Acquisition isn’t always the answer

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Helping enterprises evaluate which startups have relevant potential for their businesses, and coach these startups to make their offers attractive and applicable to these companies, is how we’re able to add value on both sides of the relationship.

How enterprises can support startups, without smothering them

I recently attended TechCrunch Disrupt in London. I was there for just one day of the 48-hour tech-fest which gathers startups, hackers, investors and digital enthusiasts from all over the world. And considering I met up with entrepreneurs from the Czech Republic, the United States and South East Asia, it was truly a global event. It was encouraging to see that, despite media warnings of global isolationism following the Brexit referendum and the US presidency, innovation remains distinctly A-political, and increasingly cosmopolitan.

At the same time, the startup community is looking increasingly crowded and competitive. Most are looking to grow, develop and gain critical mass. Many of these startups have an end-customer focus. They have mass market appeal, and leverage social networks and crowdfunding for support. This includes companies like Horus, who produce wearable technology for the visually impaired. Then there are others who are looking for that one ‘big break’ through an entrepreneurial partnership that will help them leapfrog their competition. This includes companies looking to sell component solutions to enterprises who can bundle their product into a wider offering, like AppZen. And companies looking to sell distinct sub-sets of user data to enterprises as a commodity.

Undoubtedly, there is a limited window for startups to secure these relationships while their seed funding lasts. To add to the pressure, the procurement cycle of most big enterprises is so protracted that many startups simply can’t afford to wait for those connections to come in. What they really need are introductions to enterprises that will use their product, and give them a chance to gain valuable references – the real goal of startups trying to make it in the digital enterprise environment.

But while a lot of these startups, and the enterprises eyeing them out, might believe that acquisition is the only means to survival, I believe that there is a another, more collaborative path to success. One that introduces innovation to enterprises and gives startups a chance to thrive on their own. Instead of outright acquiring these startups and their IP, enterprises can enter into symbiotic mentoring relationships with these smaller, more agile enterprises. They can provide ecosystems or incubators, where startups can benefit from the experience and expertise of industry leaders, and learn how to hone their propositions and implementation cycles to be more in sync with their target enterprises.

There are several examples of this in practice, including the UK government’s Innovate UK, which has helped to connect local firms to markets in Europe and Asia.  Further afield, there are ambitious events like StartupBridge India, which recently connected 30 of India’s top startups with Fortune 500 companies in the United States. Also in the United States, Deloitte has created a programme with a similar objective— and a similar name— Bridge by Deloitte. This programme also emphasises the value that enterprises like Deloitte can provide through vetting and grooming promising startups to give enterprises access to the metaphorical cream of the crop. With so many companies seeking innovation, but not sure where to look, it’s programmes like this and Capgemini’s own Applied Innovation Exchange and InnovatorsRace50 program that are helping startups make the most of this crucial window of time.

Helping enterprises evaluate which startups have relevant potential for their businesses, and coach these startups to make their offers attractive and applicable to these companies, is how we’re able to add value on both sides of the relationship. It’s not quite as direct an investment as a huge cash injection, but the connections and experience that startups receive through projects like this is, I believe, worth much more in the long-term.

David Blackwood

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