The war for startups.

Dear Readers,

In the past four years, I have heard countless definitions of Venture Clienting and spent my fair share in explaining the concept myself. During my time at 27pilots , I’ve built the Startup Culture squad, leading the branding, communications and event activities at 27pilots and its corporate customers. In this role, I’ve had to explain Venture Clienting most often to job candidates for my team. Since most of these candidates had a background in marketing or event management, explaining the Venture Client Model with its usual terminology didn’t work super smoothly. I’m of a practical nature and rather not dwell on theoretical frameworks, so I would usually resort to a comparison that has nothing to do with Venture Capital, IP or startups.

I don’t presume to give a better, more accurate definition than its inventor Gregor Gimmy himself (see his book “Buy, don’t invest”). But I will share my approach to explaining Venture Clienting nevertheless. For anyone not familiar with the term “Venture Client”, I suggest a quick jump over to Wikipedia for the basic definition.

The comparison I draw might not hit the mark in every detail, but I’ve always found it the easiest way to explain the role of a Venture Client unit within a corporate. You will find that I don’t focus too much on the relevance of startups or doll out the benefits of the Venture Client model for corporates and startups. Instead, my comparison indicates how a Venture Client unit works and what relevance it might gain in the future.?

What’s McKinsey’s “war for talent” got to do with it?

In the late 90ies, 麦肯锡 coined the term “war for talent” in one of their publication, describing the transformation in the job market that was forcing companies to change their approach to finding and retaining top talent. The economic growth of the past decades led to a higher demand for top talent while reclining birth rates resulted in a decrease in highly qualified people. Additionally, the technological transformation and globalization of business further increased the requirements for more sophisticated, qualified talent. Thus leading to the “war for talent”.

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If we look at today’s job market, this war is far from over. “Shortage of skilled workers” seems to be a global problem for businesses, while these skilled workers (especially if their job titles include data, software or engineer) seem to have their pick of employers. The power has shifted to the top talent. Thanks to remote work, even more so, since not even location is a restricting factor at this point. Additionally, the mindset of “job for life” has slowly been replaced by the practice of switching jobs every few years for faster career advancement.

Back then, the role of human resources (mostly known as “personnel” back then) was a lot more administrative, ensuring payroll and taking care of employment contracts. Imagine a job applicant in the 80ies asking about the perks and benefits of a company, or what the development path for an employee might look like.?

But with the growing competition to gain and retain top talent, companies had to change. Personnel became HR, paper shuffling turned to sophisticated HR software and new businesses like recruitment agencies and HR consultancies emerged. Today, no one would question that there is a “war for talent”, but moreover, HR professionals like to joke that “the war for talent is over, and the talent has won.”

I declare the “war for startups”.

This is where I draw my comparison to Venture Clienting. Looking at the increasing relevance of startups for companies’ competitiveness, I do declare the “war for startups” has begun, and most companies are not ready for it.?

According to a study by 美国麻省理工学院 and 凯捷咨询 in 2020, companies perceive startups to become increasingly relevant as a source of innovation in the next five years.

It’s 2024, so these five years are almost up. And indeed, a lot has changed in regard to how corporates approach startups. Four years ago, when I first entered the Venture Client scene, there were not more than five corporates in Europe that had established a Venture Client unit to strategically benefit from startups. Today, a lot more large companies and a couple of medium-sized ones have jumped on the bandwagon and adopted the Venture Client model, competing for the top startups of the world.?

Now, this is where my comparison to the “war for talent” is lacking a bit. While a top talent can only be employed by one company, a startup can usually supply its technology to countless companies at the same time (in the case of hardware solutions, it tends to be a bit more complicated). But in general, winning for example BMW as a customer, does not restrict, but usually enhances a startup’s chances to also win Audi and Mercedes as a customer as well. Now, when it comes to those very few top startup technologies that could truly disrupt an industry, the “war for startups” is definitely on and it’s fierce. If there is a better, faster or cheaper way to build an electric vehicle for example (shoutout to DeepDrive ), every OEM will want to be the first to test and adopt this technology. These instances are rare, but they do happen.?

Anyone can do it. But not everyone can do it well and at scale.

While it can be a strategy for a Venture Client company to focus solely on finding these high-impact disruptors, the true benefit of Venture Clienting lies in scaling the adoption of startup solutions. Take a startup like Prewave : it’s supply chain intelligence platform monitors, analyses and predicts risk in any supply chain. Any company with a complex supply chain - from BMW to K?rcher and Oetker - benefits from this solution. I want to add my personal admiration for this Vienna-based startup here, as they managed to include a Covid-risk alert to their platform by the end of January 2020, when Covid hasn’t even fully reached Europe at this point. It just shows the speed and agility that startups can bring to the table. But I digress.?

