A VC Mindset can Foster Innovation in the Telecoms Industry
As telecoms capabilities evolve in tandem with the wider technology landscape, it has become increasingly clear there is a lack of cohesion in the cycle of innovation. There is not enough investment to fuel progressive thinking and this is hindering the growth of the sector, says Ian Smith, Head of UKTIN.
“For businesses to deliver on their potential, the industry needs to adopt a more Venture Capitalist (VC) mindset - delivering the investment and support SMEs need for the next step of growth.”
Additionally, the rise of start-ups in the telecoms industry offers the potential to consolidate and augment the sector's capabilities. Understanding the number of start-ups, their unique capabilities and their potential is crucial for fostering a more collaborative and supportive telecoms ecosystem.
Importance of innovation in telecoms in the age of 5G
Innovation is the lifeblood of any company as it keeps an organisation moving forward. With humans constantly trying to deepen their connections through the use of technology, the telco industry has to make sure it’s offering the advanced connectivity solutions that people need across their personal and professional lives.
“5G is a good example of an innovative technology that has the potential to deliver better connectivity for organisations and citizens,” shares Ian. “It can support various applications and sectors such as the Internet of Things (IoT), automation in industries which struggle from worker shortages, healthcare and smart cities.”
But it can be difficult for a start-up to secure the guidance it needs to balance future capabilities, such as 5G, with real-time adoption.
“This is where innovation platforms are crucial in supporting start-ups by consolidating their knowledge to help small businesses nurture progressive thinking and take this to the next phase - implementation.”
Why telecoms need to think like VC firms
The traditional telco approach of supporting small businesses relies on securing loans and facing restricted access to large capital and support. Compared to the venture capital approach, which can provide start-ups with substantial funding over a longer period and grants access to a network of international industry contacts, expertise and mentorship. Ian believes that the telco industry needs to shift its mindset and take more risks if it wants to continue growing effectively.
“This is not to say the VC approach is without its problems, as it can sometimes result in ownership dilution, intense pressure for rapid growth and a lengthy funding process,” he says. “But growing in the right way will require telecoms to balance a need to be financially prudent with taking a leap of faith in a start-up on occasion.”
The rapid transformation of the telecoms sector and tech industry as a whole indicates that traditional practices will need to evolve if companies want to keep up with competitors and continue providing the solutions citizens need to connect.
“Taking the most useful aspects of both the traditional and VC approaches will enable telco companies to seek out and support innovative ideas and facilitate technological advancement,” Ian explains. “This is where innovation networks can provide both big and small companies with connections to investment and guidance, helping any business achieve a new mindset for success.”
Supporting telecoms start-ups
In a fragmented industry teeming with start-ups and small businesses, the need for targeted support and forward-thinking initiatives across telecoms has never been more apparent.
“New players are bringing innovation and disruption to an industry that has historically been dominated by large corporations,” Ian says. “As the industry continues to evolve, it will be essential for telecoms start-ups to remain aware of the latest trends and innovations and seek out partnerships to help bring their ideas to fruition.
For larger companies, partnering with start-ups can help telecoms quickly integrate progressive solutions and drive growth in an increasingly dynamic market.
“With large and legacy companies embracing a VC mindset and start-ups leveraging the support systems provided by innovation platforms, the industry can grow and develop, creating a competitive landscape with copious amounts of opportunities.”
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