Startups go Global

Marta Wielgus

The word startup is like an ocean in terms of meanings, symbols, synonyms and passion; there are as many definitions as people asked to define the word startup. Business is successful once you have found a key to a profitable, scalable and repeatable business model for your startup. In order for the above to come about effectively, there always needs to be some point in the life cycle of a startup when people start looking for innovation. Therefore let’s answer, are innovation and scalability the key words to success on the international market?

Hard data

The report "Polish startups ..." shows that every third Polish startup is growing at 50 percent annually and another 20 percent reports the growth of 100 percent. More than half of the startups are exporters, of which every second makes more than 50 percent of sales abroad. The leading markets are the United States, Germany and the United Kingdom. The survey shows that exporting startups are usually larger, grow faster and create more jobs than companies operating locally. As much as 60 percent of Polish startups is financed from their own savings , probably of 3F round. Only 20 percent benefit from Polish and foreign venture capital funds, 20 percent sought business angels’ money and only a quarter want to apply for the EU funds

50 percent out of more than 420 surveyed startups declare that solutions they offer are innovative globally.

The organisers of SLUSH conference and the team managing Atomico Ventures investment fund conducted a complex research which incorporated data on completed investments, an increase in the value of technological companies as well as results of more than 800 surveys; what meaning do they convey for the European countries? The fact of the matter is that 10 European companies reached the status of the so called “unicorns” (English „unicorns”), that is technological companies with their market value exceeding one billion dollars. To my mind, none of them originates from Poland.

Polish startup ecosystems develop slowly, however, business and business support services are provided by innovation and startup-related circles. We can also notice more activity in incubators and scientific and technological parks and acceleration programs prove to be more and more ambitious which is shown by substantive indicators and actions, for example Innova- Invest in Lublin Science and Technology Park, Orange Fab, D-RAFT.


galeria

A few examples of those who managed to capture global market

Michael Borkowski founded Brainly which is known in Poland as Zadane.pl. This is a group of educational portals that help children and teenagers in learning. CNBC said that this may be the first Polish company whose value exceeds one billion US dollars. Is it a potential member of the group of startup unicorns?

Livechat won 7 percent of the global market which gave it the third place in the world. Glover and Qpony.pl are also good examples. The glove makeup remover comes first; it is a special kind of material that removes makeup when moistened. The product is sold in the European chain of Sephora stores. Glover is also available, among others, in South Korea. Qpony.pl - an Internet service known as Groupon is another startup reporting a great success . These examples show that you can achieve market success within two or three years even if you start from scratch.

The essence of innovation

galeria

The word innovation, Latin innovatio, means renewal, change. It is important for that innovation to be creative and useful. Secondly - it has to bring significant added value only when people want to use it in a way that can significantly change their lives and work. Starter Gdansk , Warsaw Accelerator WAW.ac. are good examples of innovative idea generating centres.

The contemporary world is full of inventions which are beyond the possibility to be used. To give a few examples of such innovations: an extended reality, graphene, an advanced communication technologies such as NFC (called near field communication) and the Internet of things. Only those innovations/inventions which are on demand from consumers are worth any interest. Otherwise inventions are consigned in oblivion until someone finds a suitable business model for commercialization.

The term business model should be understood as the way in which the organization performs and provided its customers with a given value. Therefore, the value of innovation is determined by a precise business model. Well, then, what is the key factor influencing the economic value of innovation? It's the opportunity to create future economic benefits. The valuation of innovation proves to be and extremely difficult task as financial measures cease to be a measure of value and becomes the measure of imagination of future economic benefits.

Innovation must generate customers and customers must generate future economic benefits be it for a startup or its customers.

Startup scalability

Steve Blank holds the exclusive property rights to the definition of a scalable startup, meaning- he makes a difference between a startup and something known as a scalable startup. The difference may be insignificant - but it should be fundamental to each startup manager – which is – building a new or dominating an existing market is the main purpose of your activity.

Scalability is the decision made by the team that all operational activities of the company are focused on one goal - winning the market. This business cannot have the aim of generating " any specific" income to operate decently. Such a startup will be confined to the local market because it has one defect – it is non-investable. Who will invest in a startup whose revenue is only average? The investor assessing business models of companies chooses primarily those creating increasingly high return on sales (ROS) through generating ever-growing revenues. You should appreciate that and begin by changing your business model .

Facebook is a very good example of a scalable business. Several thousand engineers create value for millions of users. Few companies in the world have such a high ratio of users per employee. Naturhouse - a Spanish family – owned company operating on a well-developed market of food supplements /Retail Business / is an interesting example of the scalability of traditional business. The owner of the company based its competitive edge on an innovative business model which enabled him not only to exceed competition and cope with the economic recession but also helped him begin operations in foreign markets.

Innovation and scalability must occur and harmonize, and then we are only one step from success in the global market. These two factors not only facilitate adaptation to the ever-changing world but also make it possible to use change to your advantage and improve business. The change in the perception, thinking and understanding transformation processes are all dependent on those factors - AWARENESS OF INNOVATION AND SCALABILITY MEANS BUSINESS AWARENESS, MEANS THE FUTURE.


1. S. Blank, „Podręcznik startupu. Budowa wielkiej firmy krok po kroku”, Gliwice 2013
2. Raport: Szanse i zagrożenia dla rozwoju mikro, małych i średnich przedsiębiorstw Raport MSP 2012, Konfederacja Lewiatan
3. Atomico Ventures "The State of European Tech" by, Raport 2015; http://www.atomico.com/news/the-state-of-european-tech
4. E. Skala, E. Kruczkowska, M.A. Olczak, Polskie Startupy. Raport 2015., Fundacja Startup Poland, Warszawa 2015
5. Samodzielni, oszczędni i wykształceni - Polscy startupowcy wg MamStartup.pl
6. Definicja innowacji dla tych, którzy pozyskują środki z Unii Europejskich, czyli innowacja rozumiana OECD, Oslo Manual. Then Measurement of scientific and technological activities. Proposed Guidelines for Collecting and Interpreting Technological Innovation Data, OECD/Eurostat, Paris 1997.



Marta Wielgus – Piotrowska
- an investment advisor for SMEs for almost 10 years now. Supervises the portfolio of 20 startups. Managing Director in LPNT S.A. team. Her life motto: “the only permanent thing in this world is is change... however, the plan is important.”



This article was written under “Get Inspired - entrepreneurship, startup, cooperation”
project co-financed by the Polish Ministry of Foreign Affairs
as part of the "Cooperation in the field of public diplomacy 2015" contest.