HIGH-TECH ENTREPRENEURSHIP

From theory to practice

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Marco Cantamessa – Politecnico di Torino and I3P

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What’s the most important

thing in a high-tech

enterprise?

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These people (entrepreneurs) have

1. Created and built _<insert noun here>_

2. _____<insert verb here>_____ customers

3. _<insert verb here>_ technology

4. Developed ___<insert noun here>______

5. _<insert verb here>_ finance

6. _____<insert verb here>_____ profits

7. Created many _<insert noun here>_

Companies

ImprovedFound/Understood

Products / servicesRaised

Made/distributed

Jobs

The role of technology-based entrepreneurship

Startups are key to the economy because of

growth

job creation

5Kane (2000)

sales to other firms

Open Innovation

The role of technology-based entrepreneurship

Technology transfer

• Licensing

• Consulting

• Hiring

• Startup creation

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So, let’s start from you…

Have you ever thought of

becoming an entrepreneur?

Why should you become an

entrepreneur?

Can I be an entrepreneur?

Why should I think of launching a tech

startup?

Can I be an entrepreneur?

9Entrepreneur as a hunter (of what?)

Imprendere comes from

In moving towards

Pre before

Hendere grabbing with the

hand

Let’s look at entrepreneurs as a profession and as an attitude

The term «entrepreneur» comes from French and Latin

Can I be an entrepreneur?

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From a psychological perspective

• The existence of «entrepreneurial personality traits» is

debatable (good news!)

• There appears to be a distinctive «entrepreneurial

cognition» (Mitchell et al., 2007)…. can you learn it?

• Need for achievement,

• Self-efficacy

• Innovativeness,

• Stress tolerance / resilience,

• Need for autonomy,

• Proactiveness / passion.

Can I be an entrepreneur?

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Thinking in terms of

• solutions (looking for a problem)

• problems (waiting for a solution)

• opportunities (to be exploited)

Can I be an entrepreneur?

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Knowing how to leverage others’

competencies

Can I be an entrepreneur?

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Rational, but capable of using

heuristics…. and sometimes falling

into cognitive biases

Can I be an entrepreneur?

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Using both casual and effectual

reasoning

Means Effects

Effectual

Causal

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Should I give it a try?

What do I need to do?

Define a business

model

Frame the innovation

Develop a strategy

Assemblethe

resources

Do it!

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Define a business

model

Frame the innovation

Develop a strategy

Assemblethe

resources

Do it!

What kind of tech startup?

Business Models

Business models

Ask yourselves 4 key questions

What is myvalue

proposition?

Who is mycustomer?

What must I do and have to do

all this?

How do I reachmy customer?

Revenue

Cost

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Business models

Make your business model canvas

Customer

segments

The groups of

people or

organizations

the firm aims to

reach and

serveChannels

How the firm

communicates with

and reaches its CSs

to deliver a VP

Customer

relationships

The relationships

the firm establishes

with specific CSs

Revenue streams

The cash the firm generates

from each CS

Cost structure

The costs incurred to

operate the business

model

Key partners

The network of

suppliers and

partners that

make the

business model

workKey resources

The assets required

to make the

business model

work

Key activities

The activities that

must be done to

make the business

model workValue proposition

The bundle of

products and

services that create

value for a specific

CS

Infrastructure

management Product

Customer

interface

Financial aspects

Business models

Three approaches to build a

busines model and a startup

Traditionaltech startup

Founders’ product vision

Developproduct

Findcustomers

Lean startup Founders’ product vision

Build Minimum Value

Products

Iterate and Pivot

Design Thinking

Customerneeds

Build Minimum Value

Products

Iterate and Pivot

In B2B, who is the «customer»?

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Define a business

model

Frame the innovation

Develop a strategy

Assemblethe

resources

Do it!

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Frame the innovation

• Where are we along the s-curve?

• What type of innovation (radical vs. incremental, etc. etc.)?

• Fits the current paradigm or challenges it?

• Standards anywhere?

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Define a business

model

Frame the innovation

Develop a strategy

Assemblethe

resources

Do it!

Develop a strategy

• Around your potential competitive advantage

Competitive advantage

Drivers

(cost vs. differentiation vs. «blue ocean»)

Power relationships withinyour value system

Intellectual property

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Develop a strategy

Inadvertentdisclosure

(make proper use of NDAs)

Doing everything by yourself

Leaving everythingto the patent

attorney

Patenting whatcould be kept secret

Not studyingFreedom to Operate

carefully

Thinking one patentis enough

• Don’t mess up your Intellectual Property

Develop a strategy

• Around your competencies

Competencies

(what youknow)

Your offering

(what you do)

Learning

External events and triggers t30

Develop a strategy

• Define a coherent technology and market roadmap

(derivative) product development and subsequent

sales in different markets

Development of prototypes /

Product platforms

Technology development

Capabilities development

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Define a business

model

Frame the innovation

Develop a strategy

Assemblethe

resources

Do it!

