Startup Spotlight
Incubating Tech for Good: What is Missing?
Posted By On March 9, 2018

Here at POPSDev, we have been blogging recently about the ingredients that provide a strong foundation for creating, growing and sustaining online platforms for development. The recent Indonesia Australia Digital Forum 2018 produced buzz about one critical ingredient: Indonesia’s fast growing innovation ecosystem. But is this speed of growth alone a cause for celebration, or is it also exposing a missing middle?

Our research has indicated three implications. Firstly, the ecosystem’s maturity is haphazard. Products and solutions are rushed to full-scale implementation straight after prototyping, eluding the critical ‘middle’ development stage. Secondly, innovation actors tend to be siloed in their individual fields of expertise because there is an ecosystem cultural emphasis on innovation that ‘moves fast’, while collaboration with new actors takes time. Finally, actors in the ecosystem often work against the very basic innovation principles they were meant to support. As a result, cross-institutional linkage is thin and collaborations occur merely on a temporary ad-hoc basis.

Anecdotes of the trends above are increasingly apparent amidst the chorus of praise.

Government support of innovative startups and social enterprises is key. Gerakan 1000 Startup Digital is one effort to embody this ideal: initiated by Kibar, a tech startup ecosystem builder, with support from the Ministry of Communications and Information. Launched in August 2016, the movement seeks to grow 1,000 creative tech-based startups with a total valuation of USD 10 billion by 2020. However, despite actively searching for digital talent and new ideas through series of entrepreneurial seminars, workshops, and hackathons across 10 big cities in Indonesia, the movement has received nothing but endorsement from the government. Consequently, this undermines the movement’s incubation process – and without strong capacity building and intense mentoring, Gerakan 1000 Startup Digital is so far lacking ability to assist their participants in advancing their prototypes.

Development partners, on the other hand, often work exclusively with partners that they are familiar with, such as non-government organizations (NGOs). Consequently, this creates barriers for other actors to join the ecosystem and offer a more innovative approach. There are, of course, some breakthroughs as development partners start to explore collaboration with the private sector. However, this mostly happens in an ad-hoc, one-off project basis. One example is the 2016 Indonesia Incubation Program, hosted by Un.Ltd Indonesia, an incubator for social enterprises and entrepreneurs, partnered with KOMPAK, a joint initiative between the Indonesian and Australian government to support poverty alleviation. The one-year program offers capacity building, mentoring, and networking to 15 social enterprises that benefit the poor and marginalised to help strengthen their business and expansion plans. Although the incubation program managed to nurture some notable champions, it is worth noting that these startups started the program at a functional stage – with working prototypes and proven business models – not just raw ideas on a blank slate.

Innovation labs are also relevant. These analyse big data and develop artificial intelligence for the public good. However, as the name suggests, innovation labs are more interested in testing and uptake of new technology, rather than ensuring sustainable support and scalable innovation. One example is Pulse Lab Jakarta (PLJ), an excellent joint initiative between the United Nations and the Ministry of National Development and Planning. Early 2016, PLJ together with The Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) – a German development agency – hosted an innovation competition for improving public services in East Java province. PLJ then facilitated an incubation phase to help winning ideas develop working prototypes. Despite managing to launch some interesting initiatives, PLJ acknowledges its limitation to provide support beyond the prototyping stage, describing itself as an ‘ecosystem catalyst‘.

These examples highlight the challenges with ensuring effective incubation: there is insufficient support, and what support there is tends to be highly selective – participants need to fight for a spot through competition, for example. This trend is not only apparent in Indonesia, but also in a more mature startup ecosystem, such as the US and the UK.

So, how might we smooth this kink? Incubators need to consider their real value beyond simply providing swanky office space or brokering connections with high-profile individuals and institutions. Their primary role is to build capacity: provide business counselling, offer management assistance, analyse market opportunity, and – most importantly – develop a product mindset. The most interesting prospect comes not from further finger-pointing: for example, at government that should pass more “startup friendly” regulations, or at development partners that should channel greater funding to support innovators and entrepreneurs. Nor is it in further big one-off events to force collaboration.

Rather, it is in the way we engage with the right actors in the ecosystem and at the right times. This requires more cross-sectoral collaboration throughout the innovation process—from co-design, to critical co-funded and co-hosted incubation, to co-financing—or at the last, broader financing—of viable prototypes.

 


Image credit: Dennis Skley