Interesting to look back at the successful Cassini Entrepreneur Days in Prague (June 3rd and June 4th). The event was very dynamic with lots of opportunities to engage with the different startups. Overall, there was a list of 85 startups. One way of looking at them is their focus: from positioning + navigation to observation + analysis.
From this perspective it is clear that there is a lot of startup activity in the sector of observation and analysis. This covers the processing of data from satellites and any other airborne platforms and combine this data source with other sources to extract relevant actionable data.
After covering the distribution of startups, we analyzed the dual-use content of the different categories. The analysis is based on the description of the startups as well as a first level analysis of the market. Per category the graph presents the average dual-use % [as compared to the commercial value of the product or service]. No surprise to note the high dual-use % (>50%) for the different drone and drone components (including software) category.
One of the challenges that comes with design services is the cyclical nature of the services business. When the economy tightens and corporates are watching their operational expenses, the first step will be to halt any external contracts/contractors which are not deemed absolutely essential.
Whereas the earlier (staircase) model is a good approach in scaling up revenue and creating new revenue streams, the foundation of the company is still based on the service model: headcount continues to be the main driver (typically up to 60-70% of revenue). In terms of (enterprise) valuation the additional revenue streams, however, will already make a significant difference.
Design services companies typically start small (some exceptions when it concerns management buy-outs) and natural growth is a slow process as it requires hiring and training of engineers based on/driven by the revenue stream of the company. Growth of business is tied to growing the team and it is not always easy to find the engineers.