Corporate-Startup Partnership: The Geostrategic Challenge of Europe
Why is Europe in need of seamless innovation flows — and why are Corporate-Startup partnerships the key driver of economic growth in the 21st century
Europe is fragmented by nature. Its long history is punctuated by territorial battles that have drawn the present borders over time while reinforcing the sovereignty of nations. Compared to the old continent, the young United States appears more homogeneous, as its very name suggests, not to mention a language shared on both coasts. Europe is a disparate collection of nation-states whose political gathering is achieved only through an army of translators in the backrooms of the Berlaymont and the Louise Weiss building. To maintain its status as an economic leader on the strategic world stage of tomorrow, Europe must unite somehow. The European Commission is working hard in that direction, and numerous initiatives are taken on a supranational level. However, I believe that large companies and corporations have a role to play on their own, each and individually. Economic battles are won through innovation, and for innovation to occur, the industrial power of large companies and corporations must be ignited, exploring vast entrepreneurial ecosystems. Although Germany and France are powerful markets, they cannot compete alone with American power and Asian ambition. If European companies feel cramped in their domestic market, they must cross borders, expand their reach, and identify the right innovation partners wherever they are.
On the other hand, startups are at the forefront of innovation. There is no single area of human activity that is not addressed by entrepreneurial creativity, even the military. To drive Europe’s economic growth, corporations must partner with startups, on a scale never seen before. They may not have a choice, as recent global challenges will quickly require steady external assistance to address them. Using startups is a faster way than building new things from scratch: the famous buy-or-build dilemma. Limits of globalisation, the COVID-19 pandemic, climate change and sustainability requirements, to name the most obvious, are the key drivers of corporate innovation. For instance, the impact of the pandemic is far more profound than sometimes considered, with systemic ramifications that influence the entire spectrum of business management. It changes the way we work, communicate, collaborate and live. It’s a whole new standard, and companies have to adapt to it with new tools, new solutions, new frameworks, and new thinking. The scale of the task is so huge, with so many tracks to manage in parallel and in a short period of time, that turning to startups becomes mandatory. A new generation is also entering the workplace, with new life expectations. Young graduates are more likely to disregard corporate careers and engage with purpose-led ambitions. Entrepreneurship has never been so popular, and we’ll soon have like-minded people on both sides of the corporate venturing table.
This is an unprecedented opportunity. Planets seem to align. Why is it still so hard to scale collaboration between corporates and startups in Europe? Continental fragmentation and corporate mindset have been mentioned. My view is that the large companies that have understood what’s at stake and are deploying corporate venturing initiatives still consider that it can only happen outside company walls. Corporate Venture Capital funds, corporate incubators and other startup programs are all detached activities, spin-out structures that are run independently from the mothership. A centrifugal setup makes total sense for startups as it simplifies access to large and complex organisations, and provides a clear vision of expectations from both sides. They also allow flexible operations that are more adapted to the reality of entrepreneurs, freed from administrative constraints and inertia often associated with corporates. In doing so, they show interesting lucidity. However, these activities are modelled on the codes of venture capital and accelerators: pitch sessions, startup contests, deal flow management, cohorts and coaching are the backbone of their operations. All this is still far from true collaboration on actual innovation projects. Startups don’t enter corporate buildings yet.
This is the missing link. Running corporate venturing extra muros does not fill the innovation gap. In the long list of tools and channels available to corporates, very few are connecting startups with the inside. True innovation takes place when collaboration is a real joint effort on a concrete project with shared contributions. This can be achieved through strategic partnerships, and also through commercial deals where corporates actually buy from startups. Europe is full of small innovative companies that are only too happy to supply large groups. If the mindset changes and the porosity increases, it can only foster strategic innovation fueled by industrial power. Startups under corporate steroids.
Porosity is a keyword. Don’t get me wrong: independent corporate venturing entities set up as external arms are undeniably useful and must be further developed. However, they do not encourage the porosity that is required for the emergence of real, disruptive, industrial innovations, those that are likely to really drive the European economic growth.
— Laurent Kinet
CEO novable.com
