The “South Summit” is the most important entrepreneurship and start-ups event in the world. This is how the President of the Spanish Government, Pedro Sánchez, has revealed, as commented to him by the President of the Davos Forum, Klaus Schwab.
South Summit 2018 held in Madrid in recent days and closed today has brought together more than 650 investors with an investment potential under management of more than $34 billion. The object of desire has been more than 3,500 startups of which 100 were selected and which have been able to raise about 1,400 million dollars.
The fact that Spain will become the technological Start-up Nation is the adventurous objective of both the President of the Spanish Government and the Mayor of Madrid, Doña Manuela Carmena, also present at this closing event.
To achieve this, it is not enough to have an extraordinary event in which the latest innovations and visions of the future are valued. An efficient ecosystem needs to help these start-ups on their way to becoming realities that change the world. It’s not the first time we’ve talked about that efficient ecosystem.
Personally, I was delighted to hear the President of the Spanish Government enumerate three main lines that can contribute to promoting this ecosystem:
- Recognize the specific legal framework of Start-ups. It is not the same to create a company that carries out with better or worse implementation an existing technology, service or product, than to invent a new technology, service or product that did not exist previously. Its uniqueness requires specific recognition that goes beyond current corporate formats. Boosting tax incentives in such a way that established companies perceive investing in the R&D of these Start-ups as the way to incorporate new technologies from outside inside. Let’s remember that nowadays many of the tax incentives are simply that, tax incentives, not finalists. In other words, unfortunately the objective is not necessarily to generate innovation, but to stop paying taxes. We will see if this approach changes this dynamic and money does not go down the drain and tax transfer goes hand in hand with technology transfer.
- Encourage Accelerators and Incubators (number, size and the communicating vessels between them). In other words, to generate critical mass that is capable of managing a significant number of projects, knowing that only a few will be able to bear fruit. For example, the mayoress of Madrid, Manuela Carmena, announcing that the physical space where the South Summit 2018 has been held, called “la Nave” has created space for up to 70 start-ups on urban innovation (“Smart Cities”) to be established. I leave you a link http://www.lanavemadrid.com/la-nave-busca-acelerar-proyectos-y-startups-de-innovacion-urbana/.
- Connection to the investors. The creation of forums in which resources and proposals are linked should be encouraged. The accelerators/incubators are part of the process, but in this way of accompanying the start-up there is a moment, the moment of truth, in which once they have survived, by natural selection, a number of start-ups with real possibilities of being something, a push is needed that the accelerators are no longer willing to risk. This leap in quality, and in the amount of investment, must be given by investors of another level, to whom the accelerators have made the process of filtering the best options. Without this connection, all the money and effort invested so far can be lost.
As we can see, there is an element inherent to the process of creation.The certain possibility of failure. Moreover, statistically speaking, failure is far more likely than success. In cultures such as the Spanish of the last three centuries, there has been an atavistic fear of failure and its consequences. In other cultures, the failures are proudly included in the “curriculums” as a sign of having dared to risk to achieve something, and as a sign that we are going ahead in search of the next challenge with more experience and capacity to turn it this time, into success. This efficient ecosystem has the intrinsic objective of sheltering this attitude.
According to studies, of the start-ups created at any given time, between 75% and 80% of them will not survive more than one year, and only between 3% and 5% become a company or activity with perceived value. That is to say, only a minimum percentage is going to prosper as a business or it is going to be bought and incorporated into a large existing company. Against this backdrop, being a start-up’er is a heroism. A heroism that, for the sake of development, must be encouraged. This is precisely the goal you expect from such efficient ecosystem.
If you will allow me to comment, to the three points that the Government of Spain says it is going to encourage I would add one that has not been named. Educational excellence together with the process of transferring that knowledge so that it can be implemented through a Start-Up. Having centres of educational excellence is one of the great challenges Spain is facing (and Europe). Let’s remember that around Silicon Valley, apart from accelerators, investors and start-ups, there are two of the five best universities in the world: Stanford and Caltech. In the former, 50% of its 4,000 professors, as well as 25% of its students are international (in Spain the best university does not exceed 5%).
Congratulations to Amadix(Sp), the winning start-up that also competes for an additional $1 million prize at the Silicon Valley Startup World Cup Fund. Amadix is a biotechnology company focused on developing blood tests that allow early detection of colon cancer. Also, to Valerann(UK), awarded as the most “disruptive” start-up for its approach of converting road signs into connected intelligent systems that can help reduce the 240,000 deaths on the world’s roads each year and the 4.2 billion hours lost in traffic jams. To Sheetgo(Sp) as the most scalable start up for its approach of connecting spread-sheets in the cloud and automating data transfer in a few clicks. A Clicars(Sp) as the best team, for turning the car buying process into a fun experience and eliminating the need to visit the dealership for new or second-hand cars.
The evolution of these initiatives will have to be followed closely. If we want to maintain the welfare state, pensions, health and so on, we have to succeed in these high value-added technology and development initiatives. Let us remember that the average remuneration of people in these sectors is a significant number of times higher than the average remuneration of other workers. The higher the wage, the greater the capacity to contribute to the common social welfare.