18 November 2019

This week marks Global Entrepreneurship Week, with one of this year's themes being the startup ecosystem—how people setting out in business share knowledge and make connections.
Ben Spigel at the Startup Festival

Ben Spigel, Director of the Business School's MSc in Entrepreneurship and Innovation, answers some key questions on this theme.

What do we mean by entrepreneurial ecosystems?

Entrepreneurial ecosystems are a collection of different people, policies, and culture in a place that supports high-growth entrepreneurship. Entrepreneurs need skilled workers, investors, and board members who know the challenges at a high-growth firm and are willing to help out. It's more than just having smart people or lots of investment capital. It's about a cohesive community that is orientated toward the same goal.

How healthy is the entrepreneur ecosystem in Scotland?

Scotland has been doing a lot. The Scottish Government and Scottish Enterprise have been very good at having a collective vision. Edinburgh is probably the strongest place. We have success stories in Skyscanner and Administrate. We also have smart investors who've been through this before, know the challenges that entrepreneurs are going to face. And even more importantly, you have a community of entrepreneurs talking together. What I've been seeing in my research is there are no new problems in entrepreneurship and by sharing their experiences they can overcome this.

What sort of problems?

Every time I interview an entrepreneur I ask what it was like to fire their first person and they all say it was awful, they all think they were the worst person in the world. It's only when they talk to each other they realise this is really normal, and that's actually one of the ways I see people communicating. Every entrepreneur as they grow has a bad hire and they think they're the only one who's ever failed like this. As they talk they realise they're all facing the same challenge and it makes it easier to deal with.

Isn't business about competition rather than sharing knowledge and building networks?

That's the most interesting thing about entrepreneurship in Edinburgh. They are not competing. For example, I have interviewed three different rugby software developers and they all swear they're not competitors. One is in the pro market, one in the pro-amateur market, one's at club level. So they're able to share knowledge about who's buying, and what the challenges are. They don't see themselves as competitors. Maybe one day they will but right now they can learn from each other and everyone becomes more successful because of that.

How can ecosystems be encouraged?

The most important part of the ecosystem are the entrepreneurs themselves. We in universities and governments like to think we're helping but it's the entrepreneurs who're doing the heavy lifting. I've been amazed by the willingness of people in Edinburgh's community to host events, put things on, and to share. Communities of people forming, helping each other out, realising they're all stronger by communicating and collaborating.

If an ecosystem is about sharing knowledge, does this mean funding doesn't matter?

Money always matters. Scotland has a vibrant angel investment community. There's a lot of high-net-worth individuals looking to invest in companies. However they don't always know how to invest. They may ask for too much equity and you can end up strangling a company as it tries to grow. There is a big issue in Scotland in that there may be money at the sub-million level, but once you're trying to grow beyond that you have to go to London or the US to find that, and that can be very challenging.

What's the next big thing?

The big shift that's coming is trying to move from startups to scaleups. Scotland has a lot of really innovative, really vibrant startup firms in tech, food and drink, tourism—but can they move from 10 to 50 people? Or from £10m revenue to £50m revenue? That requires new skills, new managerial insights. Maybe the CEO needs a senior mentor who's been through this before and that's where Scotland has a thin supply of resources.

Why does entrepreneurship matter?

It's hugely important for the Edinburgh, Scottish, and UK economies. High growth entrepreneurship which represents 6% of new firms in a year is responsible for 50% of all new jobs created, so a small subset of ambitious, innovative entrepreneurs are the ones creating growth in the economy. It's really important that the business community, universities, governments all come together to think about how we can support these growth ambitions.

Ben Spigel

Ben Spigel is a Chancellor's Fellow and Senior Lecturer in Entrepreneurship, and Director of the MSc in Entrepreneurship and Innovation.