Start-ups and corporates need each other, says accelerator

Collaborations between agile, new firms and big-brand incumbents are more fertile than ever, according to report – but cultural barriers persist

Start-ups are savvier than ever about the realities of being purchased by corporates, says business accelerator Startupbootcamp, with evidence emerging that the two types of firms are forming ever-closer ties.

In its new report Collaborate to Innovate, Startupbootcamp notes: “Even for the most innovative of corporates, the sheer volume of people, geographies and processes that can slow down their world makes working with agile, enthusiastic start-ups hugely appealing.

“Likewise, start-ups are determined to tap into the resources, customer base, experience and finance of the corporate world. It’s a rare entrepreneur who thinks they can go it alone.”

Collaboration, says the report, “is at the forefront of everyone’s minds, and most start-ups know that [it] is critical to help sell their product or bring it to market.”

After surveying 350 of its alumni firms, Startupbootcamp found that more than 70% of them had worked successfully with corporate partners since launching.

In that segment, 41% of the arrangements were based around pilot projects, while 47% were fully fledged buyouts.

But, importantly, ambitious young minnows no longer see the “dollar signs of acquisition” as the end goal of partnering with corporates.

Instead, they are focusing on the more tangible outcomes of joint product development, and consider price tags only once the true value of that work has become clear.

This, by and large, is helping to control the bubble economics of overvaluation.

However, persistent cultural issues on both sides are preventing partnerships between start-ups and corporates from being as dynamic and fluid as they could be:

  • 39% of start-ups are unsure about who to contact within the corporates they are keen to approach. Even if a corporate has an innovation practice, there could be multiple people with a variety of remits to deal with.
  • 70% find the complicated and lengthy internal processes within corporates hugely frustrating, and by far the biggest challenge when trying to collaborate with them.
  • While corporates are typically aware of multiple start-ups working in their fields, they often struggle to identify the correct firms to take on board.
  • Many corporates are innovating incrementally, rather than radically, and tend to be afraid of disruption – the very thing that start-ups often set out to achieve.

That said, the report points out: “There are very few corporates who haven’t woken up to their need to innovate.

“Whether they’re an energy company wanting insights into customer behaviour, a bank looking for a new business model to build customer loyalty or a technology business like Intel or Cisco with a huge dependency on R&D, corporates are becoming acutely aware of the importance of innovation for survival.”

Quoted in the report, Rabobank head of innovation Harrie Vollaard admits: “The incumbents don’t have the primary control of innovation any more.

“Instead of looking only at running our own innovation projects, we had to redefine our strategy… by collaborating with new fintech start-ups.”

VINCI Energies innovation director Jorge Rivero adds: “The best ideas and opportunities involve working together with customers, other partners and even competitors. As simple as it may look, it requires lots of courage and generosity to truly collaborate in order to make a difference to the status quo.”

On the other side of the equation, says the report, “Many start-ups now wear their failures and pivots like a badge of honour, showing how they persevered through adversity… The good news is that, for the right product or service, this perseverance does pay off.”

Read the full report here.

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