Fostering innovation

06 Nov 2017
Power pack: accelerators can turn up the dial on startup success

Power pack: accelerators can turn up the dial on startup success

Startups can bring fresh thinking to sometimes staid port practises, explains Iain MacIntyre

Ports around the world appear to be increasingly leveraging their own acumen, experience and resources to foster aligned startups and in some instances established firms to deliver mutual commercial benefits.

The methodology can vary within development partnerships, but shared is the common aim of enhancing new business opportunities through “incubation” and/or “acceleration”.

One example is Rotterdam-headquartered PortXL, which aims to “accelerate innovative companies in ports worldwide” via a mentorship-driven programme over an intense, three-month timeframe.

Now operating for over two years, PortXL managing director Mare Straetmans lists the programme’s most successful startups as including Oceanos, autonomous shipping; Green Sea Guard, sensors to monitor emissions of ships; Parable, virtual reality training for safety and assembly; and Feo AR, maintenance at a distance with augmented reality.

Contract proof

“The main result of what we have been able to achieve is the number of contracts that have been closed between startups and corporates,” he tells Port Strategy.

“We focus on this because that is what entrepreneurship is about: finding clients. The first year, our 12 startups were able to close three client contracts within three months. If you consider how difficult it is to get a client meeting in our industry within three months, you realise how special that is.

“This year, our second year, we had ten startups in the programme and they actually realised 17 contracts! An unbelievable number for us. Fourteen of those contracts actually represent monetary value and three were barter deals - although pretty impactful barter deals.”

Mr Straetmans believes it is highly likely such endeavours would not have been possible without the influence of PortXL, which has a stated aim of “growing and disrupting the maritime, logistic, energy and chemical/refinery markets”.

“The startups this year have given PortXL a 9.1 out of 10 for the full programme. One of the most surprising [initiatives] might be Liquid Gold. They have a solution to recycle human waste to fertilisers. They are now starting a pilot project with the Port of Rotterdam Authority.

“A second one is Green Sea Guard. They are monitoring emissions of ships by putting a sensor in the stack.

“[Tank storage firm, Vopak] did not appear to be a potential client for this startup. But they realised that this technology could actually help them monitor the gases that are on the inside of their tanks, above the liquids they store.”

Open mind

Mr Straetmans says PortXL strives to “keep challenging everybody to keep an open mind” and, likewise, is also continuing to evolve its own offering.

“I think that is actually one of the elements of our success. We are now preparing to open up offices in Singapore and the US. This way we can accommodate startups and large corporates from the sector, better. They all have an international focus so we are building a global platform to make this happen.

“Furthermore, we are growing our capabilities to support corporates in their learning journey. We see them grow in how they interact with startups: how do you engage with startups in a pilot and, when the pilot is successful, how do you scale up the solution in your global organisation? This largely determines the value we can bring to corporates and to startups.”

Among technologies that Mr Straetmans expects will see further enhancement from these partnerships are digital logistics, autonomous shipping, emissions reduction, ballast water treatment, offshore wind energy, the Internet of Things, virtual and augmented reality and blockchain.

“But the interesting part is that most relevant technologies are not in these segments - they solve issues that companies are not even aware are an issue. This comes back to the point earlier, that it is difficult to box innovation.”

Why bother?

One frustration expressed by Mr Straetmans is an apparently often-repeated question from senior management in the sector: “Why should I bother about startups - our organisation is about ships and quay walls, what does that have to do with startups?”.

“Even in the biggest startup hubs in the world, I see this response from maritime organisations,” he says. “So there is a real disconnect to what is happening in innovation and our maritime and logistics world.”

A range of other business-fostering initiatives appear to be emerging throughout the global port sector, which are also expected to deliver significant benefits to the ports themselves and their associated business communities as well as further afield.

Among examples, earlier this year the Port of Seattle published its Small Business Development Plan, with a primary stated goal to “use our influence as an institution to promote small business growth”.

A raft of objectives have been outlined in the plan for progression throughout 2017 and thereafter, as the port’s Small Business Development Department strives to implement initiatives that:

-        expand the port’s visibility and role as a leader in diversity and inclusion in Government contracting

-        drive successful small business utilisation strategies across port divisions

-        support and develop small business enterprises that can partner with the port on public works projects, concession operations and other goods and services needs

-        develop sector-specific incubator projects where the port’s investment could trigger public/private investment, business and job creation, and return short and long-term value to port operations.

Singapore’s offering

PSA unboXed, the corporate venture capital arm of PSA International, has been actively inviting startups and other potential partners to join its incubator programme to propose/develop technology solutions in support of its CP4.0TM (Container Port 4.0) vision.

PSA International head of group technology Oh Bee Lock notes that new technologies are increasingly transforming “the way we produce, transact and consume”.

“PSA believes that ports and the larger supply chain can also reap the benefits of these technologies applied,” he says.

“CP4.0 is PSA’s transformation blueprint for establishing the Port of the Future: a hyper-connected port that creatively deploys smart technologies to deliver sustained value to customers and stakeholders in the port, shipping and broader logistics communities.”

In similar vein, last year the Port of San Diego established a new programme to foster pilot projects in aquaculture (cultivating shellfish, fish and plants) and blue tech (innovations in such fields as clean marine vessel power and technology, marine-based biomedicine and ocean-based sensor technology).

The programme states that the sustainable future of water-dependent business is critical to the long-term success of fisheries and technologies in its region. To this end, the port is encouraging proposals for new business plans from potential partners whose core purpose shares in that mission.

“Specifically, the port has established a business incubator and investment programme to assist in the creation, early development and initial scaling of new business ventures targeted at key specific segments of the Blue Economy: aquaculture and blue tech,” it states.



QUESTIONING THE VALUE OF INCUBATION

Chicago-headquartered Startup Port is unequivocal in describing itself as providing a “hybrid” startup support platform as opposed to either being an “incubator” or “accelerator” based fostering approach.

Each of its project opportunities are evaluated via Startup Port’s six “Ps of purpose” before undergoing its Sprint 90 programme, 90-minute “stress test”, 90-hour “roadmap sprint” and then 90-day “execution sprint”.

“Startup Port values time above all forms of capital and employs an approach that combines an intensive pace with exacting structure,” it states.

“The methodologies are designed to reveal and deliberately reduce the strategic risks of varied business and investment opportunities.”

In a recent blog, Startup Port debated whether the “incubator” model - whereby resource such as subsidised office space, shared administration services and networking, legal, financing and other business assistance measures are provided to startups - actually works.

Seeking to answer such fundamental questions as: “Do incubated firms outperform their unincubated peers?”, the blog cited research by the Kauffman Foundation.

“The average incubator actually has less than two full-time staff and 25 businesses,” Kauffman Foundation researcher Emily Fetsch reportedly observed. “That’s a lot of service to provide for two people. So, are they really providing all the services they say? It seems unlikely.”

According to Startup Port’s analysis of such research, while incubated businesses do have slightly higher employment, growth and sales, they also have slightly lower survival rates after they “graduate”.

Overall, the difference in performance between incubated and unincubated businesses was said to be “marginal”, with one research paper examined by Ms Fetsch reportedly finding no significant difference between incubated and non-incubated businesses.

Although observing that a single paper did not provide sufficient evidence to determine whether or not incubators work, the blog relayed concern that inherently “so many entrepreneurs, policymakers and incubator providers believe incubators are a boon for startups”.