How big corporations can work with startups
The MetaBeta accelerator CEO Dmitry Maslennikov has prepared this article to show the ways of interaction between large corporations and startups. Read below about the benefits of such cooperation and learn where to recruit starting businesses.
The column “Innovations in corporations“ is published with the support of Spinon.
About corporate innovations
Innovations, best practices and risk management are the main items on the corporate leaders’ agenda. As a rule, the innovative strategy covers ten directions: product, service, platform, structure, process, business model, communications, channels, interaction with clients and brand.
To achieve long-term success, corporate innovators have to develop curiosity, a constant search for additional information, interaction and involvement of other creative people
- “Idea Hunter“, Andy Boynton and Bill Fisher.
In addition to the idea of the flow, corporate innovators should develop the skills of making small bets with the help of creative games, prototyping, learning and reversing business models, explains entrepreneur and writer Peter Sim.
At individual and organisational levels, corporate innovations require skills in making questions, observing, connecting, experimenting and creating an association.
- “Innovator DNA: Five skills of disruptive innovators“, Jeff Dyer, Hal Gregersen and Clayton M. Christensen.
All this is much easier said than done. The R&D budgets tightening, which in the long run increase the possibilities of “digital breakthroughs“, organisational bureaucracy and the shift of previous success create difficulties for large corporations to innovate independently. Thus, companies are forced to search new sources and ways of innovative development.
In conditions of increasing competitiveness and economy globalisation, only “disruptive innovations“ can help companies to maintain a long-term excellence.
- Gerald Tellis, the Global Innovation Center director, University of Southern California.
Interaction with startups can be one of the ways to get fresh ideas and break through the “an oficial imprecation“. 15 tips and examples below will show how corporations need to work with startups.
Companies like Cisco, Google, Facebook, Qualcomm and Intel buy startups with well-established venture capital tools. Investing in startups or buying them can be a way of obtaining new technologies, knowledge and expertise.
This trend is spreading around the world, including Germany and India. According to the Reuters report, German heavyweights (Bayer, Merck, Deutsche Telkom, Evonik and Metro) are currently investing in startups for digital expertise development. In 2014 the amount of such investments in Germany was $1.74 billion (compare with $49.39 billion in the US). German startups attracted the attention of industrial giants, including POSpulse, Dinnery, Bauerntuete and KptnCook.
Traditional Indian IT service companies also interact with startups to find new ideas. Infosys, for example, opened a $500 million fund for investments in automation and artificial intelligence, and recently has acquired a young automation company Panaya for $200 million. Wipro opened a $100 million corporate venture fund in the Silicon Valley.
The successful entrepreneurs often become business angels in other companies of their sector. These are, for example, MakeMyTrip (fund for tourist sector startups of $15 million) and Nazara (seed fund for game startups). Snapdeal has recently acquired five newcomers: Grabbon.com, eSportsbuy, Shopo.in, Doozton and Wishpicker.
By creating an accelerator, corporations can understand the benefits of developing technologies in SMAC (social, mobile platforms, analytics and clouds).
Let’s look at India. Bangalore, situated in the south of the country, is considered the “Silicon Valley of the East“. There are dozens of startups here, and this makes Bangalore an excellent place to work for accelerators. Thus, Target, the second-largest retail discounter, chooses supply, mobile and digital marketing startups for the second group of startups in Bangalore, such as Twiddly, WhoDat, Wazzat and Visarity. Five startups from the first group of the accelerated program were presented in 2014, and muHive and Konotor continue to work with Target. Torch’s ideas were tested by Target in San Francisco, and are currently used in 60 stores.
Startups are vital for technological innovation, and India is heart of its development.
- Manish Chondhari, Vice President, Managing Director of PitneyBowesSoftwareIndia.
Accelerator PitneyBowesSoftware is engaged in the corporate startups development, such as Tagalys, GetFocus, IdeataandAudianz.
Talent grows with the help of an accelerating program, and this will allow to develop advanced technologies that can then be expanded around the world.
- Manish Chondhari.
The Microsoft Ventures Acceleration Program in India has recently accepted 16 startups: Appointy, Bookpad, Boutline, Imly, InstaSafe, IntouchApp, Metaome, Sliderule, MyBusTickets.in, Praxify, Thinxtream, Touchfone, ZingHR, Voonik, Zoom and AppVirality. Other companies bought two previous graduates, Adepto and Plustxt.
Kyron Global Accelerator offers up to 30 thousand dollars investment in exchange for 6–10% of shares, in addition to various services, corporate connections and access to investors global network. His latest release includes such startups as Cubito, XpenseManager, EywaMedia, Viamagus, CashkumarandAdwyze. One of its portfolio companies, Bookpad, was bought by Yahoo.
LittleEyeLabs was a member of the GSF Accelerator and later was bought by Facebook. The Gen Next Innovation Hub Accelerator, a joint initiative of RelianceIndustries Limited (RIL) and Microsoft Ventures, launched 11 startups in entertainment, taxi, internet, retail, logistics, search, education, analytics and recruitment: AxleRate, CarIQ, Coitor, HealthVectors, InterviewMocha , Light, LogiNext, Tootle, Oztern, FlexiguruandFropcorn.
