December 016 Ilm Ideas Lessons Learned Brief : Working with the Incubators Introduction Ilm Ideas provides a platform for generating, testing and transitioning to scale innovative solutions to address critical education challenges in Pakistan. The four-year programme is funded by the UK Department for International Development (DFID) and managed by Cambridge Education. The Ilm Ideas programme partners with business incubators in Pakistan to identify and support education startups. Through this partnership Ilm Ideas aims to generate a pipeline of innovative education startups ready for investment and to enhance the capability of incubators to support education startups. This brief captures lessons learned from Ilm Ideas s first year of partnership with incubators. It includes reflections from Ilm Ideas team members and from partner incubators. Reflections have been collected and presented in response to several broad questions: 1 3 What is the Ilm programme seeking to achieve through partnering with incubators? Is this still relevant? If not, how should the purpose of the partnership be changed? To what extent has Ilm s engagement strategy with incubators been successful? What should Ilm Ideas stop doing, do more of, or adjust? What kind of startups are incubators identifying and selecting for their development programmes? What changes, if any, could be made to the way incubators identify and select startups? Ilm Partner Incubators: profiles and progress to date Basecamp Operating in Peshawar, Basecamp is the first community space for startups in the province of Khyber Pakhtunkhwa. LUMS Centre for Entrepreneurship (LCE) Based at the Lahore University of Management Sciences, the LUMS Centre for Entrepreneurship is an established business incubator with a strong network of mentors and investors. Nest I/O A technology incubator in Pakistan, a community hub launched by P@SHA with global partners 'Google for Entrepreneurs' and Samsung, and through a supporting grant from the US State Department. 1 NUST TIC Housed at the National University of Sciences and Technology, the Technology Incubation Centre was set up to help emerging entrepreneurs convert their ideas into fully functional, high-performing businesses. 4 What additional support could Ilm Ideas consider providing to incubators and to startups to increase the likelihood of generating viable education enterprises? Plan 9 Established by the Punjab Information Technology Board and based in Lahore, Plan 9 is Pakistan s first public-sector business incubator. 1 Pakistan Software Houses Association for IT and ITES (P@SHA) is a trade body and a registered association, was founded in 199, primarily to promote and develop the software and services industry in Pakistan.
The table below lists the education startups that were selected and developed by partner incubators in 016-17. The startups were selected at events organised by incubators. The events were either Startup Weekends attended by a wide range of startups including education startups, or Education Innovation Challenge Events (EICs) organised specifically to identify and select startups from the Education sector. At the events, startups refined their ideas and pitched their business to a panel of judges. Based on the pitches, the judges selected at least three education startups to join the incubation programme. For more information about the incubators go to www.ilmideas.pk/our-partners-innovation-hub/ A business incubator helps new and startup companies to develop by providing services such as management training or office space. Typically, incubators focus on startups with strong commercial potential, regardless of whether they create social impact. Social enterprises usually need more time to become viable businesses. A startup company (startup or start-up) is an entrepreneurial venture which is typically a newly emerged, fast-growing business that aims to meet a marketplace need by developing a viable business model around an innovative product, service, process or a platform. Incubator Startup Solutions LCE NUST Plan 9 Basecamp Nest i/o Keep School Safe Teaching Lounge Grassroots Ltd Architects Lab Edify 3K Industries NeerPeer AXIS Ed vertechs Scinamtion Science on Wheels Qabil Bano E Learning Network Ment Hub Wonder Tree Tech Tree Provides safety and security training to middle and low cost schools in Pakistan to establish early warning and emergency preparedness systems in schools. Provides safety and security training to middle and low cost schools in Pakistan to establish early warning and emergency preparedness systems in schools. Grassroots Consultants offers solutions to improve school management and teaching quality. They are currently working with CARE Foundation and the Beaconhouse School System. The product Learn-O-Box is a portable, mobile, hybrid learning unit which can be used as a library, outdoor classroom and e-learning facility to improve the learning experience in Pakistan. An online platform that provides high quality customised training to teachers paired with in-person pre and post evaluations. The startup has built customised low cost Raspberry Pi devices preloaded with educational content. The product is compatible with computers, smart phones and basic mobile phones. An online platform for university students and students interested in gaining a professional qualification, allowing them to purchase content developed by their successful predecessors. An interactive SMS platform to connect teachers with parents and updating them on student performance in middle to low cost schools. A crowd-funding platform that connects interested donors with needy children for scholarship support. Funds raised are used to build one teacher, one room low cost schools. D animations to explain complicated scientific concepts in an engaging and simple way to primary school students. A fully equipped portable lab with trained professionals, providing access to high quality science labs for all schools. Parents can set school mode on computers and mobile phones, so students can access video lectures and quizzes aligned to their curriculum. On successful completion of the quiz, the child is rewarded with a movie or cartoon as positive reinforcement. A teacher training and educational management online programme for beginners to become fully qualified teachers, accredited by Pearson UK. An online platform for underprivileged university students to connect them with professionals in urban centres for mentorship. Augmented reality games for children with special needs to enhance their motor and cognitive skills. TechTree PK focuses on applied technology in education, offering teaching and training in basic robotics and problem solving. A Startup Weekend is a global franchise model whereby entrepreneurs develop teams, receive mentorship and refine ideas over a weekend, culminating into final pitch presentations made to a panel of judges. The incubators conduct such events as part of their regular programme of activity. The Education Challenge Events were one day events organised with Ilm Ideas to select education startups.
