The Startup Ecosystem

By Aaron Small 20/01/2010

Fred Wilson, of Union Square Ventures in New York, is one of the more prolific Venture Capital bloggers going around. I frequently enjoy his posts on ‘A VC’, where he covers a range of topics. One that caught my eye recently, was one on Startup Ecosystems.

There has been a lot of talk at the moment around the driving NZ’s knowledge economy, in particluar a discussion paper from the New Zealand Institute, and a report on a recent workshop, ‘Improving translation of publicly funded research for economic benefit’ led by NZ Chief Science Advisor, Sir Peter Gluckman.

In this report, Sir Peter states that we must recognise that the issues we face (there are many – see the report!) are not exclusive to NZ, that other countries have the same ones, no system is perfect, some do it better, some do it worse, but we are a long way behind.

To quote Fred verbatim from his post “Startup Ecosystems Take Time“:

“I think it is good to think about decades when you think about the development of new startup hotbeds.

In the first decade, you are largely making it up, copying what works elsewhere, the VCs and entrepreneurs are largely doing it for the first time, and while you can have successes, they are mixed with a lot of failures. That was 1995 to 2005 in New York City and 1965 to 1975 in Silicon Valley.

In the second decade, you start to get it right. The entrepreneurs are doing it for the second or third time. The infrastructure has developed (lawyers, VCs, recruiters). And it is easier to get talented employees to do a startup. This is where we are in New York City now and is where Silicon Valley was from 1975 to 1985.

In the third decade, the ecosystem is fully formed and producing great companies. That is where Silicon Valley has been from the mid 80s on.”

According to this analogy, it took Silicon Valley 25 years to mature. If you consider New Zealand has seen declining economic prosperity since the 70’s, then that “first decade” has actually been something like four for us! Lets hope 2010 is the year we start getting it right…

0 Responses to “The Startup Ecosystem”

  • Hey Aaron
    I too believe we are on the right track. We have a lot of the pieces in place and we currently in the process of tweaking, streamlining and bring about cohesiveness between them. With the multiple reports, taskforces and strategies being published in the last year or so it is obvious that we know what these ‘tweaks’ need to be. It is ultimately ‘time’ that is needed. Time for experience to develop, time for more international successes to occur, time for greater pools of capital to develop and time for the underlying culture that fuel these entrepreneurial/ innovation ecosystems to be more widely adopted. ‘Time’ doesn’t suggest that we should just wait around though. It is time with action. How am I contributing to this system development ? is ultimately a question those of us involved in it should be asking of ourselves on a regular basis. NZ will never be a silicon valley but neither will boston, singapore or colorado. We will be our own kiwi system. All in all I see us in the latter third of this ‘first decade’ still and am looking forward to a productive twenty ten.

    PS: Aaron – -a good read if you havent come across it before.