Microsoft Ventures and the Deshpande Fund teamed up to create “sandboxes for startups“. Zone Startups India was created by Ryerson Futures and the BSE Institute. Such accelerators are aimed at investors, as well as at potential corporate clients and partners. Other global enterprise accelerators were launched by Samsung, Telefonica (Wayra) and Orange (FAB).
MetaBet Accelerator example: we participated as a methodological partner in the four accelerated programs of Tolstoy Startup Camp from Yandex within the Yandex.Start program, and organised and carried out the first accelerating program for AlfaCamp financial and technological startups in Russia.
3. Calls for cooperation
Instead of involving consultants or third-party accelerators, large companies can interact with entrepreneurs directly. The annual summits of the Mobile Marketing Association showed how Unilever, P&G and Mondelez were working with startups. So, Unilever calls to cooperate at global events (for example, at Mobile World Congress in Barcelona).
We started to collaborate with 11 startups at MWC in 2014.
- Rahul Velde, vice president of Unilever in Asia and Africa.
Moreover, Unilever launched the platform The Unilever Foundry. This will be a single “entry point“ for innovative startups which want to collaborate with Unilever.
Although we have been working with startups for many years, now we want to increase our efforts and eventually implement it as a way of working in our organisation.
- Keith View, Unilever marketing director. The Foundry will also give startups the opportunity to apply for funding through a venture unit, Unilever Ventures.
In a world constantly connected to Internet and data, technology companies with innovative and promising thinking will play an important role. They will help our brands to interact with people where they are.
- Keith Weed.
We are teaming up with startups to stay on the top of game innovations.
- Peter Mitchell, Global Media Innovations Director, Mondelēz International.
Mondelēz International is a snack giant that owns brands like Cadbury, Nabisco, Oreo, Tang and Trident. One of the company’s initiatives, Mobile Futures, was created specifically for cooperation with entrepreneurs. Mondelez has already received hundreds of applications from startups in the field of social TV, mobile retail and SoLoMo.
- TechMahindra invites startups to present their innovative approaches and business cases and offer support in technology development and marketing.
- Standard Chartered Bank interacts with startups in the areas of data analysis and technology research and also collaborates with business angels.
- Siemens’ Tech StartUp Meet works with startups in Mumbai, Berkeley, Munich and Shanghai, and recently hosted presentations in Bangalore with the participation of AltizonSystems, DataWeave, ConnectM, Enlightiks, Flutura, Kavai, Meddiff, Osteo3d andParaBlu.
- Pearson has launched Pearson Catalyst for educational initiatives and every year selects 10 promising newcomers to work with its internal experts.
Interaction with startups and technology development help to achieve goals and advance in the digital world faster.
- Stephanie Neigeli, Digital Innovation Manager at the innovative Nestle office in Silicon Valley.
Disney and Nike have also invited startups to work with them in their sectors.
Accelerator MetaBeta example: we collaborate with “Renaissance“ insurance company, where we are a mediator in the interaction between startups “from the market“ and corporations. With our help, “Renaissance“ insurance finds companies to cooperate with and eventually gets relevant startups with elaborated mechanics of potential interaction.
Another example is the collaboration of our accelerator with a group of MedMe companies that are interested in developing startups in the sectors of mHealth and Digital Health. Our joint work began with a hackathon, and continued with the acceleration and methodological support of companies members of the MedMe group.
Hackathons are time-limited programs aimed at solving various tasks. They are attended by people who create specific technical solutions.
These are, for example, IBM Blue Mix Cloud Hackathon and earlier ‘DoGood’ Hackathon by Nokia. The Hackathones reveal new ideas in solving problems and give corporations the opportunity to develop ideas into fully fledged products. Some venture capital funds, such as Sequioa, also began with hackathons to better understand the specifics of the work and help startup entrepreneurs. Sequioa was interested in companies that was dealing with health care, payment services and transport.
5. Startup competition
Some technological giants began to launch their own startup competitions to attract talent from around the world. For example, the Intel Global Challenge (which brought together 20,000 young innovators and entrepreneurs from 60 countries), GE, Ecomagination Challenge, Imagine Cup and Amazon Web Services Global StartUp Challenge.
There are also regional contests, for example, SwisscommStartupChallenge and the Ernst & Young EU Startup Challenge. Large companies and industry organisations can sponsor awards at such competitions: in this way, the World Information Technology and Services Alliance (WITSA) works with the World Summit Awards.
Related topic: Which corporations will patronise startups
6. Conferences and informal meetings
Startup conferences are becoming more and more common. For example, the annual Tech Sparks (held by YourStory Accelerator) is a showcase, where an interested corporation can check the startup sector trends.There is another event, Construkt Festival, the largest Indian startup festival.
In addition, it may be useful to invite the founders of startups as speakers for significant events. For example, at the Asia-Pacific summit, held by the Global Mobile Marketing Association, employees of such well-known projects as CrayonData, MobileWalla, ArtofClick, Bonzai.ad and biNu regularly give speeches.
