Redefining the Role of Venture Capital and Incubators
While the Internet matures as a global business space and new technologies create new platforms for communication, entrepreneurship itself also is evolving. Traditional incubation and venture capital models may not always be responsive to the changing nature, and even culture, of startups. An emerging "global entrepreneurship education" model offers a framework for supporting startups around the world, providing both financial resources and mentorship on issues such as strategy, branding, and corporate structure.
Founded in 2005, H-Farm is an international organization, with incubation centers in Italy, the United States, and India, that immerses itself in the cultures of three countries to help startups meet market demands and overcome capital challenges, from seeding to succeeding at the global level. Here, H-Farm partner Maurizio Rossi shares insights about the model, H-Farm's own challenges and lessons learned during its international expansion, and the future of collaborative entrepreneurship.
Where did the concept of H-Farm come from? Who or what other organizations were influential in your initial plans?
The H-Farm concept is inspired by a human-centric philosophy, wherein technology must be simple, and by the agricultural metaphor, which expresses the startup life cycle from seed to "harvest." Therefore, the location and design of our work environment were strategic decisions for H-Farm. For this reason, we chose a natural country farm just a few miles from Venice and converted rustic farmhouses into the company headquarters and working facilities.
Our primary influence comes from web technologies' momentum as an innovation driver. We believe that the twenty-first century will bring the technology revolution that will redefine most of the existing business models.
Did building H-Farm outside of a city (Venice) not known for its entrepreneurial output present some unique challenges?
Most of our challenges are not presented by geography, but rather by others factors.
H-Farm is located in the country outside Venice, in northeastern Italy, one of the most important regions in terms of economics. The facilities are a few minutes away from the airport, freeway, and railway hub.
Our main difficulties, instead, are the lack of venture capital, a weak investor community, and a very small M&A market. To overcome these issues, we implemented the incubator with a financial arm that enables the growth of startups from seed stage to early stage before approaching partners or further capital co-investors.
How is your approach different than other models or incubators that work
Basically, the H-Farm model hybridizes the capital and services arms of
the traditional incubator model to better support the startup life cycle with
a full range of services, including coaching, mentoring, and seed and follow-on capital.
Who are the ideal candidates for H-Farm?
H-Farm is an ecosystem that aggregates people engaged in digital culture, and passionate about the Internet and the power of technology. The principal attitude that startup candidates share is an entrepreneurial focus, which is crucial to building a strong team around a project that will face multiple challenges during the early stage of the startup life cycle.
With offices in Seattle and Mumbai, and plans for more expansion, what have you learned about expanding outside of Italy? How much of the H-Farm model transcends geography versus needing to be localized to better support new offices?
Through our expansion to different countries with different cultures, we did learn things concerning the time to market and the community clusters, as well as other aspects. For H-Farm, adapting to these different geographical locations is not just a market opportunity to grow our business, but a necessity to overcome some of the issues related to the lack of investors and M&A opportunities. The current organization does not scale the original H-Farm model in the United States and India; rather, it integrates them as branch offices.
What advice would you give to a group outside of a traditional entrepreneurial cluster that wanted to recreate some of the success you've had at H-Farm?
The success of H-Farm belongs to its unique situation. It's a mix of our core values, like our vision and campus-like environment, and the challenges we faced to operate effectively in Italy. Certainly, H-Farm in some ways represents a new school of thought about the incubator scenario, and the way we "cultivate" a startup is a key feature of our model.
How do you anticipate your model will change over the next five years?
This is not an easy question to answer, as things are moving very fast. H-Farm wants to become the first startup center in Europe, meaning we must enhance our structure to attract and support the growing stream of opportunities. First of all, we have to improve our financial arm. We're looking potentially toward an IPO and to establishing H-Farm as an evergreen fund. In the meantime, we have an ongoing project to create a digital entrepreneurship school that makes sense within our ecosystem, and develop a wider approach toward the seed stage.
Is there anything else you would like to add about your organization or how important entrepreneurship is globally?
We can consider entrepreneurship and startups to be relevant answers for future generations of young people in terms of education, expression, and lifestyle, enabling them to change the rules and models. Incubators, for a variety of reasons, can be assimilated to a new university generation in which youth can work in their fields of study or interests. Incubators like H-Farm can be the places to attract new ideas and people to work together.