The Innovation Advisory Board facilitated introductions to several innovation centers around the globe. I was able to talk to the center director of Paris & Co. It is important to start with some context of the development of the innovation ecosystem in France and Paris specifically. In 2008 ~ 2009 there was almost no startup activity or venture capital investment happening in Paris due to the global recession. In partnership with the City of Paris, French Government, and philanthropic investors, an incubator was launched to start to organize the activities within the area in 2010. They studied incubation models around the globe taking note of best practices and approaches.
Many accelerators and incubators began to launch featuring different models. Their particular focus as a non-profit, late stage incubator. The start-ups had to be fairly mature in terms of organization and business plan with a product ready to take to market to enter their services. Their incubation lasts for two 12 month cycles. If a company completes the first cycle, they are evaluated for a second cycle.
Their services include education, incubation and corporate services. They both funnel start-ups to other incubators and their own. What is of particular interest is they don’t take equity; it is paired through fees, corporate memberships, and sponsors.
– Incubated 200 startups for a total of 590 to date. ( vs. 100 in mass challenge in 2014 )
– 78% survival rate
– Raised 85M(€) in VC capital
– Startups in incubation earned over $5.1M(€)
– Served 5300 employees of the start-ups
– Securing sponsors for events, start-up, and student programs
– Corporation partnerships for corporate incubators
– Corporations don’t take equity at this early stage – its about access and deal flow.
– Corporations actively engage in with their portfolio bring a range of people, tech, and networks to support the maturation
– $7.5M dollar annual operations budget, this budget is rapid growing annually as they expand in scale, numbers of incubators, events, employees, and services. (Note: that is about 43% public funding and 57% private, but the trend is rapidly shifting to private )
At the beginning of 2015:
– 10K-12K start-ups in Paris ( Note: about 7K in NYC )
– They had grown to 10 separate incubator facilities, each focus on a specific area or topic. i.e.: Clean Energy, Tourism, communication, Agri, Mobility, High Tech, Media, Video Games, etc.
– They employee around 50 people across the 10 incubators and are growing in size and partnerships.
– Paris now has about 50 – 60 other incubators, plus a large number of co-habitation and maker spaces
– Frequent events, contests, and hackathons
– Over $800M(€) annually in VC money in Paris compared to almost none in 2008
– A new 1000 start-up sized incubators are being planned for the city
– Creating a gravity to other countries to participate in their ecosystem.
Many of these practices and trends were mirrored in conversations with other cities/ countries on the proactive efforts to improve their innovation ecosystems. Our research has been following the development and evolution of methods being applied and overall impact.
Many cities are still struggling to provide cohesive sets of service providers to cover the full life cycle innovation. Many prefer to focus on late stage as the potential valuation of products is better, but the opportunity still exists for developing a much larger funnel of emerging startups to mature/fail/ pivot faster with less time and capital investments. This increased scale of deal flow would attract more start-ups and investors to the regions. It is also clear that the ecosystems are going to continuously and rapidly evolve from their current states. What we are seeing today in most regions are the basic formation patterns of services and funding models. These are great as an entry point, but will need to evolve to handle an increased scale of activity. They will also need to address the complexity of lifecycle investment models to create a sustainable integration of services across providers. Increase in cross-regional and international integration processes.
These conversations were both informative and conveyed the energy and excitement that is happening in regions around the world.