We investigate how a set of small and medium sized enterprises (SMEs) can engage in business model development within a regional innovation ecosystem. Based on a case of Danish manufacturing SMEs that developed their local ecosystem in an innovative automation project, we find key drivers and challenges that these companies encountered while creating and capturing value both for them and the ecosystem at large. While the value creation process is enabled by common goals and financial support, companies need to balance their core activities with their commitment to the joint initiative. Moreover, ecosystem development is centrally dependent on the value-capture process, which also takes place at the inter-organisational level. Such open innovation process implies a purposive management of knowledge flows at the level of the innovation ecosystem that fits a multi-layered structure of the business model. Our findings also highlight the underlying connection between the business model and ecosystem concepts.