Last month saw the Global Corporate Venturing Symposium take place in London. FuelUp headed to the event to see what key trends are emerging in the corporate venturing world.
With over 40 speakers, 50 innovators and 400 business leaders from corporate venturing, the event was packed with great insights with focus on the topic of “pushing the frontiers of venture capital – creating a sustainable ecosystem from the Golden Age.” Across the talks we noticed four key points that are important in corporate venturing this year.
One key trend that was emphasized by many speakers was the importance for corporations to use their venture departments to seek out external developed technology that will help grow the business – usually created by startups and universities. Intel, Unilever and BP were among the leaders pushing this trend. Arvind Sodhani, executive vice president at Intel summised this trend nicely saying: “It’s venturing’s job to bring a unique piece of technology to business units. Most of the time it’s trying to find products to strengthen the company’s position in the marketplace.”
The most talked about trend stressed the importance of corporate-startup collaboration and how beneficial it can be for both parties. Raja Doddala, VP of 7-Eleven’s venture arm 7-Ventures spoke of how crucial working with startups is for them: “7-Eleven is 85 years old and we are still here but don’t take it for granted. We don’t have a good track record on developing new technologies. We don’t have a good track record in developing new business models. This is why we partner with startups.” With an example such as 7-Eleven it is clear how corporate-startup collaboration can be very beneficial. It is harder for established companies to try new things so working with someone who can is often valuable long-term.
Although one major way to join forces with startups is to invest for an equity stake, the importance of different types of partnership were key talking points for many of the big names. GM of Microsoft Ventures, Rahul Sood, spoke of how the most important thing for Microsoft is to connect startups to customers and help them scale.
Matthais Ummenhofer, head of venture capital at the European Investment Fund spoke of why European companies are falling behind the US when it comes to corporate-startup collaboration: “It’s really about smart partnerships. You can’t go it alone. Finding the right partnerships, sharing ideas, sharing experience. Getting people together happens a lot easier in the US than Europe. People know each other over there.” Opening walls is key to collaborative innovation as sharing knowledge yields greater results than keeping it all to yourself.
THE CHANGING FACE OF R&D
With the rise of venturing many R&D departments are seeing a change in the way things are done. Many companies are now spending more time and money looking for innovations externally rather than in-house. A good explanation as to why was given by Nagraj Kashyap, senior vice president of ventures and innovation for Qualcomm. He said: “Big companies can in the end do everything startups can do. But implementing into your enterprise is smarter and faster. Corporates have their own business to focus on.” With corporations being large and established, it is much harder to test out new products, business models and markets. Big business is focused on keeping the current market position alive rather than finding new fields. Startups on the other hand are free to innovate and test out their products in new and different markets. They are able to make the mistakes big companies cannot and move on quickly.
Innovating within the company is much more expensive and time consuming, and ideas often just sit on the shelf after development. Issam Dairanieh of BP Ventures explained how the focus for BP is now to “look at the technologies that are happening outside of the business and bring them in.” This is an increasing consensus across the corporate venturing world with figures showing a fall in the number of internal R&D employees as firms see the importance of bringing in external innovation.
A NEW BRAND OF CORPORATE IDENTITY
With a growth in corporate involvement in the startup ecosystem, a new trend changing the way big business is viewed has started to grow. Corporations are spending time getting their name out in the startup world by investing time, money and resources into the growing ecosystem. Being branded as startup-friendly is increasingly important with companies looking to engage in successful corporate venturing or open innovation.
Rahul Sood of Microsoft Ventures outlined how for them the most important venturing values are: “changing the perception in the market [and] creating unicorns”. For Microsoft the focus is not on equity but rather contributing to the ecosystem making it beneficial for them and everyone else involved long-term.
Silicon Valley Bank also added to the conversation surrounding this topic stressing the importance of companies branding themselves as helping startups but making sure not to just see it as a marketing thing and actually add value to the startup ecosystem.
Image Credit: Global Corporate Venturing Symposium