the last stumbling blocks holding start-ups back to truly scale internationally. Over the course of several blog posts, we will highlight the different challenges we have identified and experienced with our incubatees and how to solve them. We categorize these challenges in 5 different categories. In this blogpost we’ll address the first: the market gap challenge.
Before we start we have to share the definition for a scale-up utilized: “Having achieved 3 consecutive years with at least 20% growth starting from 10 employees in the first year.” Some definitions add that a revenue of 5 million should be achieved by the 5th year, but this is somewhat limiting for Deep Tech startups, hence why we don’t use this. Another way to summarize or depict the value of scale-ups is by the World Economic Forum’s quote:
“Although not all startups make it big, the ones that do greatly impact society by means of new technology, services and increased employment.”
Analyzing the challenge
One of the biggest challenges facing scale-ups is the need to access new markets and acquire new customers to maintain growth momentum. Whether they are trying to expand into new local markets or across Europe, there are many obstacles to consider such as increased financial risk, logistics, regulatory issues and potentially employees (the brownfield vs. greenfield question).
This is backed by research outlining that most start-ups who have the ambition to become scale-ups face difficulties in
- understanding the complex procurement processes
- finding opportunities to bid for governments and large corporations
- scaling and changing marketing and sales processes in order to enable expansion.
Looking at the current trend of believing everything can be digitally performed, this is a challenge that should not be ignored. Nothing trumps a good face-to-face client meeting in each other’s offices. Cultural differences, methods and activities may not differ on a first glance, but spending time with each other highlights the differences and is the first road to create a mutual understanding.
Tackling the market gap
We suggest looking beyond the set-up of a new office, in 3 steps. Each complementary to the other, but ensuring your fastest way to success. First have champions of your organization embed themselves in the new market space for a short period of time, taking a deep dive to identify the local differences. Secondly, you should involve local partners with the help of your regional public agency, helping you attract foreign direct investment to get first foothold in the local industry. The third step is taking part in open and collaborative innovation workshops and acceleration programs to capture insights and learnings from people who have been there and discuss those with peers. These tailored workshops guide you towards the ideal market and customer base. The right acceleration program will introduce you into the right ecosystem to build on your own network.
For instance, through our thematic accelerator program Point.IoT the winners gained connections with European agencies for continued capability development and funding.
We’re eager to hear your learnings and what steps you took to overcome the difficulties when entering into a new market space.