Highways UK | Helping valuable tech developing start-ups succeed
In an industry that is conservative for good reason, how do you create an environment where start-ups and innovation can flourish?
Michael Vardi, co-founder of intelligent road stud developer Valerann offers the wisdom of his experience in taking Valerann from pre-seed funding to one of Europe’s 10 leading GovTech start-ups in under four years.
In the early days of a start-up’s life, it faces challenges that form a catch-22 of-sorts. The company is excited to develop a new idea into a product that will solve a pressing problem. To do this, it will need to hire a team (unless you are Tony Stark, that’s Iron Man if you’re over 35). This team will cost money the company does not yet have, so it must seek investment. Investors will want to see evidence of traction with clients, as proof of potential returns. To get this traction the start-up needs a product that it can sell. Unfortunately, it does not have the team to build this product yet.
It is easier to overcome this cycle if one of few elements exist: (1) The problem being addressed calls for a technically simple solution that allows for low R&D upfront, such as an app; (2) The client organisations are accustomed to innovation and working with start-ups and are able to make quick decisions on trialling new technologies; (3) Venture capital investors are familiar with the industry and can easily assess whether you are addressing a pressing common problem.
To-date, these conditions have been less developed in the highways industry than they have, for example, in the automotive industry. Accordingly, we have seen fewer start-ups and less innovation than some other industries. The conservative nature of the highways industry is warranted. Risks to safety on a highway cannot not be tolerated, and complex infrastructure projects cannot be jeopardised by a small-scale company. Still, our experience working with Highways England, Kier and Mway Communications shows that the industry can create an environment where start-ups and innovation can flourish by adopting some simple principles and embracing what makes this industry unique.
Below are some free options that organisations in our industry can adopt that will make it easier for start-ups, developing valuable tech, to succeed.
Share problems – Sharing the challenges the industry, and the players within it, face is crucial. It can inspire start-ups to try and solve the problem. Defining problems also makes it easier for investors to assess whether to invest into the industry.
Provide points of contact – start-ups specialise in building unique technologies. However, they probably do not understand how large organisations work, who they need to talk to, and what is most important to different people. Formally partnering a start-up with an internal ‘champion’ improves the start-ups ability to navigate the organisation and to ensure it has the opportunity to showcase its offering.
Provide a clear path for innovation adoption – employees may discard an opportunity to work with a start-up because they do not know what internal process they must follow. If an organisation is clear how it adopts innovation, it effectively turns anyone within the company part of the innovation pipeline and makes it easier to find the next technology that may transform the business.
Get the right people involved – once you have decided to trial a start-up’s technology, it is crucial to get the right people involved from day one. Large organisations may have many requirements from new technologies, and these need to be understood from the design phase of the collaboration. Doing this ensures both companies have a clear understanding of what success looks like and reduces the chances of a freeze following a trial that did not address the right issues.
Plan pilots to maximise chance of success, not to minimise commercial risk – The industry has justifiably high standards for the technology used. However, if standards are applied to new technologies from the first trial, it massively reduces the chances of success. Make sure to define the standards that must be met in order to move to the next specific phase of the relationship and seek to prove these points only.
Define the long-term objective – the Highways Industry may be slow-moving at times. This can be deadly for a start-up. The upside is that success in the industry can scale. Define with the start-up a clear vision of what you are working towards, in the best case. This will help the start-up raise investment and overcome potential short-term delays, by providing a clear picture to investors of what they are investing towards. This will also inform how you plan the pilots.
Search for learning opportunities through failures – taking on innovation is taking on risk of failure. An organisation that does not accept this risk, will not innovate. Viewing failures as learning opportunities empowers people within the organisation to take on more risk responsibly, while ensuring that the organisation captures the many learnings each trial and test provides.
Help educate investors – for start-ups to succeed in the highways sector, investors must be willing to invest in them. This will happen only if they understand that industry’s needs and potential. Investors often ask start-ups to talk to potential clients, to help them understand the start-up better and see whether what the start-up has the potential to scale. Explaining the importance and urgency of the issue you face to investors can be the difference between a start-up’s success and decline.
These enhancements, if done well, can have a massive impact on your organisation’s ability to work successfully with start-ups. It is still important to remember that each start-up is unique and may require different conditions for successful collaborations. Talking to the start-up directly will not only improve the chances of success but will help your organisation learn how to work with these organisations even better in the future.
Michael Vardi is co-founder and chief business officer of Valerann whose intelligent road studs turn existing road infrastructure into a comprehensive source of mobility-related data. Valerann was the overall winner of Highways UK’s Intelligent Infrastructure Challenge (IIC) in 2017 and Michael has subsequently become an active member of the IIC steering committee and will be one of the judges at this year’s event at the NEC in Birmingham on 6/7 November.