+Do Italian startups live in the city? The role of territorial contexts in the new forms of innovative entrepreneurship

SASE Conference, Milan June 27-29, 2013

Ivana Pais Università Cattolica, Milan

Cecilia Manzo University of Florence

+0. Agenda

1.  Theoretical framework

2.  The research questions

3.  Methodology

4.  Startups: first results

5.  Limitations and next steps

6.  Conclusions

+Why Startups should live in the city? Theoretical background Cities as places of innovation

n  Relational factors: n  Formal and informal interactions among professionals that favour

the diffusion and contamination of knowledge (Storper & Venables 2004, Asheim et al 2007)

n  Dialogue and development: “conversations” that give birth to new ideas, innovation both radical and incremental (Lester & Piore 2004)

n  Involuntary factors: Buzzing as non-intentional exchange of information and practices (Bathelt et al 2004, Asheim et al 2007)

n  Infrastructural advantage: Material (transport) and immaterial (broadband)

n  Links to Universities and Research institutions: n  Scientific entrepreneurship (spin-offs) n  Strategic guidance of research n  Human capital formation

+The research questions

1.  What kind of capital (human, social, etc..) is mobilized by those who are creating these companies?

2.  What is the role of the collaboration networks (formal and informal)?

3.  What is the role of the territorial context?

4.  What is the role of regulation?

+Methodology

n  We created a map and invited startups to join.  440 startup joined by May-June 2012 (at present they are 603)

n  All participants were given a questionnaire (CAWI method) and we gathered 305 responses (July-September 2012)

+Features of the Companies n  Sectors:

n  apps. n  consulting and business services n  social media

n  Business opportunity: n  new needs of the consumer / customer; n  new technology n  exploitation of undervalued resources

n  Clients: n  48% individual consumers and families n  46% other companies n  4% public institutions n  2% no-profit

n  Factors of competitiveness: n  innovation of products / services n  high quality n  process innovation

+Results: Individual level (1)

n  Gender

n  Startuppers are men: 89%

n  11% are women

(in Italy female enterpreneurs are 24%)

n  Age

n  More than half (52%) belings to the «post» generation (under 33)

n  only 5% «boomers» (over 46)

+Results: Individual level (2)

n  High human capital: n  73% has a university degree

n  22% has a Master or PhD

n  27% has attended courses for startuppers

n  Motivations:

n  To give shape to an idea (72%)

n  To be autonomous (44%)

n  To put themselves to test (40%)

n  Other features of startuppers: n  78% has other activities

n  freelance 31%,

n  other startups 15%, employee 13%

n  student 9%)

n  Serial entrepreneurs:

n  31% has already created other companies

n  only 16% of the total bankrupt or closed

+Results: Relations / internal

n  Families with high human capital but no entrepreneurial tradition (12% father, mother 4%)

n  84% of respondents have at least an associate (on average, associates are 3), with personal characteristics similar to those of the respondents: these are mainly former colleagues or former classmates.

n  The size of the company is very limited:

n  it is not uncommon that the workforce of the company is constituted just by the shareholders (59%)

n  on average, startups have 1 employee, 2 stable collaborators and 3 occasional collaborators.

n  The channels of recruitment of employees and collaborators are very open:

n  word of mouth in a professional environment (32%)

n  online (13%)

n  Relational skills are the most highly valued. Technical expertise was chosen by only 3% of respondents.

n  The most important features to make the team working:

n  shared vision

n  passion

n  trust

+Results: Relations / external

n  The reference system of the respondents is "profane":

n  It is important to be appreciated by the clients (47%), followed by employees (21%). The relationship with other entrepreneurs (12%) is higher than even the one with with shareholders (10%).

n  Major problems:

n  finding resources (financial, human, physical)

n  development of the idea

n  administrative procedures.

n  Weak networks of financing: n  45% self-financed and looking

for funding

n  12% self-financed not looking for funding,

n  9% venture capital and business angels,

n  6% public funding,

n  5% relatives

n  4% banks

n  2% friends

n  1% crowdfunding

n  Participation to firms’ associations: 21%

+Results: Relations / networks

n  Informal exchanges: n  information on

technology n  information on

markets n  information on

business management

n  Formal exchanges: n  information on

markets n  technology n  information on

technology

0 2 4 6 8 10

consulting

business service centers

financial institutions

associations

public bodies

universities, research centers

clients

suppliers

competitors

quality frequency

+Results: Relations / networks

Nodes Ties Density

formal 156 109 0.0045

informal 175 144 0.0047

Mean Median

formal 813 Km 85 Km

informal 810 Km 75 Km

+Results: The territorial dimension (1)

n  Fundamental criteria in the choice of headquarters: 1.  Low cost

2.  Proximity to home

3.  Proximity to universities or research centers

n  Where are the HQs n  11% coworking

n  7% university incubators

n  6% accelerators

n  5% other incubators

n  3%technology parks

n  Market: n  Regional 8% n  Domestic 46%

n  Foreign (Europe) 19% n  Foreign (non-European) 28%

n  Link between the startups and traditional activities of the territory n  Rome: Music, Arts, Cinema n  Milan: Consulting, Advertising

and Social Commerce

n  Turin: “Makers” and Media n  Naples: Civil Society and

Participatory Labs

+Results: Regulation (1)

n  Law n.221/2012 (Decree Law Growth 2.0), Section IX innovative startup: exemptions, tax breaks, exemptions from the corporate law governing special working relationships

n  Special section of the register of companies devoted to innovative startups

n  June 10, 2013: 853 companies.

n  Among the companies we interviewed only 13% has now entered in the register of innovative startups

+Results: Regulation (2)

Listed on the register of innovative companies: Who did it?

n  12.5% women vs 10.5% men did

n  16% graduated vs 7% with secondary school diplomas

n  23% among boomers (over 46) vs. 12% among the post (under 33)

n  15% startup based in the provincial capital vs. 7% based elsewhere

+Conclusions

1.  What kind of capital (human, social, etc..) is mobilized by those who are creating these companies? Mainly human capital (opposite result than the rhetoric that accompanies startup).

2.  What is the role of the collaboration networks (formal and informal)? Weak, with consequences on the availability of social and financial capital

3.  What is the role of territorial context? The most important factor, enables different forms of capital

4.  What is the role of regulation? Low effectiveness, strengthens existing allocations of capital

+Limitations and next steps

n  Phenomenon in its nascent state, exploratory analysis à this survey allows to build hypotheses to be tested

n  Self-selected sample à new analysis of the register of innovative startups

n  Integration and comparison with analysis of digital relationships (e.g. network of followers on Twitter)

n  Policy indications

+

@ivanapais

@ceciliamanzo

cecilia.manzo@unifi.it

ivana.pais@unicatt.it

Thanks!