A 3x Greater Chance of Exit? Hell Yeah.
Ev Williams says “I fear we are in an increasingly big-company-tilted world.” Or — maybe it’s just time for hybrid collaborative approaches between startups and corporates to become more mainstream.
The growth of corporate venturing programs have had the busiest year for corporate venture activity since 2001. And in so many cases, these programs are not solely for financial return but for other forms of return to the enterprise.
Corporates are seeking to leverage startup innovation — which has proven to outpace so many of them in product and technology as well as business model innovation. In return, where we as startup founders so often struggle and need support is in go-to-market/distribution. Or we see the market opportunity too early and run out of money, which is the leading reason of startup failure according to a TED talk by @bill_gross. In fact, I know this from experience. But, market knowledge, scaling GTM/distribution, and industry expertise — these are areas where corporates shine.
If the collaboration model problem can be cracked, then we have our hands on an approach to building startups with corporates — along the entire development and scaleup path — that can then reign supreme for the next generation of founders. According to data in an article by Tina Sharkey, only 29% of startups in the US have strategic corporate investment. But, those who do have a 3X greater chance of exit.
As a career entrepreneur continuing to battle the 90/10 failure ratio, I find this pretty damned exciting.
When I talk about startup/corporate collaboration though, I mean more than what has ‘traditionally’ been the case. This is not B or later round co-investment by a corporate VC. This is not a corporate accelerator which is, in so many cases, returning very little value to the corporations behind them. What I’m talking about are the emerging hybrid collaboration models that are taking root in a small but growing number of corporates today.
Just read the the exciting perspectives by Ricardo Dos Santos on these emerging models and the notion of tugboat venturing. Or take a look at companies such as Paul Jozefak’s Liquid Labs, or Henrik Werdelin’s Prehype or brenthoberman’s Founders Factory. Also take a look at Redstone Digital, a group of experienced VC’s and company builders– most with deep operational and corporate background — investing on behalf of a number of corporate funds at all stages of growth. I believe this is a glimpse of the future that we — as founders — should be watching.
The landscape is changing, and that should be scaring the hell out of many independent VC’s who typically are against corporate collaborations. I know these models have my attention as a long time builder of deep technology products looking ahead.