App nations: Start-ups, states and enterprises

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1 Start-ups, states and enterprises Sponsored by

2 About the study This executive summary highlights findings from a study examining the state of interactions among three key stakeholder groups in the app economy start-up and enterprise executives and government officials with a particular focus on identifying the optimal role for governments in helping app businesses grow. In May and June 2016, the Economist Intelligence Unit conducted three surveys of representatives of app start-ups, enterprises and government, totalling 377 respondents in all and representing three key stakeholder groups in the app economy. The start-up sample numbered 125 respondents, the enterprise sample 127 and government sample 125. Each of the samples were split evenly across Europe, North America and Asia-Pacific. 2

3 1 The US is seen as the best app business environment More survey respondents government officials and start-up and enterprise executives alike choose the US than any other country to start or grow an app business. Germany, Canada, the UK and Australia also receive honourable mention. Which do you think is the best country to start or grow an app business? % of respondents from each sample 35 Start-ups Enterprises Government US Germany Canada UK Australia 3

4 2 Degree of collaboration among app economy stakeholders differs significantly by region Enterprise executives, especially those in Asia-Pacific, tend to think that their app economy is collaborative. Overall, however, more respondents in Europe reported that their app economy is collaborative than those in other regions 37% said that their app economy was extremely or moderately collaborative. In your country, how would you rate the level of collaboration among enterprises, start-ups and government in the app economy? % of respondents from each region responding extremely or moderately collaborative Start-ups Enterprises Government Europe Asia-Pacific North America

5 3 Many start-up and enterprise executives find partnerships helpful to their growth Sixty-four percent of enterprise executives find partnering with start-ups at least slightly helpful to their growth and vice versa. Partnership models range from sponsorship of events to technology integration to B2B sales. What effect did partnerships have on your company's growth? % of respondents Enterprises partnering with start-ups Start-ups partnering with enterprises It was very helpful It was slightly helpful It made no difference It was slightly hindering It was very hindering

6 4 Many enterprise and startup executives also see competitive threats in each other The largest share of start-up executives (42%) believe enterprises will take market share, and around one-third believe enterprises have their eyes on start-up technology or IP, as well as on their employees. Enterprise executives are most often worried about changing industry dynamics. What are the biggest threats that start-ups or enterprises pose to your growth in the app economy? % of respondents Enterprise views on start-up threats Start-up views on enterprise threats They will change industry dynamics They will buy or replace our technology They will take my market share They will recruit our employees They will lobby for policies that will hinder our growth

7 5 Governments are active ecosystem players, according to start-up respondents Almost 40% of start-up executives see their national governments taking measures to improve public and especially internet infrastructure and to help start-ups expand overseas. In which ways do you observe different levels of government supporting the app economy? % of start-up respondents National State/province Provide changes in public infrastructure that improve internet connectivity Provide initiatives for international expansion Provide specific, relevant social support for employees (ie, health insurance for freelance talent) Update or streamline regulations to enable the growth of app-based businesses Provide education, scholarships or research funding to improve tech talent

8 6 Enterprise executives also observe many government steps to support the app economy According to enterprise respondents, national government most often provides direct investment to app businesses, facilitates community activities and improves internet infrastructure. In which ways do you observe different levels of government supporting the app economy? % of enterprise respondents National State/province Provide direct investment (ie grants, seed funding) Organise or facilitate community activities (ie meetups, hackathons, trade shows) Provide changes in public infrastructure that improve internet connectivity Update or streamline regulations to enable the growth of app-based businesses Provide initiatives for international expansion

9 7 Government officials see plans to deliver more in several areas Close to half of government officials say they have plans in the works to purchase app services, to update regulations for the app economy or to provide more social support for app economy employees. These plans to support growth are likely related to the benefits officials see from the app economy, most often better service to citizens and increased employment. Government respondents whose organisations have plans to provide support to the app economy in different areas % of government respondents Buy app services for internal processes or better engagement with the public Update or streamline regulations to enable the growth of app-based businesses Provide specific, relevant social support for employees Provide education, scholarships or research funding to improve tech talent Provide work spaces for startups

10 8 Opinions diverge on how effective government support is to start-ups and enterprises Businesses (start-ups and enterprises) and government respondents differ markedly on how effective the latter s support is. This disconnect is most apparent for start-up respondents versus government respondents. Respondents deeming government support very helpful to growth % of start-up, enterprise and government respondents Provide specific, relevant social support for employees (ie health insurance for freelance talent) Provide changes in public infrastructure that improve internet connectivity Provide work spaces for start-ups Update or streamline regulations to enable the growth of app-based businesses Provide direct investment (ie grants, seed funding) Start-ups Enterprises Government Note: We did not ask enterprise respondents whether providing work spaces for start-ups was helpful to their growth. 10

11 9 Cyber-security, data privacy are top risks executives see for app economy firms both large and small Start-up and enterprise respondents alike believe that the greatest risks to their growth over the next couple of years will emanate from potential cyber-attacks and breaches of customer data. To what extent will the severity of each of these types of risks to your company s success in the app economy increase or decrease over the next two years? % of start-up and enterprise respondents expecting risks to increase somewhat or significantly Start-ups Enterprises Cyber-security Privacy (eg risks to customer information) Competition from app start-ups Data sovereignty (eg geographic location and jurisdictional legal concerns) Compliance

12 10 Government officials plan to bolster regulations to address app economy risk Government officials say their plans are aligned with executives concerns. For example, three-quarters of government respondents expect to toughen rules and standards relating to data privacy and cyber-security in the next two years. To what extent do you expect regulations or laws related to the app economy to increase or decrease in stringency over the next two years? % of government respondents expecting stringency to increase somewhat or significantly Privacy (eg risks to customer information) Cyber-security Compliance Data sovereignty Anti-trust or competition

13 The Economist These materials and their contents are confidential and the exclusive property of The Economist Newspaper Limited. Their unauthorized reproduction or dissemination to any party other than the original recipient(s) is prohibited. These materials are provided for information only and shall not be construed as an offer or any form of contractual commitment by The Economist Newspaper Limited or any of its subsidiaries or affiliates. The opportunities described herein are subject to change and editorial approval. 13

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