Corporate Startup Engagement – Get to know Startups

Today’s market is dominated by disruptive technologies and agile competitors. This also affects the lifespan of companies – in 1961 the average lifespan was 61 years, whereas today it is only 18 years. If corporates do not want to fall by the wayside in our fast-moving society, they must develop in line with the market and keep up with the trends of the times. This requires ever more, ever newer and ever better innovations. One option is to invest more in research and development in-house. However, this alone is not always enough, and since start-up involvement offers other advantages besides innovation, this option is also becoming increasingly popular with companies. This is true for small and medium-sized enterprises as well as large corporations. For example, corporate investment in startups has increased by almost 300% since 2010. Of the top 100 companies on the Forbes Global 500 list, 68% work with startups. 

What is Corporate Startup Engagement? 

Corporate Startup Engagement is an umbrella term that refers to the cooperation between corporates and start-ups. This can take many different forms – Corporate Startup Engagement is in this sense more of a general term for cooperation and can take place under different conditions.

What are the reasons for Corporate Startup Engagement and what advantages does it offer? 

The core objective of Corporate Startup Engagement is to promote innovation. However, as many roads lead to Rome, different measures are taken in this respect. The reasons for Corporate Startup Engagement are numerous – the main motives include access to new technologies, the development of new customer groups and emerging markets, and reduced costs for in-house research and development. Since this area is outsourced, risks can be minimised in addition to costs.

Some companies carry out their corporate startup activities locally (e.g. regional tenders), so that the regional startup ecosystem can be supported and promoted. Another advantage is the mutual win-win effect that corporate startup engagement offers. Not only the start-ups can learn from the experience of the companies, they can also benefit from the agility and flexible, innovative work processes of the start-ups. Through Corporate Startup Engagement, today’s business models can be made more efficient and the business models of the future can be developed. This is where both sides benefit from the cooperation.

What opportunities are there for corporate start-up engagement? 

As a corporate, there is not just one, single method to meet or approach a start-up. Whether on your own initiative or by participating in a sponsored event – the possibilities are numerous. If there is a general interest in the startup scene and the new trends on the market, it can make sense to participate in just those events. These can be pitch events, startup competitions, or speed dating formats. If, on the other hand, there is a concrete need for an innovative solution that cannot or does not want to be developed in-house by R&D, there is the method of announcing a Startup Challenge or Innovation Challenge. Some companies also set up incubators or accelerators, which can also be used to promote start-ups and find potential cooperation partners.

However, if the company does not want to start its own initiative right away, or if it does not want to handle the commitment too publicly at the beginning, scouting through an intermediary can help. The advantage here is that even companies that are not yet well acquainted with the confusing startup market can find suitable partners. They are offered ideal support in the identification of needs, the search and the subsequent cooperation.

Challenges and success factors 

Although corporate startup engagement offers many advantages, some challenges can also arise in the cooperation between startups and companies. First and foremost, there are the cultural differences that exist between start-ups and large companies. While corporates are risk-averse and consist of fixed structures, startups are daring, agile, flexible and have flat hierarchies. They practice an open culture of error, true to the motto “Fail fast, Learn fast”. Corporates should be prepared to accept this attitude if they want to work with start-ups. Apart from these differences, time management can also be a hurdle. While corporate decision-making processes often take a long time, start-ups have little time and depend on fast decision making and financing, so deals should be concluded as quickly as possible.

Particular attention should therefore be paid to those factors that make a collaboration a success. These include cooperation at eye level, clear expectation management and a mutual win-win attitude. The goals defined at the beginning should be in line with the company’s goals. Furthermore, the start-up should have a permanent contact person in the company who is responsible for the cooperation. Nevertheless, the whole company should be behind the project and startup cooperations in general. When choosing the right start-up, it can be useful for companies to first have a PoC (Proof of Concept) shown to them. This can be used to check how economically viable the idea is. To some extent, it also serves as an indicator of the stage of development of the start-up.

The formats in which corporate startup engagement takes place can therefore vary. Even if the cooperation between corporate and startup can present hurdles, there are still some relevant reasons for companies to deal with startups. Particularly important success factors are time management, clear expectations, transparent communication at eye level and an open error culture. If these points are taken into account, the business models of the future can be designed innovatively and efficiently, and both startups and corporates advantages can be offered.

About Ambivation
Ambivation connects innovative companies and startups for cooperation and innovation partnerships. As an innovation consultancy and matchmaker, Ambivation promotes cooperation between established companies and startups within the framework of concrete customer, supplier and research partnerships. We support companies in the identification of needs, startup identification, startup evaluation and cooperation initiation with startups. Formats such as research on relevant startups, startup monitoring, strategic cooperation consulting or event formats such as startup tours serve this purpose. Our monthly newsletter also provides information on current examples of cooperation and events.