Why collaboration between startups and corporates will drive innovation in MEA

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In the MENA region, startups attracted?$1 billion?in investment funding during 2020, with the UAE, Egypt, Saudi Arabia, and Bahrain being the frontrunners. While in Africa, it’s estimated that venture capital funding will reach more than?$10 billion?by 2025, with Kenya and Nigeria already leap-frogging their African peers, thanks to increased capital investment from corporates in both countries.

Taking this last point into account, I believe that corporates can play a collaborative role in the growth of MEA’s startup ecosystem. Traditionally, corporates have provided a one-way function for market access or financing. Yet corporates stand to benefit from the culture of innovation that lies at the heart of startups. Likewise, startups can leverage the resources that come with corporates to accelerate their growth. A mutually beneficial approach brings increased ROI for both parties, and fosters growth and sustainability in the long run. ?

?Working together to benefit both sides

While corporates usually have market access, they often struggle with innovation and an agile mindset. Startups, on the other hand, have innovation and agility built into their DNA, but they face barriers to gaining access to their intended markets due to a lack of resources and reputation. Yet the benefits for both sides are significant.

For corporates, partnering with startups that have disruptive potential leads to faster innovation, early insights into new technologies or products, and more agile, iterative ways of working. These are all necessities in a digital-first world that’s constantly shifting, and by collaborating with startups, corporates can effectively experiment with new verticals or service offerings, or even?pivot without it affecting their bottom-line. From a startup perspective, partnering with a corporate can unlock benefits, too. The main reason for a partnership is usually financing or attracting potential investors. But a collaborative approach with a partner-centric mindset can drive mutual growth, and in so doing, startups can gain valuable leverage for success.

It can be difficult to find the right synergy, however. And if there’s a mismatch of goals or an unclear objective, then it can run into obstacles. It’s important to ‘mind the gap’, as McKinsey puts it, as differences in work cultures need to be acknowledged before setting out on a journey of collaboration. There also needs to be mutual understanding and flexibility on both sides, right from the beginning.?

For both parties, it’s important to consider the kind of collaboration that’s desired: is it broad or more specific in focus? If broad, then accelerators or incubator programmes could be a better fit – Microsoft’s?GrowthX?accelerator, which matches B2B tech startups in the UAE with Microsoft’s corporate clients, is a good example of this. However, if there’s a specific business goal, then an individual initiative between a corporate and a startup can significantly benefit the core business of each partner.

?The importance of innovation

The global pandemic has brought into focus how vital it is for businesses of all sizes to be able to innovate and adapt. As we enter a post-pandemic world, it is more important than ever for businesses to stay competitive and think on their feet. And the ability to innovate is critical to disrupt, and thrive, during ever-changing times.

To stay relevant in a competitive environment, corporates throughout MEA need to adopt a culture of innovation – and more collaboration with startups, which form the backbone of the region’s economy, will be key to foster this. ?

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