According to a recent report by VC firm Accel and market intelligence provider Dealroom, 281 unicorn companies in Europe and Israel have been collectively responsible for the launch of more than 2,000 new tech startups.
The logic behind the research – which I covered last month is this. As startup businesses morph into scaleups, their key employees gain experience and start to develop business ideas of their own. The result is an ever-increasing number of new companies, led by people who understand their chosen markets and the realities of growing a startup.
This is the much sought-after flywheel effect. But how does it play out in practice?
Well, one important factor is the willingness of scaling companies – some of them at least – to assign leadership roles to team members as they develop new products or explore hitherto untapped market opportunities. Projects of this kind provide an opportunity for today’s employees to acquire the insights, skills and market know-how that will help them become tomorrow’s entrepreneurs.
In some cases an individual chooses to move on and start a new business. But there may also be an opportunity to take charge of a company within a company.
A Big Accelerator
That’s the route taken by Vykintas Maknickas, CEO of eSim venture Saily, a business that sits within the portfolio of Lithuanian scaleup Nord Security.
And as Maknickas sees it, there are some real practical advantages to building a company under the umbrella of a larger parent.
“You don’t need to think about the office. You don’t need to worry about where the tables come from. You don’t need to worry about the IT stuff. You mostly focus on product, marketing and delivery. It’s like being in a big accelerator,” he says.
Saily operates as an independent brand, with its own CEO, as part of Nord Security. As Head of Strategy within that organisation, Maknickas researched new business opportunities. During that time, he identified eSims – virtual sim cards – as a promising, under-developed and potentially lucrative market. He pitched the idea to Nord Security’s founders and Saily was born.
So how difficult was the sell? Maknickas says Nord Security is open to proposals from team members but that doesn’t necessarily equate with taking a leadership role. “The founders are very open to everyone pitching,” he says. “Execution is a different matter. You may not be the best person to execute, so that could be tricky.”
Once a business has been given the green light and a leadership role asigned, there are further advantages to being part of a bigger organisation, not least in terms of resourcing. For instance, staff can be shared across different teams. Typically, a company may have seven or eight full time people, such as developers. Other roles can be split between business units. “For intance, you don’t necessarily need your own graphic artist,” says Maknickas, “but you do need dedicated product and marketing people.”
For the parent company, there is an opportunity to find new customers and revenue streams. At the same time, there can be an overlap between the new company’s product and the parent’s core offer. For instance, Nord Security is best known for its VPN and security solutions. Saily’s main customer case is travellers who want to keep roaming costs down, but in addition to the eSIM functionality, the company has built in VPN/Security features. Thus reputation, credibility and and knowhow can be extended into adjacent markets.
Going It Alone
Of course, not everyone will have an opportunity to form a company within a company. The flywheel effect is also – and perhaps mainly – driven by those who spend time working for one or more technology startups before launching their own ventures.
David Villalon is co-founder and CEO of Maisa, an agentic AI startup that has raised $5 million in pre-seed finance. Prior to forming Maisa with Manuel Romero, Villalon worked as Head of Product at VoiceMod and Chief AI Officer at Clidrive. Having held senior positions in Spanish technology companies, he applied his insights into creating a company that has adopted – as he characterizes it – a new approach to AI.
Maisa is aimed at businesses in regulated industries, such as energy, finance and manufacturing. As he explains, the AI is designed to automate key tasks while being fully transparent around the decision making and execution process. As such it can be trusted to carry out tasks that require accuracy and accountability.
The key insight that he took from his previous roles was the lack of customer trust in a technology they didn’t really understand. “Clients were telling me, we don’t understand this. We hear this is great but we don’t know what to do with it and we don’t have the know-how,” he recalls.
When Villalon and Romero founded Maisa they felt they had a clear idea of what theirtarget customers were looking for. “We thought about what kind of messaging they were looking for, what kind of products, what kind of leaders and what kind of thought leadership.”
Added to that was the practical operational acquired in previous roles. “During our time at Voicemod we saw hyperscaling. We went from a small team to over 100 in a year and half. That gives you insights. You learn you have to build a solid company. You have to create processes that are agile. I learned how to hyperscale from a team and resources perspective,” he says.
Perhaps the question facing entrepreneurially minded employees who develop their own ideas is “should I stay or should I go.” There are advantages to both approaches, but what can’t be denied is that experience in the technology sector is helping a new generation of CEOs and founders to build companies on a foundation of operational and market knowledge.
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