Increase Your Company’s Innovation By Beating These Growth Barriers
December 20, 2017
GE Reports Canada
It’s not easy being a startup. Entrepreneurs need an in-demand product, money to fund development and keen partners who want to see people through the ups and downs. While the most successful tech startups seem to grow like gangbusters year after year, for the majority of businesses, growth takes an immense amount of work.
How can company founders push through some of these barriers? We spoke to James Chepeya, executive in residence at Zone Startups Calgary, a global accelerator operated in partnership with GE Canada, to find out.
Why do you feel access to customers is the ultimate barrier to growth for startups?
Companies typically see a market opportunity and then come up with a solution. The problem they then have is validating whether it’s an appropriate solution, and that somebody is willing to pay for it. Is the problem sizable enough that you can build a business out of the solution? Investors want to know what the market is saying about your product. They’re looking for validation before they consider jumping in.
Why do you think some new tech companies struggle to find a market?
Often, early-stage companies come up with a widget and not a solution. Large corporates don’t want widgets that only solve part of a problem. They’re more engaged with “I need an IT solution, so I’ll go with whomever can bring an entire platform.” That is fundamental to the success of a startup – they need to have a solution.
What should a startup do if they have a great product but don’t know how to get it into the hands of customers?
They need to get more tools in their toolkits. Sometimes a company won’t have the perfect product so they’ll acquire other companies in the same space to they become a solution provider. Or they can pick up the phone and call us because our job is to look at these things. By providing early-stage companies with access to GE and its entire customer network, we provide the beginnings of market access.
Why is testing the waters through commercial pilots critical to a startup’s long-term success?
A commercial pilot requires collaboration and building relationships. It’s that partnership and the discussion that takes place around “can this actually work?” that helps you de-risk how you get to a test. Getting access to the right people in the organization is critical. If you look at Zone Startups, we have access to GE businesses like Baker Hughes, A GE Company, and to technical and operating people. Having the right people in the right place, and being able to build an appropriate team around testing and de-risking, is critical.
How does an accelerator help startups prove their technology at commercial scale?
If you don’t have a company with the right mindset who is prepared to test, it’s very difficult to go from idea to pilot. But because of our access to GE and its customers, there is an opportunity to work together on new ideas. This kind of collaboration can speed up the process.
When it comes to financing, what’s it like to work with an accelerator? What can an accelerator offer that other lenders can’t?
Raising money is difficult. These small guys can’t go to the bank. Most other investors are looking for a company that’s already selling something. Even for non-dilutive sources like the Scientific Research and Experimental Development Tax Incentive (SR&ED), the Industrial Research Assistance Program (IRAP) and Alberta Innovates, you have to have real investors. This is where the accelerator steps in. We get them access to customers and we use the ecosystem to talk to the market. We help them make their pitch.
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What does the working relationship between a startup and Zone Startups Calgary look like?
For some companies, we have specific times when we sit down for check-ins. For others, we’re just there and it’s “come talk to us.” We help some of them get the right team on board. When you look at the potential growth trajectory – one Zone company has grown from two people to approaching 40 in one year – it becomes about having the right people, because without them, you’re limiting your growth. We also recently developed a mentor network so the small guys get access to top people. The mentors may play a consulting role, join a board of directors, provide access to their networks or join the management team. An early-stage company does not need a full-time CFO, but they do need access to someone who has those skills, even if it’s just for a few hours at a time.
What’s at stake for Canada if we don’t figure out how to lower these kinds of barriers?
There’s a study that shows that GDP is directly related to the level of innovation in a country. That’s what’s at stake: our ability to grow and compete. The countries that are innovating are the ones that are attracting the capital; they’re the ones that are growing the businesses. The countries that are getting this right are the ones that are getting the early funding of great ideas and early access to customers. They’re building an ecosystem that supports that development