As you may already know, Wayra is the world’s most global, connected and technological open innovation hub. Wayra operates since 2012 through 11 hubs in 10 countries within Telefonica’s footprint and belongs to Telefonica´s Open Innovation initiative.
In 2017, our CEO Christian Lindener started leading the German hub in Munich and realized that the established acceleration model that we were offering to the startups and to our sponsor, Telefónica Germany, was not creating enough impact for both the business of the startups and the core business of the corporation.
Based on that, we did our homework and in November 2017 Wayra Germany presented a new business model which enables the business units of Telefónica to find technologies and startups in the market they want to work with. One year and some months later, we became one of the best innovation initiatives in Germany.
The aim is to build the bridge between startups and the corporation, starting with a paid pilot project, the goal of which is to achieve a local commercial relationship after the pilot for the startup.
The very best start-ups within our portfolio will have unparalleled access to our global network of over 350 million customers and clients in 24 countries. Success stories of our new business model are companies like e-bot7 and Conntac.
Having tested for almost two years what it is like to work within a corporation, I decided to join Wayra in February 2019 to contribute to the transformation of the corporation through the cooperation with startups and new technologies, by taking over the responsibilities of the portfolio and investments at the German hub.
Investments? Yes, during the last 2 years Wayra Germany was not very active within the VC/CVC scene due to strategy changes and a new business model. But we are back and stronger than ever.
How do we invest now?
- We shifted from pre-seed and seed to late-seed and pre-series A.
- We normally invest in European startups but are open to global opportunities.
- We only co-invest and are not a lead investor.
- We look for startups with first revenues and a technical validation of the product by other customers. Otherwise it is quite difficult for us to bring a valuable impact within the corporation and also to engage both parties after the 3 months pilot project.
- Our ticket size is between 100K and 350K EUR.
- We invest in startups that currently impact the core business of Telefónica or could potentially do so in the future
- Technologies we are interested in are big data, AI, network technologies, cybersecurity, HR SaaS solutions and customer service applications
We are a very attractive investor for startups, due to the fact that we don’t only bring cash to the table, but also revenues and global traction with a well-known corporation. We currently have more than 500 active startups in our portfolio and more than 100 work already with Telefónica globally.
We are always happy to get to know other investors and include them in our network to discuss potential co-investment opportunities.
WHY DOES IT MAKE SENSE FOR A STARTUP TO BE BACKED BY A CORPORATE VC?
A corporate innovation arm connects you to the mother business and offers you a large customer base through initial pilots. During pilots, speed and the business units willingness are often the main drivers of success. And this is our job, to maintain both parties at the right rhythm to be able to lead to positive results on both sides. In order to achieve that, incentives between day-to-day operations and corporate innovation vehicles need to be aligned.
The capital from a corporate innovation arm is kind of production capital. The purpose is not solely on capital gains, but in enabling the deployment of technologies locally and globally. This aspect is very important to be considered, as one of our goals after investing in a startup is to achieve that engagement of the corporation to keep working with our portfolio companies and scaling up the business by contracting its solutions in the rest of subsidiaries and recommending them to other corporate partners that might have similar needs.
WHAT DOES THE CORPORATE — STARTUP RELATIONSHIP ENTAIL?
Corporations offer expertise, resources, learnings about how to work with big corporations and business opportunities to startups, but what do they expect to receive in return? Mainly a positive learning for its:
- People: access very valuable human capital and change the mindset of current employees to be able to adapt to the next steps of the digital transformation.
- Processes: get access to solutions that can ease internal processes, transform the elephant into a leopard and save internal costs caused by inefficient internal processes.
- Technologies: get access to new technologies before its competitors.
Both corporations and startups are very complementary, as one sits on resources but is very slow and rigid in its processes and the other one is very agile but does not always have the resources to make its dreams a reality.
Many startups will at some point get in contact with large corporates, as either a competitor, supplier or customer. Having a partner like this early on, eases future business relations and gives the startup an advantage compared to their fellow founders and entrepreneurs.
CVCs used to be a last resort for entrepreneurs after everything else didn’t work out.
But nowadays, the corporate parent is no longer a helicopter parent and the corporate innovation arm work alongside traditional VC’s.
As you can see, startups and basketball are two of my hobbies. I hope you enjoyed the short reading and I would be happy to hear your opinion on this topic as well.