A conversation between Berlin-based startup communications expert, Maren Lesche, and Elisheva Marcus, Senior Content Manager at NBT AG.
Maren knows startup ecosystems. She recently launched her own small consultancy called Startup Colors focusing on Healthcare, IoT and Fintech after working as Ecosystem Manager at etventure Startup Hub for more than 2 years. She is a member of the Advisory Board at SXSW Accelerator for Healthcare & Wearables, COO of Sprinters Global – a nonprofit organization for female founders– and community Advisor for the FTR4H Healthcare Ecosystem. She is a Mentor at Techstars, Startupbootcamp Digital Health Berlin, and ZNation Lab India. Maren is also Ambassador to the Bundesverband Deutsche Startups and Advisor to the Hungarian-German startup, MediLad. A communicator at heart, you can follow her blog StartupChallenges.eu and read her stories on publications such as DataConomy, YourStory or Netzpiloten.
A frequent collaborator with Next Big Thing AG, we were lucky enough to catch Maren for an interview on the IoT ecosystem.
NBT: Welcome, Maren! To start off, could you please share with us how you are connected to the IoT ecosystem in Berlin and in Germany? And what does the IoT ecosystem mean to you?
IoT has been a companion of mine for quite a while now. Seven years ago, I started working for EU funded projects at EIT Digital; More than two years ago, I joined etventure startup hub where I supported the IoT European Platforms Initiative, a community project co-founded by the EU.
At EIT Digital, an EU organization supporting innovation across Europe, experts did work on Future Internet Network Solution technology already – a fancy word for something that turned into IoT. I soaked up their knowledge and started to understand the potential step-by-step.
While in the beginning IoT was associated with sensors and data collection, in the last three years it became more focused on gathering or collecting data in smart ways and bundling smart solutions to complex and super powerful IoT platforms. IoT also expanded from industrial user cases to healthcare or smart textiles, areas I am most curious about. Just think about exoskeletons or smart sensors in cars, or super simple – my vacuum robot that “remembers” where it cleaned already based on sensor data.
From an ecosystem perspective, there is a compelling shift happening, with new collaboration potential and new dependencies, but also new challenges for all stakeholders involved. An ecosystem is formed by a group of stakeholders with similar interests and values. Ecosystems depend on organizations or people sharing ideas. Without transparency, collaboration across stakeholders won’t be possible.
In Berlin, the IoT ecosystem definitely became more collaborative; companies with sensors started to cooperate, platforms formed, and the ecosystem became stronger and more diverse. Blockchain in IoT provided more transparency and brought in new players. Is blockchain hype or reality? Time will tell. Moreover, the ecosystem is super data-driven now. And since hardware plays a role in IoT, there is also a stronger need for maker spaces.
You for sure see traditional companies taking an active role - by developing incubator and accelerator programs in Berlin, by setting up innovation labs, by collaborating with startups, and by working way more with research organizations in developing new technology. Even municipalities initiate joint projects to test smart city solutions. In the future, it will not just be a single company or a single research organisation working on something but a complete ecosystem. This might include a complete city taking on a task, bringing the stakeholders together to co-create an IoT-driven solution for urban residents, or for all players in an industry.
Collaboration has become more diverse. Roles have changed. While startups were perhaps treated like underdogs and foreign objects in the past, many stakeholders are now opening up and trying to find new ways to collaborate. Effective collaboration starts by lowering entering barriers into the corporate world, e.g. by foregoing fancy NDAs. This might lead to bringing startups fully onboard into a company’s core services and public bodies. You also see IoT entering many different sectors. We now find IoT solutions in InsurTech and FinTech. Suddenly you realize the Internet of Things is truly the internet of everything, which brings in new players.
IoT solutions are not comparable to ecommerce or gaming – areas Berlin used to be known for. Many IoT solutions are complex and tailored for a B2B customer segment. IoT is highly relevant for manufacturing, healthcare, Smart City solutions, the aerospace industry or the automotive sector – only a hand full of companies in these sectors are in Berlin, e.g. Rolls Royce or Siemens. The music in these sectors plays elsewhere in Germany...Yet still, the IoT community in Berlin is growing.
Understanding the needs of these corporate customers and developing a dependable solution often takes longer than expected. Moreover, startups need other skills and different types of testing. They might also require hardware resources; as far as I know, Berlin only has a few dedicated makers spaces where you can find certain tools necessary for hardware development. Considering that - yes, IoT often has longer investment cycles and often it’s not a quick win for traditional VCs. On the other hand, there are new funds focusing on B2B and deep tech products, e.g. Signals VC, because IoT solutions provide benefits in the long run.
