Big corporations understand the advantages and benefits that accrue to them from Corporate Startup Engagement, hence they invest a lot in ensuring they find the right startup.
A lot of big corporations invest in innovative startups because it is far cheaper than investing in Research and Development.
Companies like ASOS, Google, and Microsoft have continuously found ways to source innovative startups with strong management teams.
A lot of big corporations regularly host events as a way to get the best minds and startups in one place. It is common to see big corporations like Google regularly hosting events. It may be a conference or a hackathon.
A lot of big corporations now favor hackathons as a way of having a brief period of engagement with various startups before closing in on the startup that meets their criteria.
Events allow executives to easily see innovations and progress first hand, as well as the growth of the different startups present at the event.
Corporate Startup Engagement usually follows three steps- Insight, Integrate and Invest.
When corporation executives attend events with a lot of startups around, they can tick the first phase- Insight.
In one room, executives can easily find the entrepreneurs and startups that have the ideas, innovations and talents.
This is an event which a lot of big corporations like hosting.
Hackathon is an event that has a lot of technology startups, firms, individuals gathered in a place to solve a problem.
It usually occurs over the weekend, and participants are given the opportunity to solve a problem. The winner is usually given a prize, while a lot of startups are invested into by the big corporations around.
Many big corporations host hackathons or are present at hackathons to source for startups they can partner within the development of a technology.
Many ideas and innovations are birthed in Hackathons.
Some companies are created solely for hosting Hackathons like AngelHack that hosts these hackathons for their corporate partners- Comcast, and MasterCard.
This may be similar to the hackathons, but there are differences. A lot of big corporations organize startup competitions, where startups unveil a prototype or business plan. It is unlike a Hackathon, where lines of code are written. In most startup competitions, there are judges selected from the leaders of the field. The judges critically analyze the prototype or business plan and make decisions using the predetermined criterion, which the organizers are aware of. The winners are given a prize.
These competitions allow big corporations to easily find startups and entrepreneurs they can work with. If they meet their criteria, they can then enter a contract deal or offer an amount of operating capital to the startups.
The downside is, that generally the startups through hackathons and competitions are sourced locally, where there could be a limited amount of talent or resources.
Because of this, a lot of global startup competitions have been done by big corporations in the past. Some are: Comcast Innovation for Entrepreneurs and Phillips Innovation Awards.
Universities, sometimes, host these startup competitions for big corporations.
A lot of companies prefer hosting events because a lot of startups are brought under one roof, and they can easily view and notice the startups and entrepreneurs they can look into partnering with. Some big companies prefer to do local scouting.
Whatever way the startup is found, there are some criteria that have to be considered before settling for a startup to work with.
It is essential that the startup chosen judiciously uses the partnership to avoid the big corporation from suffering loss.
Before a big corporation invests in a startup or partners in a startup, it first looks at if the startup has anything unique to offer in the field. The startup has to be a problem solver. Does it offer solutions to problems that have been plaguing the field? Will the solutions offered be profitable?
Big corporations before thinking of partnering with a startup usually find the answers to those.
Let's look at Accesso. The startup created a technology that allows visitors of theme parks to enjoy their time. In the past, visitors had to queue for long before they can use a ride.
Instead of queuing for hours, visitors can purchase the Qbot device for a fee. When they do, they are placed on a virtual queue. The visitors can go about enjoying other features in the park. Immediately it gets to their turn, the device vibrates.
That's a problem solver.
The Startups Management Team
While looking for a startup to invest in, many corporations take a critical look at its management team, especially the history.
The executives will want to know if the management team of the startup has been involved in a failed enterprise before. If they have, they may seek the reason behind the failure or outright avoid them.
Many big corporations avoid startups, where their management teams sell off their shares immediately after flotation.
This shows that the management team has no interest in the future of the startup.
A Cash Conservative Startup
A startup that is quicker to waste cash is avoided by many big corporations. A lot of corporations look at the spending habits of the management team.
Are they prone to dipping their hands into the company's account to fund extravagant lifestyles or do they look for means to conserve cash?
A startup, which will prefer to fly its management team with a private jet, for example, should be avoided at all costs, and one which will look for a faster, yet cheaper way to transport its management team is preferred.
Every dollar at a startup should be considered sacred.
Corporate Startup Engagement is important and intriguing for many corporations, but it is necessary to only engage rational startups.
About the Author: Simon Hitchens is a startup enthusiast, columnist, researcher and educator living in Chicago, IL. He dreams of someday living somewhere warm and writing a novel in ink.
About Gearbox: Gearbox.AI provides the leading corporate-startup engagement solutions designed to help innovation leaders, corporate development professionals, and strategic partnership executives master the art and science identifying and aligning with what's next. Through a unique combination of a membership community, AI-driven software, and cutting-edge expertise, Gearbox is focused helping corporations keep pace in an ever-changing digital world and providing startups with new avenues for growth.
The result for modern innovators is unprecedented agility, risk management, and superior results. Headquartered in St. Louis, MO with offices in Denver, Chicago, and Los Angeles, Gearbox serves as a pivotal partner to large corporations and a champion to innovative startups.
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