Why Corporations Engage with Startups (powered by USAID)

MOLDOVAFEBRUARY 17TH 2017

CORPORATIONS & STARTUPSWHY ENGAGE?

+ANDERSEN & ASSOCIATESINNOVATION & GROWTH THROUGH SCIENCE + ENTREPRENEURSHIP

MOREPLUSANDERSEN.COM

MORE ABOUT ME VIDARANDERSEN.COM

VIDAR ANDERSEN • STARTUP FOUNDER • EDUCATOR • INNOVATION ADVISOR

FOUNDING PRINCIPAL +ANDERSEN & ASSOCIATES

CERTIFIED LLP EDUCATOR NCIIA @ STANFORD

THERE IS A DEFINITION

WHAT THE HECK IS A STARTUP

ANYWAY?

A CORPORATION IS A PERMANENT ORGANISATION

DESIGNED TO EXECUTE A REPEATABLE AND SCALABLE

BUSINESS MODEL IN A PREDICTABLE AND STABLE

ENVIRONMENT

A STARTUP IS A TEMPORARY ORGANISATION DESIGNED TO

SEARCH FOR A REPEATABLE AND SCALABLE BUSINESS MODEL IN

AN ENVIRONMENT OF EXTREME UNCERTAINTY

THE TIMES ARE CHANGING

WHY ALL THIS STARTUP

HYPE NOW?

EXPONENTIALTECHNOLOGY DEVELOPMENT

SHORTERLIFESPAN FOR CORPORATIONS

AUTOMATION AFFECTING MOST VERTICALS

MACHINESLEARNING BY THEMSELVES

CORPORATIONSSLOW & RIGID

STARTUPSFAST & AGILE

LEAN METHOD HAS COME FULL CIRCLE

OR OBVIOUS IS OBVIOUS

INNOVATION IS THE KEY

TO GROWTH

VEHICLE FOR INNOVATION & GROWTH

STARTUP =

GROWTH

Uber, the world’s largest taxi company, owns no vehicles.

Facebook, the world’s most popular media owner, creates no content.

Alibaba, the most valuable retailer, has no inventory.

Airbnb, the world’s largest accommodation provider, owns no real estate.

Spotify, the world’s most popular music service, owns no music rights.

- TOM GOODWINSVP HAVAS MEDIA

THE FACTS VS THE MYTHS

SPEEDBOATS VS

TANKERS

10 FACTS CORPORATIONS DO GET IT

1

Traditional Venture Capital is no longer the only way to raise money for startups. DocuSign raised in the same round (Series E) exclusively from the following corporations: SalesForce, Google, Recruit, Mitsui & Co, BBVA, NTT DoCoMo, Telstra and MKI

10 FACTS CORPORATIONS DO GET IT

2

The majority (61.7%) of the unicorns mentioned by the Wall-Street Journal under The Billion Dollar Startups Club have raised from at least one corporate. (not including investment firms and banks)

10 FACTS CORPORATIONS DO GET IT

3

Corporations do not invest only in their own vertical: The online music streaming service Spotify raised money from Coca-Cola.

10 FACTS CORPORATIONS DO GET IT

4

Inhouse R&D is giving way to collaboration with new ventures. 9 out of the 10 biggest R&D spenders worldwide are already working with startups.

10 FACTS CORPORATIONS DO GET IT

5

Not only silicon valley tech companies like Google,but some of the traditional corporate players have explicit ways to invest in startups on a large scale. Ping An Insurance Group has a venture arm: Ping An Ventures.

10 FACTS CORPORATIONS DO GET IT

6

When it comes to collaboration with startups, France (not USA) has the highest percentage of its top corporations engaging startups: 23 out of 25 top corporations are working with startups.

10 FACTS CORPORATIONS DO GET IT

7

Investing in startups is not the only way to collaborate. ProSieben Sat1 Media AG provides advertising time in return for revenues or equity shares through its venture arm (Seven Ventures).

10 FACTS CORPORATIONS DO GET IT

8

Building accelerators,a popular way to help startups,is now done by “non-tech" corporations too. Diageo has an accelerator to create new spirits brands: Distill Ventures.

10 FACTS CORPORATIONS DO GET IT

9

Working alone with startups is not the only option: global corporations do it together as well. The Ecomobility Ventures investment fund has been created by 5 corporations(Air Liquide, Michelin, Orange, SNCF and Total).

10 FACTS CORPORATIONS DO GET IT

10 68% of the top 100 companies from the

Forbes Global 500 are engaging with startups.

& STARTUPSWITH CORPORATIONS

WHY DO CORPORATES

ENGAGE WITH

STARTUPS?

SHIFT HAPPENS

“SCREWED IF YOU DON’T”

FAST SLOW

VS

"In the new world, it is not the big fish which eats the small fish, it's the fast fish which eats the slow fish."

- KLAUS SCHWABWORLD ECONOMIC FORUM

VS

"If you don't create the things that will kill Facebook, someone else will."

- MARK ZUCKERBERG FOUNDER OF FACEBOOK

SOMETHING IN IT FOR EVERYONE

WIN-WIN OUTCOMES

CORPORATION ASSETS

• CREDIBILITY • BRANDING & PR • DISTRIBUTION • SUPPLIERS • FUNDING

STARTUP ASSETS

• SPEED OF INNOVATION • INNOVATIVE IMAGE • REAL INNOVATION • CULTURE TRANSFER

HUGE UPSIDE POTENTIAL

FTW!

