#7: Corporate-startup collaboration opportunities through CVC

Hi, I'm Jeppe and welcome to my weekly newsletter on Corporate Venturing, released every Tuesday. My aim is to provide a comprehensive perspective on the latest developments in the field and its related topics, drawing from the insights of top management, venture capitalists, founders, LPs, and family offices. I aim to offer valuable information and thought-provoking content that will aid in understanding the importance of Corporate Venturing in business strategy.

For today's topic I'm looking into Corporate-startup collaboration opportunities facilitated through Corporate Venture Capital.

One of the most promising features of CVC is the potential for collaboration between the corporate parent and the startup. When done right, this collaboration can be the rocket fuel that propels a startup's journey by years. However, it is widely recognised among CVCs that achieving successful collaboration is difficult in practice.?

There are many challenges to overcome, such as aligning strategic interests, managing cultural differences, and effectively sharing resources. Nevertheless, the benefits of successful collaboration are undeniable. As mentioned in newsletter #2, startups can gain access to resources, expertise, and brand recognition, while corporations can gain access to new technologies, innovation, and market insights. With the right approach and a commitment to collaboration, CVCs can unlock tremendous value for both startups and corporations alike.

First, we’ll dive into some examples of opportunities arising from the corporate-startup collaboration:

1) Access to new technologies: Startups are known for their innovative ideas and technologies. By collaborating with startups, corporations can gain access to new technologies that can help them stay competitive in the market.

For example, in 2015, General Motors invested $500 million in Lyft, a ride-sharing startup. The collaboration allowed GM to gain access to Lyft's technology and expertise in the ride-sharing market. Uber made a very similar collaboration with Toyota.

2) Improved efficiency and productivity: Startups can help corporations improve their efficiency and productivity by introducing new processes and systems. By leveraging the startup's agility and speed, corporations can implement changes quickly and efficiently.

For example, in 2016, Coca-Cola invested in a startup called Hivery, which uses artificial intelligence to optimise shelf space in stores. The collaboration allowed Coca-Cola to improve the efficiency of its supply chain and increase sales by optimising its product placement in stores.

3) Expansion into new markets: Startups can help corporations expand into new markets by providing local expertise and knowledge. By collaborating with startups, corporations can gain a better understanding of the local market and consumer preferences.

For example, in 2017, Walmart acquired Jet.com, an e-commerce startup, for $3.3 billion. The collaboration allowed Walmart to expand its e-commerce business and gain access to Jet.com's expertise in online retail.

4) Innovation in product development: Startups can help corporations innovate in product development by introducing new ideas and approaches. By collaborating with startups, corporations can stay ahead of the curve in terms of product innovation.

For example, in 2017, Nestle invested in a startup called Freshly, which delivers healthy, pre-made meals to customers. The collaboration allowed Nestle to innovate in the food delivery space and introduce new product offerings to its customers.

Collaboration success stories are essential for the survival of CVCs. The insights gained from the collaboration is more valuable than the financial gain itself from investing into the start-ups. In 2021 I invested in Einride for Maersk. The collaboration would facilitate the roll-out of 300 Electrical Trucks and would significantly position Maersk as a true end-to-end decarbonised supply chain player. Additionally, Einride would gain significant brand recognition from the collaboration and would allow the Swedish start-up to to more easily convert new customers. A true gain from both sides and the most successful collaboration done by Maersk Growth with a start-up in it's 6 year history. This successful collaboration, demonstrates the value of Maersk Growth to top management and opens up possibilities for further collaborations between start-ups and the Maersk mothership.

I hope you enjoyed this week's newsletter. In the upcoming edition, I will be exploring the topic of "Ethics and Governance in CVC".

If you have any suggestions or contributions that you would like to share with me, please do not hesitate to reach out. I would be delighted to hear from you.

/Jeppe?