The Verdict On The Vigo Survey - Part 1
A few weeks back we asked the Finnish startup ecosystem to answer a simple survey on how the government backed Vigo accelerator program has worked in favor of the startups and the ecosystem as a whole. The time to answer that survey ended last Friday and we've now had a few days time to figure out what the data actually mean and how it could be used to make the program better. Needless to say, there are a lot of areas that need improvement. We'll go through the results below.
The survey
Below is the survey we had participants answer. It's by no means a very complete survey and by no means is it academically built, but it's trying to portray the overall approach of the startup ecosystem for the program and see clear shortcomings in its activity.
Part 1
- 1. Have you been interviewed by Vigo accelerators? (if yes, move to next question - if no, move to part 2)
- 2. Was it clear to you how the process works? (if yes, move to next - if no, move to part 2)
- 3. How was it unclear?
Part 2
In this part we asked general questions on how the startup ecosystem saw the program. The answers could made on a scale between 1 and 5. 1 equalled "totally disagree" and "totally uncompetent" (for question 10) where as 5 equalled "totally agree" and "extremely competent" (for question 10).
- 4. Vigo has had a positive effect on the Finnish enterpreneurial scene in the last 12 months.
- 5. Vigo accelerator has worked in an open manner to improve the ecosystem.
- 6. I'm not exactly sure how the Vigo accelerators and the program work.
- 7. Vigo system is exactly what we need in the Finnish startup ecosystem to create more high growth startups.
- 8. Vigo accelerators are easy to approach, if I'd need to reach them.
- 9. Vigo accelerators have funded/accelerated the best-of-breed companies, the best startups around.
- 10. How high would you rank the competence of VIgo accelerator teams?
Part 3
Here we asked in the form of 2 questions how people saw the goal of the program as well as how it could be made better.
- 11. What do you understand as the goal of Vigo programme?
- Create a fast-lane for startups to get public funding
- Create successful first class accelerators to Finland
- Create an "Israeli-type" speedway for Finnish startups to get funded and accelerate into the international IPO & exit market
- 12. What would be the biggest thing to improve in Vigo?
- All accelerators should have a big fund supporting them
- The process should be more transparent
- The process should be more simple and clear
- The accelerators need to be more competent
- There needs to be more accelerators
- Other
The results
Once more, these results are not academic in any way. They simply try to give a clear enough picture of the program so that it can be made better in the future for all of us. We'll start off by looking at the breakdown of the participants and how much they had actually been in contact with the Vigo accelerators.
In this first part of the survey results, we'll cover the first six questions. We'll go through the remaining questions in the second part of the Vigo survey after easter.
Part 1
With the first question we wanted to find out how far spread the Vigo program actually is. All in all, a relatively large amount of respondents answered they had been interviewed by Vigo accelerators. This of course helped us in the two upcoming questions to determine how clear the process was and how well the interviewed respondents saw the advantages of the program.
In the second question, we asked all those who had been interviewed by Vigo accelerators if the program itself had been very clear to them. We understand we could have asked a ton of other questions, but the basic setup usually requires the participants to understand the deal they are agreeing into and thus this question was asked.
While there were only 42 companies who had been interviewed by Vigo accelerators, more than 70% did not understand how the process or program worked. This clearly tells that while the program was put up with a lot of noise, not a lot of effort was put into the way this accelerator program works from the perspective of the startups.
In question three we asked those who found the process unclear the ways in which or why they found it unclear, which were the issues that they did not find answers to and so on. There was a wide variety of issues that troubled the respondents. Many claimed that the roles of participants was not clear nor was the basis on how funding was given out, and so on.
Many respondents also answered that it was not clear what the role of the Vigo accelerators was in the companies themselves. There was a lot of disambiguation whether the accelerators are investors, advisors or actually consultants. Some even went as far as wondering if the system was built for the accelerators to reap the benefits of each party; with a small investment they could easily land a board seat and in addition with the monthly invoicing of the startup reap the benefits of a consultancy.
Needless to say, there are a lot of issues that need clarification. One of the main issues that was also given in the results below is the issue of transparency. A publicly funded program should stand strict scrutiny as the taxpayers are funding it.
Part 2
In part two we looked into the opinions of the larger population as well - those that did not have any contact with Vigo accelerators. The answers in these questions were given on a scale of 1 to 5, depending on how strongly the respondent agreed with the claim.
The first of the claims was whether the program had had a positive effect on the overall ecosystem and atmosphere. The average for the responses was a 2.96 which is slightly below the neutral 3, making the overall effect of the program just a bit negative. However, this is such a small skew to the disagreement of the claim that in all honesty it can be said that the program itself has not had any effect, neither positive nor negative, to the Finnish startup ecosystem. In total, 101 answers were given to this question.
The second claim was to get an understanding how people see the transparency of the program. This was one of the claims that sparked the clearest of answers, hoping to result in dramatic changes to the way the program is run. Looking at the result, it can be said that the program is run in a closed manner to improve the ecosystem, which sound paradoxical in itself. People most likely would like to see the program improve the ecosystem, but it should do so in a lot more open manner. There were 102 answers given to this question, with an average of 2.28 making it slightly agreeable than "somewhat disagree".
Third on our list of claims was to understand how big a problem the lack of understanding how the program worked actually was. 64% of the respondents said that they somewhat agreed or totally agreed to the claim "I'm not exactly sure how the Vigo accelerators and the program work". A clear sign that more clarity is needed to the program. However, there were 25 people who somehow or totally understood how the program work. Out of 103 answers, however, it's not a very high number. The average for this question was 3.64 which is slightly skewed towards not fully understanding how the program works.
