Why Venture Collaboration is the Future of Corporate R&D
What can venture capital firms offer startups? Money, foremost. Mentorship, usually. Publicity, street cred, and validation are typically part of the deal. What’s missing in this model may be why so many startups fail: critical strategic services. Early commercial validation, support from established corporate partners, and a community of investors and strategists create a powerful venture collaboration approach. Key to this model is the corporate partner, which benefits the corporation as much as it does the startup by acting as an options-based R&D engine for its product portfolio.
The State of Startups report published by First Round Capital surveyed 700 founders and revealed that the foremost concerns were hiring good people, acquiring customers, and revenue growth. The venture collaboration model addresses these concerns by providing ventures with access to the right people to build their businesses from both a talent perspective as well as customer acquisition at all stages of development.
Other significant fears voiced by founders in the report were stagnated growth (22 percent), or inability to find a product-market fit (21 percent). In addition to the obvious financial value in potential investment offered by venture collaboration, startups can expect a wealth of advice from established corporate partners, opportunities to pilot real field tests and case studies that lead to early market validation.
Every day organizations are coming up with their own venture accelerator models. In the past week alone, the NFL opened up shop to trade licensing rights for equity, and Tyson Foods launched a program to fund agricultural startups. It is easy to see why demand-driven investment is superior to a purely VC or accelerator approach. Corporations participating in programs like TechNexus’s EMERGE accelerator, which focuses on wearable tech ventures for first responders, are granted inside access to the leading-edge technology in a variety of formats — V2V communications, LED-lit apparel, location monitoring, and more. Rather than fearing outside innovation as a threat to the core business, venture collaboration allows established corporate partners to stay ahead of the development curve.
Projects that require several rounds of development iteration, ones that can truly innovate, are even less likely to be funded by corporate R&D programs because of the seemingly distant payoff. Startups benefit equally, or arguably more, from this symbiotic relationship in the form of access to an established customer base, real-time feedback, market knowledge, and the opportunity to grow an ongoing relationship with a potentially game-changing customer. TechNexus’s EMERGE program illuminates these benefits by creating a forum for ventures to interact with end users — first responders — to work through the development process with increased insights and relevant feedback. For instance, an early learning from field testing proved that the protective cases for mobile devices weren’t tough enough for the extreme conditions in which first responders use them leading CommandWear to develop an even tougher case.
Startups involved in the venture collaboration model of acceleration gain access to unprecedented mindshare from corporate partners,, customers, and the venture partner. Overwhelming increase in enthusiastic corporate involvement is evidence of the growing interest in demand-driven investment. This smarter investment model is force-multiplier and poised to become the future of corporate R&D.
