A recent piece by the IPA’s David Caygill and Matt Rebeiro on corporate venturing caught our attention recently. Whenever valuable industry insight emerges, we can’t help getting stuck into a debate with colleagues over intricate details.
The piece explored some valuable points of view around corporate venturing – from investment being (part of) the incentives for startups to 'culture eating strategy for breakfast.' But having spent over a decade working in corporate venturing, we felt the piece could’ve gone further.
It’s not about framing, but an agreed end goal
Entrepreneurs already have a higher purpose – it’s why they’re engaged in what they’re doing. They have a clear vision of what they want to achieve or the problem they want to solve. It is crucial to ensure the partnership will help achieve that higher purpose – finding the right fit is paramount.
Successful partnerships are forged when both parties are open about the end outcome and are realistic with their expectations. This end-goal must be agreed from the outset of the partnership, whether it’s a short or long-term vision they wish to achieve.
Take TfL and Citymapper. They share the same long-term vision of improving London’s transportation. When TfL released its open-source data, a mutually-beneficial opportunity arose for both. Citymapper was able to take advantage by developing a service that is now a staple on any Londoner’s smartphone, a model Citymapper repeats worldwide.
Investment isn’t the be all and end all
There is no question that financial investment plays an important role in a startup’s quest for partnership. But this is only part of the story – and not the only or most important incentive.
As any Dragons’ Den viewer will have noticed over its 14 seasons, entrepreneurs put themselves in the Dragons’ firing line for all manner of reasons. Some come for the investment, true; but others come for additional expertise, publicity or access to the Dragons’ connections – so-called ‘smart money’.
We’ve frequently found that entrepreneurs are coming for this ‘smart money’ which they see as a business accelerator. Corporates, too, are looking for added value, such as access to that niche tech or inspiration for their own workplace culture. This is the currency with which they are really trading.
Trust your entrepreneur, and don’t become overbearing
Entrepreneurs need the space and conditions to thrive. So as far as is possible, don’t meddle where you don’t need to.
Instead, corporates should trust the entrepreneur in whose idea they invested rather than letting unnecessary corporate meddling impact the entrepreneur’s original vision and mission creep setting in.
Where corporates can benefit entrepreneurs is in the ‘on-demand’ support they can provide. Entrepreneurs should however be the driver behind the decisions for what they need to make the product work. Perhaps they need access to connections or management consultancy.
This separation of church and state needs to be established from the get-go, and be religiously adhered to.
Ideation is just one type of partnership
Bringing entrepreneurs into the fold for ideation rings true in some cases. But corporate venturing is so much more than just ideation; it’s just one type of corporate venturing.
Startup-corporate partnerships emerge for near-limitless reasons, as evidenced in BT Infinity Labs’ approach. From access to research, expertise, tech and marketing capabilities, BT recognises the value startups add beyond simply ideation.
Corporate Venturing is not and never should be a question of what you can take from the other. Start with what you have to offer and work backwards from there. A corporate-startup partnership can and will only work if the resulting relationship is mutually beneficial.
Shilen Patel is the chief executive and co-founder at Independents United.