Corporate Startup Stars: Promoting Best Practices of Corporate-Startup Collaboration
For startups, collaborations with big companies offer not only increased visibility and an enhanced reputation, but also access to new markets and business-specific technical knowledge. These relationships can open up other avenues of important financial resources, such as corporate venture capital.
Corporates benefit from the arrangement, too. Engaging with young firms makes them more agile, innovative, and able to respond quickly to market changes.
Examples of this include Qudini’s successful partnership with Telefónica, or the acquisition of a mobile commerce platform MyOrder by Rabobank — which now enables the latter to offer value-added services to its customers. These are just a couple of successful instances in which large firms save money while providing startups with secure revenues.
That said, corporate-startup collaboration is not easy. The majority of large businesses struggle to engage effectively with young businesses on equal or mutually beneficial terms. Equally, on the other side of the coin, startups can often find their experience of working with corporates to be ineffective and time-consuming, and may give up quickly rather than spending two years chasing a potential big contract.
Launching Europe’s 25 Corporate Startup Stars
We launched Europe’s 25 Corporate Startup Stars to highlight good collaboration practices between startups and corporates, promote the mutual benefits of partnerships, and feature role models that can incentivize behavior changes among big businesses. The initiative, led by Nesta in collaboration with the Startup Europe Partnership, showcases and ranks exemplary big businesses working closely with startups.
In March 2016, we issued an open call for nominations from startups themselves to give us their recommendations on the most “startup-friendly” corporates. To complete the list, we also conducted our own research to identify large firms working with European startups. This helped us to find the most active corporates in the space and produce interesting findings and insights. After this process was complete, the final corporates selected were asked to provide evidence of their collaborative activities through a questionnaire.
The final ranking — announced at an Awards Ceremony at SES in Berlin in June 2016 — provides a solid representation of how European corporates are engaging with small business in different ways, highlighting means of collaboration.
In addition, the entries taught us that large corporates in the same sectors are addressing challenging issues in different but equally innovative ways. For instance, entrepreneurial culture was fostered through dedicated internal programs to support and stimulate internal ideas, and also through internal competitions. Incentivizing managers to participate as mentors was also found to be a useful tactic for some.
We noticed different but equally effective approaches to internal problems in corporates, such as misaligned corporate strategy, but also identified a shared and genuine desire to make it easier for startups to approach and work with them. Some companies created specific roles for promoting startups internally; this meant responsibility for liaising with different departments and accelerating the decision-making process in finalizing contracts.
Given the variety of approaches taken by different corporates to similar challenges they faced, and the successes they had, we decided to focus on celebrating this diversity and to showcase “good” practices rather that ‘best’ practices — which were harder to define and needlessly limiting.
In addition to the ranking, another clear lesson to emerge is that corporates now recognize the importance of shortening payment terms when dealing with small businesses. For instance, Unilever, Virgin, and Telefónica introduced a fast-track procurement program to simplify procurement conditions for startups.
Collaborative German corporates
Three German companies are included in the ranking: SAP SE (ranked 20), BMW (23), and METRO Group (at 25). Our findings revealed that multinational software corporation SAP SE mainly engages with startups through The Startup Focus. This is a dedicated acceleration program that brings startup innovation to SAP’s enterprise customers and has seen it engage with over 3,200 startups globally, of which approximately 1200+ are from 52 countries across EMEA.
BMW programs are also international in focus: for example, the BMW iVenture is a $100 million corporate venture unit investing in the US, Europe, and Israel.
Lastly, METRO operates locally with an accelerator that scouts for interesting solutions to digitalize their most important customer group: hotels, restaurants and caterers. They regularly organize meetups centered on “Innovation in Retail” to support retail and food startups. Last year, they partnered with the startup Miflora, who sold its bouquets in a Galeria Kaufhof Store for Valentine’s Day.
These three companies were evaluated and selected by a panel of high-level, experienced judges, including serial entrepreneurs, investors, intermediaries, and representatives of the academia. The main criteria for selection were the scope, scale, and motivations of corporates’ activities to engage with startups, as well as the level of innovation of their programs and processes.
Overall, the 25 Corporate Startup Stars ranking process and awards have illustrated how interactions between small and large businesses can bring many benefits to both parties. They provide startups with insight into how a variety of the world’s leading companies interact with businesses of their scale — illustrating the growth opportunities available, while also assessing what is required of them.
Ultimately, successful corporate-startup collaboration requires commitment, leadership, experimentation, and risk-taking. Collaborative working is a skill in itself.
For more, see our reports Winning Together and Scaling Together, or visit Startup.co.uk.