天美传媒

What鈥檚 the best way for large corporations and startups to work together? Is there a single tool that鈥檚 better than all others? Once they team up, what happens next? And how do you measure whether the corporate venturing has been successful?

These were some of the issues discussed as 天美传媒 kicked off MWC 2019 in Barcelona with back-to-back sessions at 4YFN, the MWC-linked conference focused on startups. The sessions were moderated by professors Julia Prats and Thomas Klueter, and brought together executives from large corporations and startups 鈥� all intent on innovating, all with their own experiences on how to do this.

For Prats, it鈥檚 about 鈥渉ow large corporations can take advantage of the innovation that startups bring into the market, and at the same time how startups can learn from corporations.鈥�

As the sessions made clear, there鈥檚 no cookie-cutter approach to that relationship. It can range from large companies becoming a startup鈥檚 biggest customer early on, to a corporate acquiring a majority of equity 鈥撀� and everything in between. Corporations offer deep pockets, scale, management and product expertise, and long-term commitment; startups offer fresh solutions to problems, along with agility.

鈥淲e are currently using a portfolio of mechanisms for how to work with startups,鈥� said Karolina Korth, chief digital officer of Siemens Mobility Spain. 鈥淒epending on what the current problem is, there are many tools you can use in a corporate environment.鈥�

Bill Gajda, global head of Strategic Partnerships and Innovations for VISA, agreed that each company must tailor its approach: 鈥淒ifferent companies depending on where they fit in the ecosystem of their industry will bring a different perspective to venture.鈥�

Are corporations better customers or owners?

For Gregor Gimmy, head of BMW Startup Garage, the best approach to startups is to simply become a major customer. 鈥淲hat does a startup need from a corporate and what does the corporate need from a startup? The startup needs the corporate to buy their product. What does BMW need? BMW needs solutions. They need technology.鈥�

Adding a company with the clout of BMW to its client roster gives a startup revenue and credibility, while freeing it to work with many other customers, including BMW competitors; when large corporations go the route of equity stakes, competitors will likely avoid the startup.

But others take a different tack. Gajda said that when VISA makes equity investments, it seeks tight commercial agreements and input into the companies. 鈥淲e can bring deep subject matter expertise if you鈥檙e looking for a product extension, or if you鈥檙e trying to validate something that you鈥檝e built. We can also accelerate speed to commercialization,鈥� said Gajda. 鈥淚 think there鈥檚 a number of reasons related to a different skillset and a different mindset that corporates bring.鈥�

Which is what some startups fear. Avi Meir, a founder of business website Travelperk, sold his previous venture to Booking.com. But so far he has raised funds from non-corporates, because he doesn鈥檛 want to sell the business and wants to stick to his strategic focus.

鈥淢aybe I鈥檓 wrong, but the impression we entrepreneurs have is that once you are signing the first term sheet to raise a minority investment from a corporate VC, it鈥檚 the first step basically to selling the company to them,鈥� Meir said.

But BP Ventures said that鈥檚 not always the case. 鈥淭hat鈥檚 not why we invest in companies. We invest in companies because they have technology that is disruptive 鈥� When we invest in a company we invest because we think it鈥檚 a company that can do well in the future,鈥� said Ignacio G铆menez, investment director of BP Ventures.

And large corporations don鈥檛 always need to look outside to innovate. Catalina Balseiro, chief innovation officer of Suez, said her company also has a host of mechanisms to deal with entrepreneurs, but also foments intrapreneurship. 鈥淚t鈥檚 very important to combine knowledge from outside and knowledge from inside.鈥�

Rethinking the metrics

Whatever the agreement, at a certain point in the relationship there will be some sort of financial evaluation.

But the speakers said that it鈥檚 important to establish new metrics for investment in startups. 鈥淭here has to be the right level of understanding from management, from the board of directors in order to enable digital experimentation,鈥� said Francesca Wuttke, chief digital officer of Almirall. 鈥淭here has to be several experiments done, most with the goal of scaling, but not all with the goal of directly impacting revenue.鈥�

Even if there is positive financial return, it won鈥檛 be immediate. 鈥淚n this industry you invest one day, and it鈥檚 only five to 10 years later that you make your exit and you prove that you鈥檝e been successful,鈥� said聽Marc Rennard, chief executive officer of Orange Digital Ventures. 鈥淚t鈥檚 a good balance between financial results and strategic benefits for the group.鈥�

Part of the return can be pushing along the cultural change that comes with dealing with startups, or intangible benefits such as attracting new profiles to work. 鈥淢aking yourself friendlier to a startup requires a big change in how the corporation is working,鈥� said Almirall鈥檚 Wuttke.