Corporations Roles in Startup Ecosystems
Startup growth trajectory is all about credibility, and Corporates can fast-track credibility for startups.
Early startup days are spent convincing early adopters to buy, partner, or offer a testimonial of your product. I’ll buy or try pretty much any product coming out of our mentorship program. One, because I want to experience what we’re promoting and supporting. And two, because I offer a tacit endorsement of the founder and their product to the broader WNC community where we serve entrepreneurs. Even being accepted into Elevate offers a similar endorsement or market signal of the potential of these local startups.
Startups constantly battle against the status quo. Well at least the fun ones do. Therefore, growing a startup requires data to assure its credibility. Not just in sales, fundraising too. What’s the most common question a founder will receive while shopping for a deal? “Who else is investing?” I’m not writing to criticize groupthink in Venture Capital, rather to emphasize how the innate nature “big names” and momentum de-risk the opportunity.
A “big name” is relative to your market and industry. It could be a university, Fortune 500, or local corporation. Just “fish and ponds”, you know? In Asheville, given our startup scene and for this blog, we’ll consider “big names” to be established corporations.
Venture Asheville has incubated Cardstalk for about a year and a half now. Cardstalk is an on-demand greeting card company. Imagine a kiosk in place of aisles of cards in the grocery store. And what’s really cool about it, is the content comes from local artists. The tech behind the kiosk allows for an artist to upload their content and it will be available for purchase at the kiosk the same day. Pretty cool way to bring artists and consumers together in an arts-hub like Asheville, NC.
Let’s look at the Cardstalk journey. Founders Steph and Brandon Prime won the Asheville Impact Microgrant, joined Elevate, took part in MXP by GrowthX Capital, then won an NCIDEA Microgrant. Using part what they learned in MXP, Steph and Brandon reached out to their immediate networks and asked for introductions. I know it sounds obvious but go visit any accelerator or incubator and ask founders how many personal referrals they’ve asked for. Spoiler alert: it’ll be a very low number because people fear rejection.
Which happens is a terrible trait for entrepreneurs to have. A high competency for tenacity will remedy this fear, but that’s a blog for another day. Go to www.theE13.com if interested in that kind of thing.
Steph and Brandon reached out to me and my team at Venture Asheville asking for an introduction to someone in the grocery market world. Our team is part of the Economic Development Coalition for Asheville Buncombe County, and we have two grocery chains headquartered here: Earth Fare and Ingles. It didn’t take long for Cardstalk to meet Earth Fare, and later this week, they’ll debut their first kiosk at one of their Asheville locations.
Where can they go from here? The data route: track buying habits, revenues, and preferences. They now have the credibility to get more artists on the platform. We’d expect growth to happen with the Earth Fare chain of roughly 25 locations or expanding to other grocery chains.
By Earth Fare giving Cardstalk a shot, they could potentially pave the way for immense growth for a local startup while also giving their customers a better card buying experience. And did we mention supporting local artists? This is a corporate win-win-win.
Corporations play an important role in startup ecosystems. In the Cardstalk example, the corporation being the first customer establishes credibility for the nascent startup.
Other times corporate contracts create jobs for startups. At software development agency Anthroware, CEO Jon Jones secured a long-term high value contract to one of the area’s largest corporations. To fulfill the obligation, Jon hired one product owner, one designer, and one engineer. Three net new local jobs that all pay well above the county average. “Many times, larger companies know they need some innovative outside thinking, but they’ve lost the skillset; that’s where Anthroware breathes some startup mindset into the machine. We create agility and startup speed within corporate product teams by using research capabilities to run more experiments cheaper and faster than they can on their own. Asheville is a creative place that’s full of out of the box thinkers — it continues to be an amazing home base for our firm.” said Jones.
Corporations providing long-term work for startups create jobs, provide security for employees, and grow the ecosystem with profound impact.
Another way corporations can support the ecosystem is through their expertise. At our annual award showcase and rankings, the Venture 15 and Venture Asheville Honors, we earn credibility through our corporate partners. To qualify to compete for the honor of the Venture 15 rankings (developed by measuring CAGRs) our startups supply their year-end tax documents. But they don’t supply to them to the Venture Asheville office.
We partner with local accounting firm Johnson, Price, Sprinkle P.A. (JPS) who receives all documents over a secure portal. JPS also audits each document and follows up with founders as necessary. JPS provides the rigor, credibility, and validity to our rankings. We can’t do the event without this corporate partner.
Another way for corporations to share expertise is through mentorship. When Aluminati Guitars needed a mentor with retail and trade show experience, we called on Moog Music. And like their synthesizers, they delivered quality! The mentor Moog shared with our founder provided tangible and strategic value that one only achieves from experience.
How else can corporates influence, interact, and support startups? Two more ways to share: Sponsoring events and programs for Entrepreneur Support Organizations (ESO’s) and Corporate Venture Capital (CVC).
ESO’s always need help and funding. Even ours. Keep the energy alive, support your ESO’s. If you want to sponsor an event, consider the Venture 15 and Venture Asheville Honors.
Corporate Venture Capital now comprises of 25% of all Angel deals. What better to own an innovation pipeline than to support new tech and new products in your industry? CVC is the new R and D.
Related to this topic is in the corporate foundation world. First Horizon Bank Foundation has consistently supported the Asheville Impact Microgrant Program. A small investment for a large foundation means founders can take the leap and launch their ventures.
Let’s wrap this up with a copy-and-pasteable summary: Corporations play an important role in startup ecosystems in fast-tracking startups through expertise, contracts, pilots, and CVC. Corporations can also help ecosystems build capacity by supporting and sponsoring ESO’s.
If you are a corporation interested in leveraging your resources to foster more collaboration and innovation in the startup ecosystem, give me a shout.
