2018 Startup GUIDE - 10th Edition
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62 | COVER STORIES<br />
Swiss <strong>Startup</strong> Factory<br />
Thriving Corporate Venturing<br />
in Switzerland *by Tamara Savchuk and Max Meister<br />
Agile enterprise… Outside-in innovation… Disruption… Business<br />
Model Innovation… Corporate Venturing… These buzz<br />
words pop up everywhere, in the media, in research articles,<br />
during conversations and so on. However, how do you create an<br />
“agile” company? How do you transfer external knowledge inside<br />
your corporation? How can you spot disruption? Where do<br />
you get an innovative business model? But most importantly,<br />
why is corporate & startup collaboration beneficial and how<br />
do you ensure its success?<br />
Fail alone<br />
<strong>Startup</strong>s typically have flat structures, increasing the speed and efficiency<br />
of technological or business model development. However,<br />
they lack capital, human resources and market reach. As a result,<br />
many projects never reach a product-market-fit or even see<br />
the light of day. In contrast, corporations have access to a large<br />
pool of resources, customer knowledge and accumulated cash reserves.<br />
Nevertheless, risk aversion and bureaucratic structures hinder<br />
innovation and market responsiveness. Consequently, several<br />
companies have missed profound industry transformations; some<br />
traditional players disappeared while new ones entered the market.<br />
Weaknesses<br />
• Lack of capital resources<br />
• Lack of human resources<br />
• Lack of market reach<br />
• Innovative<br />
<strong>Startup</strong>s<br />
Strengths<br />
• Market responsive<br />
• Uncertainty embracing<br />
Strengths<br />
• Accumulated cash reserves<br />
• Available human resources<br />
• Large customer base<br />
Weaknesses<br />
• Innovation-stagnant<br />
• Long time-to-market<br />
• Risk-averse<br />
FIGURE 1: CORPORATE AND STARTUP<br />
COMPLEMENTARITIES<br />
Corporates<br />
Succeed together<br />
Yet, tapping into the complementarities of each player brings<br />
unprecedented benefits for both. On the venture side, founders<br />
get access to new markets to find an optimal solution for their<br />
product and receive capital to grow. On the corporate side, innovation<br />
initiators can forego the long and cost-intensive internal<br />
developments, thereby increasing market entry speed and flexibility.<br />
In fact, firms can quickly test uncertain concepts through<br />
startups, observe the market response and internalize successful<br />
ideas. Flexibility and speed are crucial for finding new revenue<br />
streams and driving sustainable growth, especially in dynamic<br />
environments.<br />
Set up the stage<br />
Corporations have four ways of engaging with startups.<br />
• y Intra Innovation is a set-up to drive initiatives internally but in<br />
an agile, entrepreneurship-like way. External talent and startups<br />
can be brought in to work on specific tasks with the aim<br />
of renewing existing processes, products and services. Thus,<br />
the initiative is appropriate for working on projects close to<br />
the business’ core and is fully integrated into the company.<br />
• y Corporate Acceleration is a collaboration with a startup in<br />
which a company provides the necessary resources and support<br />
to bring a venture’s product to the market. The idea is to<br />
diversify a corporation’s value proposition and create a new<br />
revenue stream, therefore, both players work closely together.<br />
If the project works out, the venture is fully integrated into<br />
the company’s ongoing activities.<br />
• y The aim of Company Building is to develop disruptive projects<br />
that are independent from the core business. Since uncertainty<br />
is high, the corporations typically takes a minority<br />
stake as well as a seat on the board, but the startup operates<br />
as a spin-off.<br />
• y Corporate Venture Capital (CVC) is an approach in which fund<br />
managers constantly monitor the startup ecosystem to identify<br />
capital gain opportunities and business threats. While the<br />
corporation gets a minority stake in the venture, the latter remains<br />
completely independent. CVC is one of the traditional<br />
Corporate Venturing tools and its popularity is demonstrated<br />
by recent statistics. In fact, in 2017, global CVC activities<br />
reached 31.2 Billion dollars in funding for 1,791 deals. Between<br />
2014 and 2017, the number of transactions almost doubled,<br />
while the total sums invested tripled (CB Insights, 2017).<br />
Despite the CVC’s popularity, it is not appropriate for every case.<br />
The choice of the tool depends on the company’s innovation<br />
goals, internal set-up, types of technologies and desired outcome.<br />
Moreover, the degrees of corporate involvement and capital<br />
expenditure vary from tool to tool. A corporation’s innovation<br />
strategy, based on an assessment of the company’s internal<br />
capabilities and external environment, guides Corporate Venturing<br />
activities.<br />
SWISS STARTUP <strong>GUIDE</strong> <strong>2018</strong>
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