Three major roadblocks to growth for the startup entrepreneur (survey results)
I recently organized a first ever survey of startups in Belgium, in collaboration with Bloovi. With this survey we wanted to provide a more thorough understanding of the situation and the expectations of the Belgian startup entrepreneur, and to give a ‘voice’ to this small but growing part of the economy.
Although this is a national survey, we thought the results might be of interest to the readers of Whiteboard. Maybe it will inspire some of you to conduct a similar survey in other European countries, with which we might build a truly European view of young European entrepreneurship, and provide a European-wide recognition of its importance.
How important are startups for the economy?
A lot is written about startups, but are they really an important part of the economy? Well, I was truly amazed to see that the 61 companies that participated in the survey jointly expected a turnover growth of more than 700% over three years. Of course, they start from a low base with an average of 146K€ turnover per startup in 2011. Not too bad, you might say, but the spread between the high-revenue generating companies and the ones with minimal turnover, is quite substantial.
More intriguingly: if we assume the amount of participants represent in between 5 to 10% of the effective amount of web-startups in Belgium, this would mean that, as an industry, they would ensure 0,4% extra economic growth for Belgium in the coming years. Not at all a bad perspective in times of economic stagnation. More importantly, startup entrepreneurs expect to create thousands of new jobs in the next three years.
Is this realistic? Or are these entrepreneurs just painfully over-optimistic?
Good question. My feeling when studying the survey is that these startups performed quite solidly already. Almost half of them expect to be profitable by the end of this year. An additional 25% by the end of next year.
So they’re hardly the cash-devouring type of startup you might encounter overseas. It appears that Belgian entrepreneurs are quite aware of the roadblocks that hinder their growth expectations.
#1 Economic growth
Economic growth is mentioned as the biggest roadblock. Sadly, nothing much to do to counter this one.
In second place Belgian entrepreneurs mention attracting investments to support their (international) growth. This one is more tricky. As the founder of Nomadesk Filip Tack pointed out: these startups are currently dramatically under-capitalized.
The survey shows that these entrepreneurs would need to find a threefold of their current investments in order to realize their growth objectives. Not easy, at least not in Belgium. The Belgian funding landscape is very harsh. Adeo Ressi called it “one of the hardest markets in the world to find funding as a startup”, even. So there isn’t much money to burn, even if you wanted to. Not surprisingly, lack of funding is one of the major reasons for entrepreneurs to consider moving their operations abroad.
The third bottleneck mentioned by these startup entrepreneurs is finding the right talent. Good developers that can thrive in a startup are quite scarce, at least in Belgium. But almost every entrepreneur experiences difficulties attracting experienced sales and marketing professionals.
There’s very little incentive for a senior marketer to let go of his company car, high salary and pension scheme in order to go and work for a startup. Perhaps there’s a role for government to play here: fill the gap of developers through more adapted education, and incentivize experienced professionals to go and work for startups, through fiscal benefits for instance.
After all, as the survey shows, startups are a small but strategic piece of the country’s economy… For the free executive summary and to purchase the full report please go to www.belgianwebstartups.be If you want some advice or support in organizing such a survey for your country, feel free to contact me (you can find my contact info below).
Photo: yes, the road is REALLY blocked, Flickr, Old Sarge
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