Tough question. In general, I advise startups to focus on revenue first. But I also know this is easier said than done.
There are definitely more funding opportunities provided by German-based corporates than by VC funds, which offer budget for pilots or co-investment via accelerators or scale-up programs. They tend to invest in Germany - a definite competitive advantage for German IoT startups. On the other hand, many of these programs are still investing close to their traditional core business. I would love to see them making bolder investment decisions, supporting technologies that might look crazy and push borders.
If you look at classical VCs, startups in Berlin are competing with all the other smart markets that have strong IoT solutions – some of them with smarter legal frameworks or even more transparent ecosystems. Keep in mind: the investors in venture capital firms are serving others; it’s not their own money. VCs are business driven. If a founder in the IoT field can’t explain his or her ROI, investors have to be cautious.
If you look at public money, there are funding opportunities across Europe, e.g. the newly launch Data Incubator, EDI. However, entrepreneurs have to check thoroughly if these funding opportunities are aligned with their product lifecycle. With public funding there is usually paperwork involved, and many options are not truly transparent. I meet a lot of startups and when I mention certain funding opportunities, many of them have never heard about them.
Last but not least, hopefully there will be more money floating into the system from serial entrepreneurs who are working on IoT solutions right now. Hopefully, they will become angel investors once they are successful. So money-wise, transparency is the key.
Failure is painful – and in many ways it needs to hurt because you have to feel the pain in order to feel the pressure to change. Talking about mistakes is important, but failure is not supposed to become a marketing tool.
Same goes for sharing knowledge. If you are not an expert, do not share half-baked knowledge. But if founders share their failure stories and their expertise, that’s appreciated! Berlin has some IoT pioneers who invested time to educate and push the complete ecosystem. Those are some strong champions. Based in their example, the IoT community in Berlin is very embracing and generous. But I try to never treat that as the norm! Keep in mind that every founder who is sharing information in a meetup or at a conference, is sacrificing time spent working on their product. Every single hour he or she spends outside of the office, is a very expensive hour away from his or her business.
Working days don’t get shorter just because you have success. Sometimes you have to work twice as hard because an investor requires faster speed or you have more people to take care of because the team is growing. If you’re expanding internationally, you’ll face certain issues, like the complexity of founding a company in many different countries. Just keep in mind that founders are super busy. So when you see people who give back to the community on that stage, hands up to them!
At etventure, we tried to map ecosystems, to become active elements of the ecosystems and shape them. But I have to say, that I actually don’t like the term ‘ecosystem builder’. I don’t think one single entity can build an ecosystem. You can encourage people to take on different roles and shape communities together. But they have to embrace it. Players in an ecosystem have to find their own specific role, have to define how active they want to be, and figure out in the long run what value comes out – without value, it doesn’t work. Building from scratch is not a one-person job.
However, I might be wrong. Let’s see how the Asian countries and China are performing in the end. In areas like Chengdu for instance, the Chinese government is building up a complete ecosystem from scratch; including newly constructed co-working spaces, co-living areas and a new infrastructure – out of pure business reasons!
In Germany, certain regions are focusing on certain sectors – mainly based on traditional roles or historic developments, e.g. Finance in Frankfurt or chemical industry in NRW (North-Rhine Westphalia in Western Germany). Frankfurt has been a strong market place for centuries with trade fairs and banks. Hamburg had always been a conducive transfer point for food. Huge coffee manufacturers shipped from and to, the Hamburg harbor. In Berlin, we had an amazing film industry and art scene even before WWII. In Israel – an area full of conflict – the military is influencing innovation.
To me, ecosystems become even more interesting when entrepreneurs break with these traditions – e.g. they find ways to serve their customers better. The unexpected is fascinating and stands out: If you always think inside of buildings, boxes, and squares nothing happens.
Yeah, it’s an interesting project. I always wonder if you can force innovation or communities and collaboration? This urbanisation of innovation ecosystems makes me curious: why are people going there? Are people staying there? Is it working? Is it sustainable enough to keep them?
The physical proximity is an important factor. And I am a huge fan of the co-working community. It is great to see how powerful the ‘we’ attitude inside certain spaces can become. But in co-working spaces you have a lot of intrinsic motivation. How can a governmental project like the one in Skolkovo make this up?
Choose wisely how you can support the ecosystem and find your niche. Give first, take later. And be realistic: Define how much you can give at a certain time. Ecosystem work also requires a steady presence.
Special thanks also to Darina Onoprienko, from NBT venture evertrace, for her original input on this interview.
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