The Generalitat of Catalonia promotes a new approach in the support programs for startups in very early stages. It is entrepreneurship with a high focus, oriented to extremely specific areas. 10 programs of this type are being supported. Before saying which ones they are, I try to argue the reasons that motivate their promotion.
1) We want to continue promoting the technological hub of Barcelona recognized globally and extend that effect to other parts of the Catalan territory.
The concept of entrepreneurship is varied and several typologies must be distinguished. The Generalitat de Catalonia distinguishes the following types: 1) Entrepreneurship of small enterprises (self-employment, support to new small commerce, rural entrepreneurship…) 2) Startups, 3) Scientific entrepreneurship, 4) Corporate Venturing (which is in fact more a tool of innovation of the traditional company than an instrument of entrepreneurship), 5) Social Entrepreneurship and 6) Entrepreneurship of Cultural and Creative Industries.
From the public perspective, a range of actions must be balanced to stimulate each type of entrepreneurship, since all contribute positively to society and the economy. Certain approaches simplify and distinguish only two types of entrepreneurship: (1) small and medium-sized enterprises and (2) innovation and technology based, disruptive and growth oriented enterprises. For governments seeking to create jobs by promoting entrepreneurship, clarity about the different types of entrepreneurship is necessary. In some countries, public policies have put the two types of entrepreneurs together, despite their substantially different needs. From training programs, through tax incentive schemes and reaching support structures (such as accelerators and mentoring activities) support programs for entrepreneurs of one kind or another must be different. In fact, even metrics measuring the activity and the outcome of support structures must be different and should be considered in different time frames. Support programs for small enterprises have a regional focus and, if implemented well, can provide a short-term return. But these actions are unlikely to have a significant impact on large-scale job creation. Instead, a support structure of innovation-based businesses must have long-term economic growth strategies. In addition, in this case, other actors are required, not only entrepreneurs: large corporations, universities, venture capital…. Growth-oriented entrepreneurship is more complicated. But it offers far more potential in the long term.
Today, the idea of entrepreneurship has become globalized and democratized and there is a worldwide race to have the most powerful entrepreneurial ecosystem. Barcelona Catalonia have been able to set up an strong entrepreneurship hub, a concentration of technological startups very relevant worldwide. In order to continue supporting this position and its evolution it is necessary that the system generates many more companies. Moreover, new proposals should not arise from the center of the metropolis solely. There are opportunities for technology and growth-oriented startups in less urban areas.
2) The second reason is that entrepreneurship is a very efficient way to promote technological change.
How much does it cost to develop a new drug in the pharmaceutical industry? Between 1,000 and 2,500 million euros, depending on the sources. But … does this mean “every” drug? No and I’ll explain why. It is estimated that only 1% of the molecules that are initially defined as potential targets become a new drug. Therefore, the cost of development includes the cost of R&D to find out which is the valid 1%. That is, to work 99% of the other molecules to that point where it becomes apparent that they are not valid. The technological risk is therefore implicit in the cost of developing new products.
Years ago the biotechnology sector appeared. It began in 1976 with the founding of Genentech, which now employs thousands of people and since 2009, is owned by Roche, after an acquisition that was an ending form of collaboration. This type of acquisitions is very common. So, why pharmaceutical companies are interested in biotechs? Today a very important part of the new products of the global pharmaceutical sector comes from biotechs. It is estimated that it will be 50% by 2018. Locally, here in Catalonia, we already have examples of the impact of our biotechs on our pharmaceuticals.
There are 4 types of actors to whom collaboration is very useful: 1) Entrepreneurs, who have the opportunity to grow their proposals with the expectation of impacting the sector, 2) investors, an essential actor, who sees in the big pharmaceuticals, a potential exit, 3) the pharmaceutical companies themselves, which expand their pipeline, and 4) the public sector, which increases business activity.
What do we require for sustaining a model like this one? Why does the new scheme work? Biotechs, developing new concepts, are more agile, fast, economic and creative than big pharmaceutical companies. There is greater efficiency. But in addition it requires a repetition on the part of the entrepreneurs when they fail. They must look again for that winning bet. And with the same goal, investors must diversify. Society as a whole gains because it accelerates the pace of technological change and also diversifies its economy. In fact, many of the biotechs are not acquired but they grow to a point where they self-sustain with their own pipeline of products, technologies or devices. All this movement takes advantage and uses the young talent grown in the universities. And also expresses the expectations that we had generated in them when forming them.
In short, we are actively participating in the game of the spiral, that of accelerated technological growth.
Biotechnology thus becomes a new sector or a pipeline contributor for pharmaceutical companies, which have transferred part of the risk of developing new products to those companies that are more agile and faster. And also to the private sector of seed capital partners willing to take some of that risk as well. In the same way that this has happened, there is the option of similar schemes repeated in other business sectors: Traditional companies do not assume (they “give up”) part of the risk of generating disruption and leave that risk in the hands of young and agile companies, who see an opportunity in assuming this risk.
In this context, if we are in this paradigm, if we continue to evolve towards that context of generation of disruption… how should we promote entrepreneurship? How will the support programs for entrepreneurs have to be?
We will be able to generate disruption if we focus (also in the programs of support and acceleration). Currently we have these 10 focused entrepreneurship programs:
The outline of the programs, each in this specific area, is as follows:
1) A training program of 150 hours in which 3 things are treated
- Between 10 and 20 needs and opportunities in the specific area
- Technologies that can address these needs
- The global market in this area
2) An expert mentoring support for the startups that are created at the end of the training phase
3) Each program should articulate a platform in which the projects develop more easily, a test platform that helps to perfect the entrepreneurial proposals.
In this web you can see the outline of one of the programs: http://endurancelab.co/
In short, instead of looking for verticals, we look for very specific areas to which to apply technology through startups (tourism no / yes theme parks) and in which they identify certain needs and opportunities. It is intended to create highly specialized startups.