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Venture Clienting – the new approach to Corporate Venturing

11 Nov 2019

The expected: Top startup technology makes a competitive difference! Leveraging cutting edge startup technologies generates millions in cost savings, new revenue, and market share growth.

The unexpected: No need to invest! Some of the world’s most innovative companies, such as Apple, know how to leverage external startups without the enormous cost and risk associated with CVC investing.

Few executives deny the relevance of startups. In particular, those who attend Slush. There is a broad consensus that corporations need startups as a critical source for cutting-edge technologies and business models.

Corporate Venture Capital (CVC), which is the investment in a minority non-controlling stake of a startup, is the most prominent vehicle to benefit strategically from startups. In 2018, executives of about 700 corporations with a dedicated CVC program approved to invest $50 billion in startups. Indeed, a lot of shareholders’ capital.

Yet, what if there is a top startup with the potential to generate millions in revenue or cost savings? But, your CVC does not invest! Or what if your company is flooded by relevant startups? However, your CVC can only invest in 5-10 startups p.a.! What if your business units have a hard time adopting startup solutions? And finally, what if your company does not have a dedicated CVC unit at all? Like Apple and 90% of companies with over 1 billion dollars of revenue?

Given these inherent limitations of investing in startups, is there an alternative corporate venturing tool? Yes, there is – the Venture Client model! It was invented in 2015 by BMW managers, who created the first Venture Client unit: The BMW Startup Garage. Since then, companies worldwide, including those that do not have a CVC unit, adopted the Venture Client model. Among these are BSH Home Appliances (Bosch Group) and LafargeHolcim.

How does the Venture Client model work, and how is it different from CVC?

The Venture Client principle is simple. Yet, it has a profound impact on enabling incumbents to adopt top startup solutions and scale quickly at low risk and cost. In essence, the Venture Client, instead of equity, buys the product of a startup. The first purchase is a “minimum viable purchase” (MVP) since the Venture Client buys just a sample of the startup’s solution for validation by a business or functional unit. The Venture Client process is a fusion of venture capital, innovation management, and procurement processes. It takes into account the requirements of the incumbent, which revolve around spotting and efficiently integrating many leading startup products to gain strategic benefits fast at low risk. Firms of any size and industry can adopt the Venture Client model to harness product, process, and business model innovations from top startups. Venture Clients not only gain strategic insights into new technologies, but they also benefit from customization, pricing, and time-to-market advantages.

Gregor Gimmy & Andreas Schnell

About the authors/ speakers:

Gregor Gimmy

Founder & Managing Director, 27pilots

Gregor founded 27pilots to help companies benefit strategically from startups through a breakthrough corporate venturing tool: The Venture Client model. Their mission: to help companies worldwide adopt the Venture Client model and establish it as the new standard for corporate venturing.
Before 27pilots, he spent six years at BMW, where he invented and developed the Venture Client model to solve a critical challenge: How can the entire organization benefit from many top startups faster, and at lower cost and risk than possible through traditional corporate venturing? He implemented the Venture Client model by founding and managing the BMW Startup Garage, the world’s first Venture Client unit, for three years. Given the success of the Venture Client model at BMW, he founded 27pilots with 3 BMW Startup Garage colleagues in 6/2018.

Before the BMW Startup Garage, he established an internal innovation strategy team known as BMW Innovation Works. Before BMW, he started various VC funded ventures in Silicon Valley and Europe. Early in his career, he worked at IDEO (Palo Alto). There he helped create a new innovation model (known as Design Thinking) and transformed IDEO into a strategic innovation consultancy, called the Roland Berger Strategy Consultants.
To further advance the Venture Client model, he is deeply engaged in publishing, researching, and lecturing about the Venture Client Model at leading business schools. He is an Executive in Residence at the IMD Business School, and co-author and guest lecturer at INSEAD business school. He has co-authored the first scholarly publication about the Venture Client model, published by the Harvard Business Review in 7/2016.

Andreas Schnell

Thematic Lead of Venture Clienting at Capgemini Invent, Germany

Andreas is driving the topic Venture Clienting within Capgemini Invent and is a team member of the Digital Innovation team in Germany. With 5+ years of experience in the automotive and commercial vehicle industry he has helped several OEMs digitize their business. Andreas has been working on projects around new digital business models, connected services, mobility services and corporate startup collaboration. At Capgemini Invent he is leading the cooperation with 27pilots to establish the Venture Client model for Capgemini’s clients.