How large companies are coming out of their comfort zone to fish out the best startup innovators
Startups are sort of becoming omnipresent. They are everywhere. As new startups keep emerging, it is becoming increasingly difficult for them to strive just on VCs. To achieve a wider reach, startups are collaborating with larger companies to maximize their scope and accelerate growth. And obviously, the upshot of this is a win-win situation.
The Corporate and Startup connection
Startups reaching out to corporates or the corporates reaching out to startups, there has been a significant increase in both these practices. Today’s corporate tycoons don’t wish to sit in their comfort zone and see the world go by, they are eager to hunt and explore areas where new innovations and disruptive services brew. They’ve come to realise that the startup landscape would be the best place to begin with.
For example, a well-established corporation is facing a problem in a particular area of their business. Somewhere out there, a startup is offering a niche solution to that particular problem. Now, the corporation has found a solution to their problem through this startup. A connection is established, and a successful collaboration leads both parties to a mutual benefit.
Here are some of the ways how startups and large companies connect. They are strategic in nature, and the momentum of this type of alliance has greatly increased over the recent years.
Annual Mobile World Congress (MWC)
This international annual meet is held in Barcelona. The MWC is one of the well-known conferences where companies and startups meet and share views about how they can help each other.
Direct call for startups
Unilever is one of top companies which facilitates startups to directly collaborate with them. It calls the potential startups who can offer an exclusive solution to their needs. Unilever does this at the Annual MWC.
Also, it has its own collaboration platform called the The Unilever Foundry, where a single-entry point is provided to startups who are looking forward to partnering with Unilever.
Siemens too has its own engagement platform known as Siemens’ Tech StartUp Meet, where they can engage with Indian and international startups.
Startup competitions are rising. Large organizations are regularly holding startup competitions all over India, targeting industry-specific innovators. IBM has its own yearly startup challenge, usually held between October and December. Here, the participants get a chance to pitch their innovations in front of the angel investors, venture capitalists, corporate tycoons and other eminent panel of judges.
Similarly, there is a Swisscomm Startup Challenge, Ernst & Young EU Startup Challenge and World Summit Awards, which sponsors awards for excellence in innovation.
Hackathons are a bit different game play compared to startup competitions. Here, the concept is to have startups solve a particular issue within a defined time. This platform allows to pick and choose best minds in the startup industry and emerging technologies that are transforming businesses. Again large companies hold their own hackathons. For example, IBM Bluemix Cloud Hackathon.
Wearable Technology Challenge
Startups specialised in wearables have another door opened for them to showcase their digital excellence to one of the world’s biggest technology companies – Microsoft.
Since large companies are breaking the traditional rules of talent hunting, Microsoft is no different. This technology giant has built a platform called ‘Make it Wearable’ aimed to fish the best trend-setters in the wearable vertical, where the platform also offers a grand cash prize for winners.
the ‘Make it Wearable’ platform is a combination of competition and Entrepreneur Mentorship Program. It opens doors to participants from all over the world, where they also get a chance to build and scale with Microsoft’s brainchild – the Curie and Edison modules.
Is this union bane or boon?
Corporations and startups, though both thrive on innovation, their working and growth module is different. The startups are something like a machine gun firing, means they are really agile and love to go on spree to reach their goal in the shortest time. Some miss and some hit. Whereas, large corporations are something like a game of archery. They take their time, lay out a strategic plan for a bull’s eye and prefer to leave a mark in the industry for years to come, and aim to dominate the market forever.
We have seen great collaborations between startups and large corporations, with staggering deal amounts reaching to billions. For example the merger of Facebook and Instagram, with the deal clinched at $1 billion.
Is this what always happens when startups and large corporations come together? Is this the way the merger always happens, where large companies just swallow the startup wholly?
Well, not really.
The acquisition may not be the only way to scale with an established company. There are several strategic approaches the two companies deploy for a long-term collaboration. There are several ways each can benefit the other in creating a win-win situation.
Large companies can pay startups to develop and deploy a particular innovation for them. The two can sketch out a client/vendor relation, through a strategic investment, and do a marketing together.
Having said that, it looks like the big companies and startups will come out with new methods of strategic alliance to bond professionally and healthily to foster growth on both sides.
With startups getting mature and large companies vying for ignited minds to help them create a stronghold in the market, the current scenario of startup engagement looks promising, however, since they both are in the hands of the ephemeral world of technology, only the changing times will tell what will be the future outcome.
Thinking of a startup engagement, but not sure how go about it? We can help you get there.