Corporations leverage external innovation in this model, funding a portfolio of startups with minority investments to accomplish a mix of strategic and financial objectives. venture capital deals in the first half of 2020, according to Pitchbook. Corporate VCĬorporate Venture Capital Funds (CVC) are increasingly mainstream, accounting for 26% of all U.S. On the other hand, internal innovation may be isolated from other “best of breed” solutions being developed externally by the startup and venture capital ecosystem. This model may work especially well when the corporation possesses world class technical or operational expertise. Intrapreneurship efforts are fully controlled by the corporation, allowing a focus on sectors relevant to the parent company. In these models, ideas are generated inside the corporation, developed, and either run as new lines of business or spun out. Intrapreneurship includes R&D, incubation, and other forms of internal innovation. On the other hand, these externally created startups aren’t controlled by the corporation, making accelerators an effort where influence is more relevant than power. The programs are typically designed to deliver benefits including mentorship, technical product assistance, business development introductions, recruiting support, legal services, fundraising advice, and sometimes capital investment, too. A few prominent options include: AcceleratorsĪccelerators help corporations harness external innovation by working with startups born “in the wild” - these startups apply to participate in a limited-time program with a mix of educational curriculum and unstructured elements. In my experience, executives often seek better understanding of the basic innovation choices available. It’s no surprise then, that for a large number of corporate executives, prioritizing innovation activities can be a daunting task. So if corporations and startups should work together, how can they do it? Freedom to Choose, or Corporate Chaos?Īccording to a McKinsey study, only 6% of executives are satisfied with the results of their innovation programs. Instead, by working together and leveraging the strengths of each other, these seemingly polar opposites can disrupt markets and create better solutions for customers and for the world. More than a quarter century later, the tables have turned, and corporate executives worry that startups are the disrupters and destroyers.Īll these fears - on both sides - spring from a myth that startups and corporations are mortal enemies whose only narrative is to kill each other. My advice then was the same as it is today: “What did your mom tell you to do on the playground in first grade? Go make a new friend.” “Don’t they want to put startups out of business?” was the question I always heard. When I started my venture capital career in the early 1990s, startup CEOs would ask me if it was a good idea to explore opportunities with big corporations, like Microsoft. By Scott Lenet, President of Touchdown Ventures
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