But first, let’s address the elephant in the room and get it out of the way. Not all corporate-startup relationships work. According to a report published by 500 startups, the vast majority of corporates see less than 25% of their initial pilots with startups scale into solutions that can be taken to the market.
So why are we still talking about corporate-startup collaboration? Oh yes, the other 75% narrative. Corporates today recognise this need to work with startups to enable innovations, propelling them to step up their startup collaboration initiatives.
In fact, the number of corporate investments in startups has nearly tripled in volume from 980 in 2013 to 2,795 in 2018, increasing over 9 times in value from $19 billion to $180 billion based on a study by GVC Analytics, a company that tracks corporate venture deals.
To quote Jerry Maguire, ‘you complete me’
The value of such collaboration to both parties is clear. Corporates bring the networks and resources to enable the startup to reach scale at a reasonably early stage. On the other hand, startups provide corporates with ideas, technologies, or solutions that they can quickly test and bring to the market. They are also viewed as beacons of creativity and innovation.
Yet, only a handful of startups will thrive and ultimately disrupt the entire industry. This is why corporate-startup collaborations mesh beautifully with the sequence.
So if corporations learn the steps well — set clear objectives and identify their capabilities and process of working with startups — there’s a higher chance they’ll finish the business dance with an encore.
Corporates looking to advance their innovation agenda through collaboration with startups possess these common objectives:
First objective: to solve immediate problems and priorities faced by internal BU stakeholders
Innovation champions within large corporates realise that in order to build organisational support for their programmes, they must build organisational support which sets up the foundation for more ambitious innovation initiatives or moonshot projects down the road. This is why innovation teams are now looking into startups as an alternative to traditional solutions suppliers and various corporates.
Not only do startups have the agility to test ideas fast, but they may also bring a new perspective of attacking the problems that hurt the business unit stakeholders — whether in terms of increasing revenues, or of decreasing expenses, or even of both.
To produce tangible results and early wins, the corporate innovation team needs to carefully choose startups with a strong execution track record, and ensure the readiness of stakeholders to support initial pilots and integrate startups by understanding their stakeholder priorities. On top of this, they may need to rethink the lengthy onboarding or procurement process that works for larger or traditional ventures and streamline them to make them more apt for startups.
Second objective: to explore and develop use cases for proprietary assets and technologies
It is not only funding that startups look for when working with established corporates. Corporates, for example, are often sitting on tons of underutilised data which startups lack access to and through which they can quickly turn into insights, business models, or products.
For instance, we’ve seen opportunities for corporates to leverage our corporate-innovation programme to find best-in-class startups that can use corporate’s newly developed technologies to produce success stories that will hopefully drive future adoption leading to new business lines and revenue streams for the company.
Third objective: to explore sustainable technology solutions and accelerate the adoption of ESG principles
Doing good is doing good business. Large corporations today are beginning to integrate sustainable and circular practices into their tactical operations. And with more and more everyday consumers requiring their brands to adhere to environmental, social, and governance (ESG) measures, big corporations are stepping up their efforts to find innovations that will lead to:
- greater corporate transparency through automation of monitoring and reporting of impact
- more efficient use of resources and reduction of wastes and carbon emission
- alternative materials to plastics for packaging
- improved access to knowledge and financial inclusion of smallholder producers
Fourth objective: to develop investment opportunities or deal flow
Large corporations are turning to startups for cutting-edge technologies with the potential to disrupt their current businesses and provide a competitive advantage in the next 5 to 10 years. For these types of innovations that require a longer-term horizon and are non-incremental in nature, corporates are looking at startups across different stages for potential deal flow or investments.
The good news? We are looking for corporates to be part of the innovation dance
We’ve discovered startups whose tech innovations present potential tech solutions for your business.
Our great strength as a company is our large network of relevant startups in the region and we think this can be of immense value to regional corporations, wherever they are in their innovation roadmap. Also through our regional reach, we are able to find and connect corporations to the startups most relevant to their innovation objectives.
If you’re interested in this initiative and would like to fast-track your corporate innovation and business transformation through co-creation of solutions, let us know by filling out this form.
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Dustin Masancay, who handles e27’s corporate innovation & ecosystem building, co-wrote this article.
The post The corporate-startup tango and why it continues to be relevant appeared first on e27.