I could name a hundred more examples where startup technologies can solve one very specific problem within a corporate, either reducing costs or (again in rarer occasions) increasing revenue. And now this is really where the Venture Client model comes into play: the challenge is not in adopting one startup solution, it is in adopting many solutions fast and at low risk and cost. Similar to HR: anyone can hire one person, but to hire hundreds, you need the right processes, people and tools. Alas, we arrive at the “war for startups”. Because just as talent has won the “war for talent”, startups will win this war as well. When a company is not willing to adjust its way of working with startups, startups will simply stop working with this company.?

HR is a universally established department with a dedicated team, clearly defined processes and specialized tools to solve a company’s need for talent. There are external scouting partners and databases, consulting firms specialized in optimizing a company’s HR strategy and supporting its HR operations, and so on… No one in any company - from the CEO to the interns - would question the need for an HR department and HR specialists. Yes, in smaller companies like startups, HR is often only part of someone’s job, one of the many responsibilities of an office manager, a COO or even the founders themselves. But as soon as the hiring needs increase, an own position is created and an HR professional is needed to streamline recruiting, take care of the employees’ on-the-job needs and establish a culture where the employees thrive (and with them the company). The HR department is the established go-to place when it comes to finding new employees (or when issues occur with existing ones). Usually, a business unit would reach out to HR with a list of requirements for the ideal candidate and an approved budget to hire one. From there, HR takes over to search and evaluate potential candidates. The business unit and the candidates are guided through the entire recruiting process. HR sets the professional framework and ensures clear communication and a smooth experience for both sides. HR is also available and knowledgeable to answer any type of questions that arise during the process. The business unit - as the technical expert and the one having to work with the candidate - makes the final hiring decision, after which HR supports the contractual tasks. Now to all the Venture Client experts reading this: does this not sound familiar?

I wager that in a few years, no CEO will question the need for a Venture Client unit either. In the past four years, the Venture Client industry has grown from one singular player to more and more Venture Client-specialized software, services and consulting businesses blooming everywhere. The market is definitely growing, just like the market for HR-specialized software and services has rapidly increased since the 90ies.?

What’s branding got to do with this?

There is another component to the “war for talent”, one that was also first introduced in the 90ies by Simon Barrow and Tim Ambler: the "employer brand". It was not enough to have a cool product or a good company reputation, but to win the “war for talent”, companies needed to define why they were an attractive employer, how they differed from other employers and what benefits an employee could expect when working for them. They needed to develop an employer brand - and a good one! The target market “talent” is not automatically identical with a company’s customer target audience. There might be overlaps, especially in B2C businesses (most BMW drivers also wouldn’t mind working for BMW). But building solely on that was and is not enough on the job market. Talent has become quite demanding. Candidates want more than just pay, perks and benefits, they want to be able to identify with a company’s vision and values.?

Coming back to the “war for startups”, companies will have to start working on their Venture Client brand. Just as having an HR department in place was not enough, establishing a Venture Client unit will not suffice either. Most corporates will probably still be able to siphon off their company reputation (“who doesn’t want to work with BMW?”). But the more companies adopt the Venture Client Model and become attractive customers to startups, the more relevant will be a company’s Venture Client brand to distinguish and differentiate oneself in the rising global competition. The first hurdle of a Venture Client unit will actually not be the external recognition, but the awareness inside its company. As long as CEOs don’t recognize the need for startups and a Venture Client unit, it will take a lot of internal communication efforts to reach all the nooks and creaks of a large corporate, so that every business unit knows who to reach out to for whenever a startup need arises.?

Now, dear reader, here is where this love letter to Venture Clienting comes to an end. I am planning to share more of my insights. Yet, I am loathed to write simply to appeal to LinkedIn’s algorithm or my own vanity, so I’m interested in your feedback: was this at all valuable? Where does my comparison miss the mark? And would you like to hear my take on Venture Client branding?

Yours kindly,

Sylvia

P.S.: On a personal note, this piece of content is actually rooted in my master thesis on “Recruiting women to startup companies: the impact of employer branding”. I have two more expert topics in mind for further publications, and both actually relate back to my thesis. It does feel like a full circle coming back to this nine years later.

About Will, Helm & Tell.

Will, Helm & Tell is the first and only consultancy dedicated to branding, marketing, and communications for Venture Clients. Our founder Sylvia has helped build and scale leading brands like BMW Startup Garage and Open Bosch, as part of the 27pilots team. Active for more than nine years in the startup ecosystem, she has worked with innovative startups worldwide. As a trusted partner of 27pilots, Will, Helm & Tell is the main event organiser of the Venture Client Track at Slush, connecting startups and corporates in powerful new ways.