Developing an Enterprise Ecosystem

December 2018

Developing an enterprise ecosystem
Training for policy makers

Douglas Abrams


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About the facilitator
• Wharton MBA
• JP Morgan – Vice President - IB Technology, Global
Markets Internet Marketing

• Parallax Capital Management – Co-founder and
MD - Venture Capital

• Extream Ventures – Co-founder and MD - S$20
million VC fund

• Expara – Founder and MD - Expara Ventures
venture fund and advisory

• NUS – Adjunct Associate Professor, Business
School, Entrepreneurship

• Sasin – Visiting Professor, Venture Capital
• RMIT Vietnam – Entrepreneur in residence
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Expara timeline 2000-2018
EIDMV I
NUS

Extream

EIDMV II

EV III
Expara-GSB

Expara

2000

2000

2002

2004

Parallax

2006

2008

Sasin
KIMBA

2010

2012

2014

Expara Malaysia

Expara Thailand

2018

2016

EAV1

Expara Vietnam

BANSEA
Expara Japan

Overview of Expara

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Innovation and Entrepreneurship
• Why countries need innovative entrepreneurship
• Driving innovative entrepreneurship: enterprise ecosystems
• The key players
• Singapore enterprise ecosystem
• Ecosystem building skills
• Outlook for Vietnam’s enterprise ecosystem

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Creative destruction
• Innovative entrepreneurs drive
long-term macroeconomic
performance

• Long-run economic growth
• Economic fluctuations
• Structural adjustment
• Accounts for over 50% of
productivity growth

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Development of a thriving entrepreneurial sector
• Not just an economic "niceto-have"

• In the knowledge-and

innovation-driven globalized
economy of the 21st century

• It is a competitive necessity

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Impact of VC-funded companies on econony
• US companies receiving VC from 1970-2005 accounted for 10
million jobs and $2.1 trillion revenue in 2005

• 9% of total private sector workforce and 16.6% of total GDP
• Job growth rate of 4.1% vs 1.3% and sales 11.3% vs 8.5%

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Companies founded by MIT grads
• 25,800 active companies
• Employing 3.3 million people
• Generating annual revenues of $2
trillion

• Singapore: $307 billion; Vietnam
$224 billion

• Equivalent to the 11th largest
economy in the world

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Innovation and Entrepreneurship
• Why countries need innovative entrepreneurship
• Driving innovative entrepreneurship: enterprise ecosystems
• The key players
• Singapore enterprise ecosystem
• Ecosystem building skills
• Outlook for Vietnam’s enterprise ecosystem

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Innovation and ecosystems
• Coral reefs – 10% of earth’s surface;
25% of known species

• Cities 10x larger than neighbor are
17x more innovative

• Residents of city of 5MM are 3x more
innovative than resident of town of
100K

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Factors that drive innovation require ecyosystem
• Liquid networks
• Slow hunches
• Serendipity
• Error
• Exaptation

• Platforms

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Participants in enterprise ecosystems
RIs
Capital
markets

IHLs

Entre

Industry

Enterprise
ecosystem
Govt

Mentors

Accel
Incub

VCs
Angels

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Innovation and Entrepreneurship
• Why countries need innovative entrepreneurship
• Driving innovative entrepreneurship: enterprise ecosystems
• The key players
• Singapore enterprise ecosystem
• Ecosystem building skills
• Outlook for Vietnam’s enterprise ecosystem

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Who are the players?
• Entrepreneurs

– Lifestyle entrepreneurs
– High-growth entrepreneurs (scalable
business)

• Venture investors
–

–
–
–
–

Venture capitalists (VCs)
Angel investors
Corporate VCs and investors
Banks
Government

• Accelerators
• Incubators
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What roles do they play?

Entrepreneurs

Venture investors

• Create opportunities

Identify opportunities

• Raise funding

Provide funding

• Manage finances

Oversee finances

• Increase value

Assist with growth

• Generate returns for investors

Generate returns for themselves or
their investors

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Small versus scalable business
• Small business: limited scope,
complication and risk. Slow
growth.

• Scalable business: significant
scope, complication, and risk.
Rapid growth.

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Why do companies raise investment?
• Lifestyle or scalable?
• Paycheck or payout?

Founder

• A big piece of a small pie?
• A small piece of a big pie?
Investors

Investors

Founder

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Stages and sources of funds
OM
F,F&F

Incubators
corporations
government

Founder’s
Capital

VC hurdle rates

Customers, suppliers,
strategic partners
VCs, Banks for VC loans

Seed/
Angel

60-100%

Series
A, B, C

40-60%

Mezzanine

20%

Pre-IPO

IPO

Why are these rates so high?

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Why do investors invest in venture capital?

Expara IDM Ventures (2)

43.03

Case Shiller Real Estate Index

4.1

As of June 30, 2014. The Cambridge Associates LLC U.S. Venture Capital Index® is an end-to-end calculation based on data compiled from 1,508 U.S. venture capital funds (963
early stage, 165 late & expansion stage, 374 multi-stage and 6 venture debt funds), including fully liquidated partnerships, formed between 1981 and 2014. (1)Pooled end-to-end
return, net of fees, expenses, and carried interest.(2) 2007-2015 Sources: Cambridge Associates LLC, Barclays, Dow Jones Indexes, Frank Russell Company, Standard & Poor's,
Thomson Reuters Datastream, and Wilshire Associates, Inc

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Impact of VC on a diversified portfolio

Private Equity and Strategic Asset Allocation. 2007 Ibbotson Associates
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Companies founded with venture capital

www.nvca.org
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Industries created by venture capital

www.nvca.org
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Accelerator versus incubator

Accelerator

Incubator

• Provide start-ups with mentorship,

• Provide start-ups with mentorship,

• Competitive application process

• Open application process

• Time-limited and batch based

• Time-limited or open-ended

• Invest in start-ups

• May or may not invest

• Business model: investment

• Business model: fees (plus

• Demo day

• May or may not have demo day

network, space and support

returns

network, space and support

investment returns)

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Types of accelerators
• Venture accelerator – focus on financial return
• Corporate accelerator – strategic/financial return
• Sector-specific accelerator – healthcare, fintech
• Accelerator plus VC fund – post-graduation investment
• Others: co-working spaces, start-up academies

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Accelerator investments
• Initial investment - $10K - $50K for 5-10% equity
• Equity, convertible note, SAFE or equivalent
• Post-graduation investment - $250K-$500K for 10-25% equity
• Provided by accelerator plus VC and/or by affiliated investors

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