4 key differences between a startup and a corporate startup
With startups making a significant dent in the market, corporates need to innovate to stay relevant. Enter: the corporate-startup.
Written by The Word Architect, edited by Jaime Waddington.
For many, the word startup summons up visions of young self-starters, sitting in their garage, with big visions of taking the world by storm. And, they wouldn’t be wrong. However, startups come in many forms and their stories all differ. Differ, but have a commonality, as well, in that they are all borne from passionate and forward-thinking entrepreneurs. The same can be said for a corporate startup.
What is a corporate startup? It’s a type of innovation happening within a corporate. A few years ago, a small startup wouldn’t pose a threat to a large corporation but times are changing faster than ever, and with startups making a significant dent in the market, corporates need to innovate to stay relevant. Enter: the corporate-startup. Startups that are built by or within corporations.
While corporate startups don’t begin in backyards, garages or home kitchens, they do have a group of like-minded entrepreneurs at their helm. And, the new trend is for corporates to employ those unicorn intrapreneurs, high-end employees who promote those big ideas through innovative product development.
But, let’s be brutally honest, while we are trying to paint two canvases with the same paint, there is a reason that we refer to startups and then to corporate startups.
The 4 key differences between startups and corporate startups
1. The funding
Both need funding, that much is clear. However, a “traditional” startup will either utilise funds saved up, head over to a financial institution for a loan, endeavour to approach a venture capitalist or an angel funder, look to crowdfunding formulae or many other, often risky schemes. This also means that startups are closely monitored by their investors. If they are unable to show the ROI and meet targets, they are very rarely reimbursed.
A corporate startup, given that it’s generally made up of already established entrepreneurs or is within a company that has the means, will have a very different approach to the funding side. Corporate startups funding mostly stem from internal sources and of course, the budgets are considerably larger than typical startups. Besides the budgets being larger, the idea capital value is also larger with corporate startups. What does that mean? Corporate startups think bigger in all manners, especially with regards to money. However, money is not always their only measurement for success.
This takes us to the second difference — the goal.
2. The goal
Although, most ideas, businesses and innovations have a goal to make money. We say most, but very often, corporate startups are not only financially driven. There are other goals that they are also looking to measure the success of a venture. Because corporate startups have a bigger sandpit to play in, they tend to not follow typical roads when it comes to business development. They will look beyond the core reason or the obvious business model, and expand their minds (and pockets) to encompass new business opportunities, reach different markets and varied paths to reach those markets.
Corporate startups, although perhaps more ballsy, do still focus on ensuring their business idea and model is lean, yet expandable. They have the internal means, qualified experience and yes, money, to do this.
3. The resources
That takes us neatly to the next difference — the resources available. It’s no secret that a corporate startup will have tested these waters in some capacity before. They will have the human capital, the cash flow, the partnerships, the suppliers, the internal incubators, marketers and influencers, to pull it all together.
For the startup, this is often their downfall, not having enough resources to pull from. However, it does not mean that a startup cannot work with limited resources — it just means it may take a little longer, which is fine too.
It is important to note, as well, that the tools and processes available to each type of startup will differ too, and it is in that difference that we move on to the next.
4. The branding and public persona
Typically, a corporate startup will not be linked to the actual corporate/s involved. They will run covert-like in the background, offering their expertise, their resources, their money and their grounding, but will never be a name-mention, except behind closed doors Is that a good or a bad thing? Many will debate this and ask the question, “Why not use the power of the underlying strong brand?” Too true, but a big corporate or its entrepreneurs may not want to be associated with a startup that could be a huge flop. This is essentially done to protect the core brand and avoid any possible brand damage.
With a “traditional” startup, the brand is everything. Following the big bang idea, it comes a close second, with many nights debating over the right name, logo, colours, identity and persona. “What language will we use? How will we show our values through our brand? What will the public like?” These questions and many more will become top talking points at every meeting, and rightly so. Brand and public persona are important. And, it’s not to say it isn’t important to the corporate-startup — they too will build an independent entity to represent the innovation or idea, but they, most times, will only bring in the big guns behind the idea once the startup has shown signs of success.
With all the differences outlined, the common aspects are, essentially, passion, drive and relevancy. At The Delta, we love both startups and corporate startups, and in fact, while we work mostly with the latter, we do dip our straws into the startups once in a while. This keeps us grounded and is a good reminder as to why we began this amazing and crazy startup ourselves.
Whether you’re tip-toeing around an idea or have it all figured out, we would love to hear from you and bring you into our Venture Studio.