Part 2
In the second part of the survey results we'll cover the rest of the questions and answers. They are interesting for sure and I strongly invite you back after easter to study them with us.
But before that, how do these results resonate with you? Is this something you were expecting or are you shocked to see these?
The findings support my qualitative Vigo client interviews and overall assessment as well. Still compiling my summary for our internal use, but my intention is to summarize some points this after Easter when launching a blog section under Spinno's web site.
Vigo program web pages are very short and they do not even explain its direct link with the Tekes young innovative companies funding program. This slide set tells partly the story, but not that much:
http://www.vigo.fi/www/fi/liitteet/Kiihdyttamo/Liitteet1-3.pdf
There was a very good PPT document based on some work following Juha Ruohonen's Victa-report (preparation phase name for the program prior to launch). It explained the planned model and overall concept at the point of taking in applications from potential Vigo teams, but this document disappeared in less than a day after it was made available to Vigo applicants.
One issue is that TEM, Tekes, Veraventure and the Vigos are still finetuning the model based on issues raised with public procurement rules and flexibility needed with the original compensation model (max 10% equity + monthly fee of up to 9ke).
What I have heard from the Vigos is that they have been busy with finding and launching their first start-up cases so their own web sites are very non-informative. They are to be improved and hopefully we will soon hear positive news of the first Vigo cases. Timo Ahopelto / Lifeline tweeted yesterday that they are working with 4 investment rounds and one product launch.
To put things in context, while reading the result of the Vigo questionnaire, one should keep in mind that If this would have been done on venture capital in general, I'd argue the results would have been far worse on how transparent or clear VC/angel ways of working are in general. Now, I agree that's no reason why Vigo couldn't or shouldn't do better.
But...
In government run operations such as the Vigo, many times the public requires full transparency and extensive checks and balances to make sure everything is fair and equal when tax payers money is at stake. I'd argue that this might not be all that good thing when talking about risk capital investing, extremely competitive landscape and fast moving growth companies with a very high failure rate. We will easily regulate the agility and independent decision making out of such systems as Vigo, in which case we end up with sub-optimal setup with mediocre-to-incompetent people running it. I think we all agree we have enough of those. The best people will go where they can play their best game and where there are no extensive red tape to slow them down that results them loosing to those without such obstacles. This is especially the case when we talk about ex-serial entrepreneurs!
This is good to keep in mind when we are having fun with the public crucifixion of the Vigo model. I'd hate to see Vigo end up as slow and bureaucratic as Tekes & Co, which are the result of such checks and balances.
What comes to the negative or neutral questionnaire result on whether the program had had a positive effect on the overall ecosystem and atmosphere, I think that's complete rubbish. I've personally seen the spark the program and the people working in the Vigos has had on the Finnish growth entrepreneurship scene and is has been very much a positive one.
Vigo is not perfect and I personally have issues on parts of how its put together and run, but I'm not sure a government design in one of the most competitive and meritocratic lines of business can ever be perfect. Government support has always come with a price tag. Vigo is no different.
What needs more transparency is how it's designed. Not necessarily how its run.
To add to Ville's comments, I'd argue that the work on improving Vigo has just begun. Like startups, Vigo should be iteratively designed to improve the startup ecosystem. It's very seldom startups, not to mention government organisations, get things right the first time round.
Now that the issue has been put on the table for public scrutiny, so to speak, we now must work to iron out the problems and improve the program for the next round.
Thanks Guys, great effort to make the ekosystem better!
Would be intresting to see the answers from companies acctually working with Vigos. I guess that's still the most imprtant question, are the Vigos addind value to startups that they invest in, even short term.
Would also be great to see distribution of the customer satisfaction between six Vigos.
I have to say that I finally understood what Vigo does this Tuesday, after talking with Moaffak from Veturi.
I have to say that none of the communication on the pages or the slide decks I saw earlier helped. Hopefully, the short, simple "we help you fill the gaps in your team" pitch will stick. And hopefully no government interference.
Changes are surely welcome, the current model (pre-Vigo) just isn't enough.
There's not enough funding or right kind of people to support new start-ups aiming for high growth.
The only way to improve is to create more success stories and thus get more international VC money and international contacts to Finland. Look at Sweden for example, they have all this figured out much better than we do.
Who are the best people to help here? Well of course serial entrepreneurs who already have the experience and the contacts outside of our sand box.
Antti: I agree, it always takes some time to get big things rolling. Now we need some open discussion and also patience.
Ramine: I agree, the www.vigo.fi should be updated asap. One should be able to understand how Vigo/accelerators work(s) by only reading that page.
I appreciate this survey and the resulting debate. Here are my thoughts on the topic:
For me as a taxpayer the worst case scenario is taxpayer paying most of the service provider's fees and any upside is added to this income without real risk-taking, Do we want to build a system where "costs are socialized and profits privatized"? It didn't work in banking...
According to the Finnish Company Act (Osakeyhtiölaki, Chapter 3, §15) a company must provide its current list of shareholders upon request. So, finding out at least which accelerators have actually become shareholders of their Vigo-financed clients should not be a difficult task. Public subsidies are useful, but they should not replace risk-taking.
If a Vigo accelerator had a possibility not to invest real money, e.g. by merely signing an option agreement with a client and get some 100 k€/year/start-up in fees, there is hardly any real downside. One can argue that accelerators have an opportunity cost etc., but some entrepreneurs might consider Tekes's other "75%" instruments (like AIH) pretty attractive to hire best consultants on competitive basis with no discussion about sharing the upside. Who should be the client in the Vigo context, the service provider or the start-up?
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