Hello, I’ve recently got back from an Euro trip with a corporate venture builder from Brazil, and am happy to get back posting here. This little road show was mainly to scout innovative projects in healthcare with potential to expand internationally and included three countries: UK, Finland and Belgium. As much as this experience wasn’t directly linked to FinTech, the following insights into drivers for innovation resulted.
Maturity and timings
One initial comment I find important is to consider how mature innovation, startup and team are. You can have a high impact innovation with a huge international potential, but if startup and team are not ready to look beyond their borders, most likely the project will start limited to their domestic market. This wouldn’t be a major issue if it wasn’t for the fact that markets can react extremely different to one or another innovative project, hence growth can be much faster or slower depending on where you launch it. Reversely, if a dreamer startup management doesn’t have their innovation ready but insists in disembarking in markets around the world, this can be a costly error. In this sense, aligning the timing of strategic decisions with the maturity of the project in general is key.
Different Markets
The Brazilian corporate venture builder I was accompanying – TechTools group – argues that the biggest South American country has fast adoption rates and can represent huge potential if you have a strongly connected and competent local partner. Brazil is still my home market – as opposed to my current host Germany – and opportunities are uneven across different sectors. Learning more details of what TechTools is focusing on, I’m convinced healthcare is among the more interesting ones.
UK
The first place we had meetings on was London. In addition to visiting one previously acquainted global organization with a local presence, we met with various counterparts ranging from startups, passing by incubators all the way to investors and government bodies focusing on innovation. The UK struck me as a private-sector-led innovation market and financials seem to be a recurring focus. Even organisations created and maintained partly with public funds are managed privately and even if formally accounting for their activities, there is no direct subordination to a ministry. This approach creates an interesting independence, so priorities and working methods can be adjusted by those close to the innovation without bureaucratic approvals or sign offs, with a focus on what creates value.
Finland
Helsinki was a great surprise for me, as they have an enormous startup scene and seem to breathe innovation. I normally look at financials when comparing markets, so I didn’t think that the Finnish market would be in a position of leadership when confronted with other places in Europe, but clearly there is a common understanding and acceptance that innovation makes the country more competitive, which is why they invest heavily in it. With massive incentivized co-working offices for startups – one of our visits for instance was to an old hospital building – the numbers of companies focused on innovation is impressive. Also, when looking at the local government support to startups, they seem to look at each project and decide on a case-by-case basis how much support they will offer, and this is up to astounding 70% of each project. Wow, that is commitment to innovation.
Belgium
Brussels and Flanders were our last stops on this visit and this is where TechTools already has a wider established network and plans to set foot in Europe. Healthcare is naturally a research-intensive part of innovation, and the visits to the universities and their innovation departments are very impressive. We have seen a number of world-class laboratories and research centers in healthcare, energy and beyond.
Also, by visiting accelerators and incubators and the Belgian co-working spaces, one can see the astounding number of startups – many of which with an established growth record – and notice how much this relatively small country also invests in innovation. I particularly enjoyed getting to know the history of how Eastern Flanders (the Dutch speaking part of Belgium) transformed the fled of the mining industry to leapfrog their employment of local workforce into technology companies. This is a strategically smart policy decision, especially when contrasted nowadays with other markets trying to bring jobs and industries back by force and protectionism. No surprise if this smart positioning of Flanders and Belgium renders them some high flying innovation in the coming years.
Lessons learned
One hard lesson taken from the the trip was the importance of being introduced. Some of the contacts were made exclusively on an interest basis using a website form or cold calling/emailing. While people will still meet you, it is hard to move beyond polite introductions to discuss potential business together, whereas a mutual contact facilitates the first contact significantly.
Being in Europe for the past six years, I cannot ignore the stark contrast between apparently converging European markets, for instance in their approach to innovation. I have been working with startups and innovation for the past few years, and see a lot of potential to communicate and expand best policy practices throughout the continent. Whereas you have freedom of movement within the EU (Schengen especially), people and startups need to know where to go to maximize their chances of success, else the innovation process follows an inefficient localisation.
Finally – and very importantly – it’s hard to overstate how important physical presence is. We consume increasingly online, but experience a place in person is vital to build the bridges that sustain business. Meeting and talking to locals gives you insight into so much that you have in common, and also exacerbates the differences, both complementary and not. If you are considering business in another location, even if your desktop research can be very helpful, do not skip actually going there in person to have a real life feel for that market.
Now that I’m back, next texts will focus on some cool FinTechs that I’ve recently been testing, and I also should soon update our portfolio overview, get in touch if you want to know more!