Lessons Learned and Recommendations 1 Develop a shared understanding between stakeholders about the purpose of partnering with incubators The decision to partner with incubators was made during the Ilm Ideas programme inception period. The intended purpose of the partnership was to enhance incubator capability to support education startups and to create a pipeline of education innovations ready for investment/to go to market. During implementation, incubators were understandably more interested in getting support for the startups themselves, especially in helping them connect to investors and customers. Some startups were also expecting more support (including financial support) from Ilm Ideas. Engage with startups later down the line Startup Weekends and other events organised by incubators to select startups to join their incubation programmes generate a great deal of interest and enthusiasm. Attendees are typically young university graduates who have been thinking about their solution for a while. They may already have formed a company and pitched their idea to customers/investors. At education specific events (EICs) startup ideas were less mature. The large majority of attendees were coming up with ideas in response to the opportunity to become a startup and to be incubated. Consequently many of the solutions proposed were not well developed or thought through. Ilm Ideas is proposing strategies (3 6 below) to help ensure that incubators are choosing entities to join their programme from a range of more mature startups with strong and possibly more experienced teams and better developed solutions. 3 Recognise the challenge of finding start-ups with commercial potential that focus on improving education outcomes for poor and marginalised children By their very nature, startups must have a commercially viable idea or solution to take to market. Social enterprises or education startups are less likely to generate significant profits or high returns on investment and/or they take a long time to become commercially viable. Consequently, and as we have seen at all the Challenge Events and Startup Weekends organised by incubators, there are very few startups proposing solutions that could impact education for poor and marginalised children. Such children are typically hard to reach and profit margins are low, thus incubators tend to select the most commercially viable startups. There are also very few examples in Pakistan of successful education businesses reaching out to the bottom of the pyramid (BoP) except for the low fee private schools. We have also observed that among incubators and startups, the predominant focus is on technology based products and services due to their higher potential for return and ease of use. However, technology penetration in the Pakistani market, particularly at the BoP is relatively low and thus the solutions proposed tend not to address needs or customers at this level. Also, it is assumed by many startups that it is the tech in edtech that is important. They overlook and/or underestimate the educational aspects of their products/services, their teams rarely include anyone with education expertise and they know very little about the education context they plan to move into. This is an area where Ilm Ideas can add value by connecting startups to mentors with education expertise. 4 Redesign the selection process to create more time to develop the idea and to equip startups with information they need. A single event may not provide sufficient time for startups to get to their best ideas. This is especially the case for education startups who, as already mentioned, may be at a very nascent stage in developing their ideas. Ilm Ideas is recommending that more time be invested in sourcing and selecting education startups and that a two-step selection process be introduced in which startups 1) learn about what s required, find out about setting up an education startup and share their ideas with mentors and then ) pitch their solutions. This will help increase the quality of applications. 3
Stages of a startup Demonstrate proof of concept Create a prototype Achieve market adoption success Develop a product idea Refine the product Make first commercial sale 5 Ensure that startups have group of mentors before they 6 make their final pitch Examine and refine incubator outreach strategies to attract more mature startups to join their incubation programmes Access to mentors is critical. However, there should be sufficient time after mentoring and before making a pitch to be selected to join the incubation programme for startups to refine their ideas and pursue partnerships. The range of mentors is also important. Three of the incubators relied on their own teams and a representative from Ilm Ideas. With support from Ilm Ideas, two of the partner incubators brought several mentors with varied backgrounds to their mentoring sessions. Apart from providing advice at the selection event, the mentors are now connected with the incubator and startups. This would require incubators to expand their target audience to include for example, mid-career professionals as well as young graduates. With support from Ilm Ideas, incubators should advertise their programmes more widely, using existing networks in education and the business community. The stronger incubators could also consider supporting established nonprofits looking to develop market-based social impact innovations. 4
