Why Large Organizations Should Partner with Startups

Internal innovation is hard work — almost too hard.

The larger an organization is, the more bureaucracy and red tape to cut through.

The larger an organization is, the more likely its talent will be predisposed to managing?what is now?than discovering?what is next.

As such, internal innovation efforts often consume a lot of time, a lot of money, and don’t often deliver a worthwhile return on investment.

What if there was a cheaper, faster, and more effective way to help your organization grow?

Partnering with early-stage startups can help your organization learn, test and embed new ideas more effectively, economically, and quickly.

Whatever industry you’re in, chances are there are hundreds of nimble startups that?aren’t?encumbered?by red tape, who?do have the talent?required to discover what is next, and, most importantly,?are looking for corporate partners to sell to and work with.

Partnering with startups can help your organization:

• access real-time market intelligence on emerging tech and business models in your industry
• quickly embed strategic-fit technology and solutions into your organization’s offerings
• adapt to changes in the market, and grow market share
• grow your organization’s revenue and size through acquisition
• learn different ways of working that are more conducive to early-stage innovation

Even some of today’s most heralded and innovative companies such as Amazon, Meta, Google, and Microsoft have turned to partnering with, investing in, and acquiring startups.

Growing through acquisition is the surest way to grow after an organization reaches a certain size, and its ability to innovate organically and/or through internal efforts dissipates.

So how can your organization partner with startups?

There are several ways, from lightest to heaviest touch:

1. Run a hackathon with startups around a challenge statement your organization sets
2. Run startup scouting programs (searching for startups globally that can help you solve a pre-defined problem or tackle a new opportunity area)
3. Run a corporate startup accelerator program (incubating a handful of very early-stage companies)
4. Establish your own corporate venture capital fund (establishing a venture capital fund to invest in strategically aligned startups and/or simply startups that can help the organization generate greater financial returns). Over?US$300BN?in CVC was deployed by large organizations over 2021 and 2022.

Of course, all of this requires a great deal of work.

For example, the best venture capital firms track thousands of startups each year, meet with hundreds, and typically only invest in five to twenty.

This requires a full-time and thoughtful commitment to scouting the best startups, interviewing them, performing due diligence, and effectively selling them on partnering, providing they are a validated strategic fit.

Most large organizations simply don’t have the talent internally with the networks, assets, or experience required to do this effectively.

It takes the average associate a decade to learn the ropes and climb to partnership at a venture capital firm. So the typical organization's approach of plucking someone out of anobscure back-office role because they are "into startups," giving them a 'Head of Startup Engagement' role, and relying on inbound inquiries to fill their funnel (most of which won't be very good or aligned) is fraught with folly.

This is precisely why large organizations are turning to third parties that offer startup scouting, corporate accelerators, and CVC-as-a-service offerings.

Such providers partner with large corporates to help them effectively partner with startups to drive towards strategic and financial goals and avoid the nasty and expensive trap of trying to do this themselves - something that can kill the appetite of senior leadership to invest in startups at all thereafter.

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If you want to learn more about partnering your organizations with startups, reach out on?[email protected] . My team at?Collective Campus ?has helped large organizations such as?Microsoft, Lufthansa, Bank of New Zealand, Charter Hall, Village Roadshow, Allens Linklaters, and others partner with hundreds of startups over the past six years.

Whether you want to run a hackathon, a startup scouting program, deliver an accelerator, or establish your own corporate venture capital fund, our team can help.