Assemble the resources

• Build your team

Assemble the resources

• Raise finance

Labor-intensive services (consultancy)

Tech transfer entity

Capital-intensive services

IP-based product startup

Fabless product startup

Vertically integrated product startup

Fools, Friends & Family

Bootstrapping

Debt

Equity from Business Angels, Accelerators or Venture Capitalists

Equity or co-development fundingfrom customers

Public R&D&I funding

Try connecting the

boxes

Assemble the resources

• Raise finance

Assemble the resources

Type of round

Typicalamount

Typical investor

Seed

rounds50k-500k

Business angels, accelerators,

specialized VCs

«A» rounds 500k-2M Early stage VCs

«B» rounds 5M-30M Late stage VCs

«C» rounds and expansion

capitalWhatever Whatever

Typical

investment rounds

VC Fund

Startup 1

Venture Capital Firm

(General Partners - GPs)

≈ 5%

Startup 2 Startup n

Assemble the resources

Investors

(Limited Partners – GPs)

≈ 95%

Source: EVCA, 2013

Assemble the resources

Raising commitments

from LPs

Generating deal flow

Selectingstartups to invest

or coinvest

Calling for funds from LPs

Supporting invested startups

Deciding follow-on rounds

Exiting from investedstartups

• IPOs

• Trade sales

• Sales to founders

• Liquidations

Returning moneyto LPs, deductedcarried interest

The VC

investment cycle

Assemble the resources

• How do VCs invest?

• VCs invest in high-risk startups (why?)

• VCs invest minority stakes (why?)

• VC investment contracts entail specific clauses w.r.t.

governance, exits, future valuations (why?)

• Some BAs invest in convertible notes (why?)

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Define a business

model

Frame the innovation

Develop a strategy

Assemblethe

resources

Do it!

Do it

• Choose where!

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Consider

• Money

• People

• Customers & complementors

+ taxes, red tape, etc.

Do it

• Choose where

Type of entity

Incubator AcceleratorSeed

accelerator

Competitionto get in

Relatively low High Very high

Duration of program

Long (years)Very short (months)

Short

Financing Meetinvestors

Meetinvestors / win grants

Seed financeprovided

Involvementin startup

Tutors and mentors

Mostlymentors

Board and part time management

Do it

• Choose where

ITALY AS A PLACE FOR STARTUPS?

A new legislation has been enacted in 2012 and has boosted the

structuring of the startup ecosystem

• Official definition of “innovative startup”

• Less red tape, from incorporation to failure

• Greater flexibility in labor contracts

• Incentives for investment

• Fast-track startup visas

• Limited government money going into a «fund of funds» and

into matching funds

Italy’s startup ecosystem

ITALY AS A PLACE FOR STARTUPS?

The ecosystem is taking shape

(broad regional base + hubs)

City Startups % of total Cumulated %MILANO 607 13.10% 13.10%ROMA 355 7.66% 20.76%TORINO 207 4.47% 25.22%NAPOLI 101 2.18% 27.40%BOLOGNA 92 1.98% 29.39%FIRENZE 84 1.81% 31.20%MODENA 76 1.64% 32.84%CAGLIARI 69 1.49% 34.33%GENOVA 61 1.32% 35.64%PALERMO 58 1.25% 36.89%Source: Registro imprese, Sep 28th, 2015

Italy’s startup ecosystem

ITALY AS A PLACE FOR STARTUPS?

High scientific productivity and underutilized graduate talent

Italy’s Startup Ecosystem

ITALY AS A PLACE FOR STARTUPS?

In technology, bits and

atoms are coming together

Italy has a strong

competitive advantage in

engineering and

manufacturing (factories

are already there!)

… not to mention food,

fashion, furniture

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Italy’s Startup Ecosystem

ITALY AS A PLACE FOR STARTUPS?

• Lack of Early Stage Venture

Capital (slowly improving…)

• Demand for innovation is

still weak

• The ecosystem is not yet

popular with international

entrepreneurs and investors

Source: EVCA

Italy’s Startup Ecosystem

Startups in Turin

What’s special about Turin

• High incidence of startups that are

– Associated to universities (45%,

1.8x national average)

– Engaged in «industrial» sectors

(21%, 3x Milan and Rome)

• A «university town» that offers

high-level technical competencies

at reasonable cost

• Low cost / high quality of life

• Very strong manufacturing competencies are available in the region (factories are already there!)

• Two strong university incubators + other actors

The experience of I3P

Independent company, owned by the

universities and local public authorities

Consultancy and advisory company that works

with Students and researchers

Other entrepreneurs

Existing companies who want to create spinoffs

Government-owned company, with an

innovative business model, driven by results

Numerous prizes won and highly ranked by UBI

Global

The experience of I3P

Fundraising

Equity fundraising with BAs, VCs,

corporate investors

Debt fundraising with partner banks

Matchmaking between technology

and business competencies

Integration of the founding team

Staff recruitment

Consultancy

Strategic consultancy

Specialist consultancy

through partner firms

Scouting

Within the university (spinoffs) and

outside (Italian and foreign startups,

corporate spinoffs)

Events, competitions, hackatons, ....

and lots of one-to-one meetings

Support to business development

Trade fairs

Tailor-made corporate events

Development of sales networks

Management of corporate

incubation programs

Support to investitors

Advisory, board representation,

part-time management

Facilities

Serviced offices

Coworking spaces

Acces to shared

areas

The experience of I3P

Out of business

Founded

Surviving(1 IPO)

Currently incubated Acquired

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An annual deal flow made up of 350 applications,

150 business plans / MVPs, 35 new startups, of

which 15 admitted

Balanced across sectors (ICT/digital, cleantech,

medtech, industrial) with strong synergies with

Politecnico di Torino and local industry

Seed-level fundraising amounts to 2.5 M€ per annum

on average

A 3 M€/year seed fund is being set up

More than 1,400 jobs created, each of which has

required a one-off investment of 6 k€ in public funds

Positive P&L, and financially sound

Twenty years from now you will be more

disappointed by the things that you didn't do than

by the ones you did so.

So throw off the bowlines. Sail away from the safe

harbor. Catch the trade winds in your sails.

Explore. Dream. Discover.

(attributed to Mark Twain)