7 8 Review incubator reporting requirements and requirements for information from incubators Establish a shared understanding about technical assistance from Ilm Ideas The programme requires quarterly reports and brief monthly updates from incubators. Ilm Ideas has provided templates for both reports. In addition, incubators are required to provide the following information: Incubatee Profiles for each of the startups selected (using a template provided by Ilm Ideas ) Completed needs assessments for each of the startups selected (using a tool developed by Ilm Ideas ) Startup work plans for each of the startups selected (using a template provided by Ilm Ideas ) Completion Report to be submitted by the incubator at the end of the incubation cycle (using a template provided by Ilm Ideas ) Monthly update on progress against pre-determined payment milestones and submission of invoices to Ilm Ideas. Ilm Ideas feels that this is a reasonable amount of reporting and information sharing. However, frequent, additional and ad hoc requests for information may be causing an issue. Ilm Ideas should take care that these requests are routed through one person and that information provided by incubators is accessible to all Ilm Ideas team members so that information already provided is not requested again. Ilm Ideas will consider requesting monthly updates or quarterly reports, not both. An important lesson learned, in light of conversations with the programme and incubator teams, is that there is a possible mismatch in expectations concerning the technical assistance (TA) to be provided by Ilm Ideas. Ilm Ideas planned for TA to be provided to partner incubators themselves, whereas incubators appear to be more interested in securing TA for their startups. However, it may be the case that incubators are unable to articulate their needs clearly, as they have no experience of working with social enterprises. When incubators identify TA needs of startups, Ilm Ideas needs to equip the incubators in those areas so that they can support startups independently. Drawing on conversations with incubators over the last year, critical areas for technical assistance to incubators are: Connecting incubators to relevant mentors, investors and experts who understand education and/or social enterprise and have relevant sectoral knowledge Conducting an analysis of the education market and customer segmentation Undertaking social enterprise business modeling. Critical areas for technical assistance to startups are: Supporting social enterprises to identify and connect with their beneficiaries and customers specifically in marginalized, difficult to reach areas Measuring and improving their social impact Connecting startups to mentors in areas where incubators may have limited expertise (e.g. education, social enterprise). Accelerators are interested in achieving the same overall goal as incubators i.e. helping to improve the odds of success for startups, but accelerators set about achieving that goal in a very different way. First and foremost, accelerators generally make a financial investment in the companies enrolled in their programmes. They help teams build their companies and seek to accelerate the trajectory and path of the business. 5
9 Consider extending the incubation cycle Expecting education startups to be investment ready after four months is unrealistic. Education startups are social enterprises in business to tackle social problems, and to improve communities, people s life chances, or the environment. They too aim to make their money from selling goods and services in the open market, but they typically require more time to be established and become investment ready than purely commercial startups. The incubation programme for education startups should ideally be for a duration of six months, with regular opportunities to weed out or eject those which are not performing well enough. 10 Select the best startups to join an accelerator All the education startups graduating from the incubators will pitch their solutions at investor conferences organised by the incubators. However, we are expecting very few if any of the startups to be investment ready, or ready to go it alone by the end of the incubation period, and there are very few investors interested in potentially high risk education startups that may need several years of investment before generating returns. In addition to extending the incubation cycle, the best startups could be enrolled in an accelerator. Such startups will be identified by Ilm Ideas and the incubators at the investor conferences. Ilm Ideas will then provide financial support to the accelerator to host the startup(s). Ilm Ideas could work with existing accelerators (InvestInnovate and the SPRING accelerator are examples) or one of the current partner incubators could be graduated to an accelerator. To find out more about Ilm Ideas, please visit our website: www.ilmideas.pk 11 1 Consider partnering with fewer incubators The programme works with five incubators, each with different interests and approaches. The capacity of incubators is also variable. At first it made sense to partner with as many existing commercial incubators as possible to find out more about working with them and to maximise the chance of creating the self-sustaining community enabled to continue investment in evidence-based education innovation solutions. In future however, the programme should examine the strengths and weaknesses of its partnerships with incubators and focus resources on those that are most closely aligned with Ilm Ideas s expectations and are interested in identifying and supporting social enterprises. Explore the possibility of philanthropy and CSR to support startups As has been noted above, startups are unlikely to be ready for investment at the end of the incubation programme and there are very few investors interested in potentially high risk education startups that may need several years of investment before generating returns. An alternative source of funding for startups is philanthropy and Corporate Social Responsibility (CSR) funds. Philanthropists are likely to be patient investors and more interested in impact than returns on investment. Ilm Ideas should consider creating a directory of philanthropists and CSR funds in Pakistan to share with incubators and startups. The directory could be prepared by Ilm Ideas with one or more of the incubators and be updated by incubators when Ilm Ideas ends. Ilm Ideas is a programme funded by UK Aid and managed by Cambridge Education, a member of the Mott MacDonald Group. 6