There used to be a time when scaling a business to compete with the bigger corporates involved overcoming major financial and technological barriers. Thanks to decreasing costs of game-changing technologies and the democratisation of communication tools, these traditional barriers to entry are fading fast. Nowadays, startups have opportunities to disrupt markets before market leaders have time to react.
All the while, corporates are facing a growing set of challenges around staying fresh an innovative to their clients. According to a recent survey from Accenture, only a small number of organisations are generating a significant proportion of their income from new activities. Disruption needs new and different ways of thinking — whether it’s alternative forms of leadership or cultural attributes — but many corporates are stuck in the past and lack the much-needed organisational agility.
Partnering with startups
While many corporates consider disruptive startups as a threat, some see them as an opportunity. As such, there’s a growing trend of corporates opting to partner with them in some form. While corporate-startup partnerships differ from case to case, the ideas behind them are similar: corporates get to tap into the agility of startup innovators and share each other’s networks.
A notable example of a major corporate engaging in partnerships with startups is Capgemini. Through its Applied Innovation Exchanges (AIE), Capgemini bridges its multi-national clients and a global ecosystem of startups together to provide the latest thinking, technologies and innovative experiences.
According to Adele Every, vice president of Capgemini, corporate-startup collaboration is all about staying relevant and fresh to clients.
“If we’re not constantly looking at how the market is evolving and what new communities are spinning up in emerging technologies, then we’re not on the cutting edge of technology anymore,” she said. “We use our community of startups and SMEs to help us stay connected. It’s self-fulfilling in that when you start creating these communities, you start pitching each other’s credentials and share networks.”
“Have we seen a return? I would say our perception in the marketplace is expanding as a result. As our communities build further outwards, we are being seen much more as a key innovation transformation company that can support our clients.”
Expanding on his startup’s relationship with Capgemini, Antoine Baschiera, CEO and founder of Early Metrics, said:” “Our collaboration with Capgemini was a way to match two complementary approaches, we bring the expertise on the startup ecosystem, and Capgemini brings access to clients and most of all a capacity to tailor what they are doing with each client.”
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What sort of startups are of interest?
“In terns of the startups in the highest demand, that’s really challenging to determine,” said Taylor Ryan, CMO at Valuer. “There’s a general gravitation to all things fintech and blockchain across numerous sectors; which is fascinating. There are a lot of companies exploring impact startups right now. At the very least, these large companies are trying to understand how they can adjust their future growth within the Sustainable Development Goals (SDGs).”
For Every: “Anything around AI, machine learning, cognitive computing is really big for us at the moment. The startups we’re working with are looking at areas such as how enterprises can take a series of highly complex documents and pull out the relevant information needed.”
Capgemini is not unique here, AI and AI-related startups are getting a lot of attention. According to figures, nearly 150 global corporate venture capital funds (CVCs) — equity investments in startups made by corporate entities — backed AI companies in 2017.
“Blockchain is something that is becoming much more talked about too, blockchain for authentication in particular,” added Every. “We’ve also been looking at things like asset tagging.”
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What does corporate-startup collaboration look like?
“There’s a case to be made that nearly all large companies with revenue over $10B have built out innovation departments and are exploring how they can expand their services and products for the future,” said Ryan. “There are of course some that are doing a significantly better job than others and every organisation looks a little different. There is no perfected method of startup collaboration, internal/external innovation, or framework for measuring milestones.”
Corporate-startup collaboration covers a wide range of behaviours — often it’s transactional. CVC has been steadily rising in the market. In 2018, the number of active CVC business units rose to 773, a 35% increase over the previous year, according to figures from MIT Sloan Management Review.
Corporate accelerators are increasing in popularity too. These take existing companies, with an existing team and existing idea, and accelerates them by improving all aspects of the operation, getting them into the best position, so that they can scale faster. Ecosystem collaborations — these include engagements such as hackathons, startup competitions, meetups and conferences — are also becoming more prominent.
Interestingly, many corporates and startups have begun seeking relationships that are more than strictly transactional. Many relationships simply involve the sharing of knowledge, activities and resources.
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