COVID-19 has prompted
a system reset. Across the board, business leaders are questioning how we can
change our economic system to benefit the new reality — and while many
entrepreneurs are answering this call with sustainable and inclusive solutions;
too often, the scalability of these ideas is not yet competitive.
What I’ve learned from two decades of scaling startups and working at the
forefront of the circular
economy, now as
Chief Ambassador of UpStream Festival, is
that purpose-driven entrepreneurs often fail to build the fundamentals of a
successful business. Why is this, and how can more entrepreneurs building
solutions for the ‘new economy’ create impact at scale?
Here are five lessons from the Dutch landscape, the fastest-growing startup
ecosystem in Europe, that I hope are useful for
founders everywhere looking to make a difference.
1. Hire to scale
According to CB
Insights, 23
percent of startups that die do so because they lack the right team. It’s key to
make sure you have a well-balanced founding team with the necessary skillsets to
facilitate growth. Typically, a strong founding team consists of a cunning
strategist, a persuasive business developer, a creative genius and a strong
project manager who keeps the pace and gets the work done (the
A-team,
as I call it).
This is a lesson applied by The Ocean Cleanup,
the brainchild of entrepreneur Boyan Slat — who was 18 at the time it was
founded, and who is on a mission to rid the world of 90 percent of plastic
pollution.
To make the business a success, the leadership team was immediately diversified
to support different stages of growth; and in July 2015, an independent
Supervisory Board was put in place to further strengthen its governance and oversee the
progress of its executive team.
2. Validate your idea quickly on the market
When you spend too much time researching your product, there is a high chance
that you’ll end up in the ‘valley of death.’ Even though some technologies
require a long R&D time, to prove to investors that your product works, you need
to get out and test it on the market.
Peelpioneers is a good example of a startup that got
this right. They started with a great idea to extract high-value food
ingredients from the waste stream of orange peel and quickly validated their
idea in the market, allowing them to attract the investors they needed to scale
their production facility.
3. Focus on scalability and think ahead
There are many great startups that just don’t have a product or service that can
be grown or easily developed for a large audience. To get investors to support
your business, it’s necessary to search for solutions that can scale
exponentially and deliver enough value to customers.
Circularise developed an open-source protocol
and decentralized network to bring transparency to global supply chains to move
towards a circular economy; tackling a major challenge to connect multiple
players along a supply chain, from raw materials producers to manufacturers to
retailers. Their solution can be scaled to different supply chains in multiple
industries; the more parties that use their solution, the more others want to
join — both commercially viable and highly scalable.
4. Focus on the problem you solve
Developing a sustainable product or service just because ‘it’s a great idea!’
will not create impact. There needs to be a clear problem that your product or
service is solving, and that your target audience is willing to pay for.
When Physee, a manufacturer of solar-powered windows, was
still in the researching phase, they zoomed in on the needs of their niche. They
understood the need: Architects and real estate owners wanted to create
energy-neutral, comfortable spaces with cost-effective solutions; and their
mission became to create solar-powered windows that looked exactly like normal
windows, but with sustainable benefits.
5. Invest in your visibility
Out of the €1.4 billion in venture capital that was invested in the
Netherlands last year, only 130 million went to impact-driven startups and
scale-ups. Investors I speak with often complain that impact-driven startups
aren’t visible, which goes hand-in-hand with what I’ve witnessed — a lot of time
and energy gets put into product development and growth, but not in networking
and visibility.
Skoon Energy provides renewable energy on demand through
a network of clean mobile energy solutions, and focused on their visibility from
the get-go. Their founder secured their first funding from a large corporate
investor and kept promoting and pitching his startup from day one at various
events, trade missions and in the media. This led them to a commitment from
clean energy investor Kees Koolen, the former CEO of
booking.com.
No matter how innovative or creative your idea — in the end, only those that are
viable, feasible and desirable will make it; and more often than not,
assumptions about viability and desirability are wrong, leaving startups
building something nobody is interested in. Or founders with promising ideas
believe that investors will come looking for them. They won't.
As US-based investor John Doerr says, “Ideas are easy. Execution is
everything. It takes a team to win.” I know there are promising solutions out
there that can pave the way for a ‘green economy’ and a much more inclusive
world, but if these alternatives are going to achieve mainstream impact,
entrepreneurs must focus on creating a business set to scale. There is a call
for a systems reset and I'm joining that call. Change can't come quickly enough!
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Lars Crama is Chief Ambassador of Upstream festival, Managing Director of Innovators.Inc, and former Commercial Director of circular economy hot bed Blue City. With more than two decades’ experience as Chief Commercial Officer, Chief Marketing Officer and Global Director in international startup, scale-up and corporate organizations; Lars is now on a mission to help more entrepreneurs, startups and companies to embrace the next economy — having been inspired by circle economy principles and Kate Raworth's Doughnut Economics.
Published Sep 21, 2020 8am EDT / 5am PDT / 1pm BST / 2pm CEST