Apart from major official events, there are local meetings of sector representatives, where you can communicate informally. Among other things, these are regular meetings dedicated to knowledge management, held by Bangalore K-Community. There are both startups representatives and founders of accelerators and venture funds (Kyron among them) visiting these meetings as speakers.
7. Locations where startups are accumulated
Large companies interested in building relationships with the startup community regularly organise tours to places where startups are clustered (Silicon Valley in the US or its Indian counterpart, the city of Bangalore). Your Story holds meetings between startups from Bangalore and trade delegations from England, Switzerland or Hong Kong on the territory of Indian projects. This gives corporations the opportunity to estimate the competition in the industry and work only with the best projects. Companies in Bangalore are annually visited, for example, by Citrix, Google, Walmart, Cisco, Wipro, Intel and Bosch.
8. Customer Involvement Model
Many startups dream of having a large corporation as their client. But some big companies are interested in collaborating with startup teams too.
- Amazon, for example, happily provides its cloud infrastructure to develop projects and to establish strong relationships with the entire ecosystem of accelerators and venture funds.
- SAP company organised meetings of HANA Technology to get to know the projects in BigData and analytics sector. In addition, SAP is actively promoting its services in cities where the technological business is rapidly developing: Dallas, Vancouver, Shanghai, Bangalore, Munich, Melbourne and Moscow.
“IBM is spreading its cloud technologies and tools amongst startups in the Internet of things.
MetaBet Accelerator example: we are partners of Amazon, Microsoft, SAP and other corporations. Within this partnership, corporations give start-ups we work with technological support and grants for using their products.
9. Opinion and startup media leaders
Reading popular startup media and engaging in professional discussions are important steps. Startup communities websites and groups in social media can become good intermediaries for transmitting interests of a corporation. For example, IBM and the DBS bank regularly write articles and columns in a number of influential startup media.
10. Special interest groups
Lead some technological industries (such as smart cities operating by the Internet of things technologies) to its boom will take a long time. To accelerate the development of such industries, corporations can create Special Interest Groups, where their employees attract funds, resources and users, all the things you need to develop the project or idea they are interested in.
The Bangalore company TiE created a special interest group in the Internet of things and attracted such powerful players of the market as Intel, Cisco, Bosch and Infosys.
11. Startup communities
A lot of startup communities from around the world gather in one place at significant events of the sector. These are Mobile Monday, Startup Week, Open Coffee Club, Creative Sundays and StartupWeekend. For example, mobile Monday meetings are visited by mobile application developers, startup founders and other professionals. The main goal is to discuss trends in the industry, offer solutions and help to promote innovative ideas.
These events are an excellent opportunity to get to know large companies (Microsoft, Orange, Google, Adobe, Paypal, McAfee, TCS, Sasken, Morgan Lewis and so on).
12. Entrepreneurial relations
In addition to spontaneous communities run by volunteers, there are formal organisations that help entrepreneurs to establish contacts in the sector. Such companies carry out regular paid activities for startups and corporations that can be beneficial to each other. One of them is The Indus Entrepreneurs. The professional network of this company consists of 2500 participants from 18 countries. The sponsors of such events at different times were eBay, SAP, Vodafone and Microsoft.
Apart from accelerators founded by corporations and investors, there are more long-term programs for startups at early stage. These are business incubators that are created and based on state organisations or universities (the incubators exist including at Stanford University, at the National University of Singapore, at the Technical University of Bombay). Such incubation programs can be a good platform for corporations to act as mentors or potential investors.
14. Research and development grants for business-oriented universities
University research can give corporations an additional opportunity to work outside of corporate R&D-laboratories. Business-oriented faculties and research programs at universities can become a base for corporate development in prospect. IBM, Loreal, GE, Dupont, Bosch and other companies are examples of large companies that sponsored university research centres and continue to support business students.
15. Visiting Entrepreneur
Some companies organise a visiting entrepreneur program, when startup founders spend some time in the corporation’s office. This helps large companies to get used to entrepreneurial thinking, become more flexible and open to innovation. This model is rarely used in practice, but it is often used as a case in business schools and venture funds.
Startup thinking can become a solid strategic advantage for a large company.
- Christina Holly, the EIR company “visiting entrepreneur“ and the head of the technological innovation center in MIT.
My experience shows that the demand for introducing entrepreneurial practices in large companies is increasing.
Summing up, we can conclude that large companies have begun to interact with startups more actively. This helps to develop entrepreneurial thinking within the corporation and to start looking for new ideas.
We do not only help startups to develop and support entrepreneurial initiatives, but we also introduce a particle of startup spirit into the corporation. We create a culture of “interior entrepreneurship“, corresponding to the current trends and requirements of clients.
- Natasha Volpini, the Brazilian branch of Mondelēz media manager.
Become a valuable partner for the best startups.
- Cameron Campbell, Business Development Director at the New York Accelerator WorkBench.
Make innovative friends.
- “Moderate Innovations“, Navi Rajou and Jaidip Prabhu