SHORT & LONG TERMVALUE DRIVERS

TIMING RISK COST

R&D Long Term High High

Corporate Startup Engagement Medium Term Average Low

M&A Short Term Low High

5 EXAMPLESFROM THE REAL WORLD

HOW CORPORATES ENGAGE WITH

STARTUPS

5 EXAMPLES HOW CORPORATIONS ENGAGE

1Sprint, R/GA, Kaplan, Microsoft, Disney, Barclays, Qualcomm and METRO all have an accelerator powered by techstars.

5 EXAMPLES HOW CORPORATIONS ENGAGE

2 Johnson & Johnson has a co working space with research facility: Jlabs.

JLABS

5 EXAMPLES HOW CORPORATIONS ENGAGE

3Monsanto and Syngenta have a venture arm: Monsanto Growth Ventures & Syngenta Ventures.

5 EXAMPLES HOW CORPORATIONS ENGAGE

4Procter & Gamble has a fellowship program with the accelerator The Brandery in Cincinnati, sponsoring startups.

5 EXAMPLES HOW CORPORATIONS ENGAGE

5 Even the CIA has a venture capital arm: In-Q-Tel, an early investor in Facebook.

MORE THAN ONE WAY TO DO IT

BUT HOW DO YOU START ENGAGING?

HEURISTIC LOW TO HIGH INVOLVEMENT

8. Mergers & Acquisition

7. Investment

6. Spin-Off

5. Accelerator / Incubator

4. Co-Working Space

3. Events

2. Startup Program

1. Support Services

HIGH ENGAGEMENT

LOW ENGAGEMENT

HEURISTIC LOW TO HIGH COSTS

8. Mergers & Acquisition

7. Investment

6. Accelerator / Incubator

5. Co-Working Space

4. Spin-Off

3. Events

2. Startup Program

1. Support Services

HIGH COSTS

LOW COSTS

HEURISTIC LOW TO HIGH RISK SEEKING

8. Investment

7. Mergers & Acquisition

6. Accelerator / Incubator

5. Spin-Off

4. Co-Working Space

3. Startup Program

2. Support Services

1. Events

HIGH RISK SEEKING

LOW RISK SEEKING

HEURISTIC SHORT TO LONG STRATEGY

8. Events

7. Support Services

6. Startup Program

5. Co-Working Space

4. Accelerator / Incubator

3. Spin-Off

2. Investment

1. Mergers & Acquisition

LONG TERM

SHORT TERM

WHO DOES WHAT 262 OUT OF F500 CORPORATIONS

CORPORATE ENGAGEMENT BY CHANNELS AND RANK

TOP INDUSTRIES WHO ENGAGE WITH STARTUPS

94.1% Pharmaceuticals

85.2% Telcos

68.8% Regional Banks

64.5% Major Banks

58.8% Diversified Insurance

TOP INDUSTRIES WHO ENGAGE WITH STARTUPS

100% (7 of 7) Semiconductors

100% (7 of 7) Computer Services

87.5% (7 of 8) Beverages

TOP COUNTRIES WHO ENGAGE WITH STARTUPS

94.1% France

71.4% Germany

71.4% Switzerland

56.8% Japan

53.3% United Kingdom

Orange EADS Credit Agricole Renault BNP Paribas

VW Group SAP Allianz Siemens DTAG

Nestle UBS ABB Syngenta Swisscom

Nippon Tel Softbank Nissan Motor KDDI Seven & I Hld.

Vodafone Standard Ch. SABMiller Diageno WPP

OTHER COUNTRIES OF NOTE FOR COMPARISON

45.5% U.S.A

23.8% China

Johnson & Johnson P & G Google Boeing Dow Chemical

Ping An Insurance Group SAIC Motor Alibaba Tencent Holdings Lenovo Group

THIS IS NOT A FAD

EVERYBODY IS DOING IT

CASE STUDY

JLABS

JLABS accept high-potential companies from diverse healthcare sectors, including pharmaceuticals, medical devices, consumer and digital health.

JLABS

Space Equipment Expertise Ecosystem Channels Funding

JLABS

JLABS

San Diego Flagship

San Francisco South

San Francisco California Institute for Quantitative Biosciences

TorontoCambridgeMA

JLABS JLABS JLABS JLABS JLABS

HoustonTexas Medical Center

JLABS

• Started 2012 • Over 100 companies in portfolio with a

growing capacity to accommodate up to 225 companies across the 6 sites

• Does not take equity or IP (identified JLABS as success criteria)

JLABS ALUMNI

WHERE TO GO FROM HERE

SO WHAT’S

NEXT?

ENGAGEMENTEVOLVING IN PHASES

STEP TOOLS

1. Learn Research, Events

2. PartnerSupport Services, Startup Programs, Co-

Working Spaces, Spin-Offs, Accelerators & Incubators

3. Own Investments, Mergers & Acquisition

DIFFERENT OBJECTIVESDIFFERENT ENGAGEMENT TOOLS

Innovation Culture New Markets Platform Solving Problems

Events

Support Services

Startup Programs

Co-Working Space

Accelerators & Incubators

Spin-offs

Investments

M&A

CORPORATE OBJECTIVESST

AR

TU

P E

NG

AG

EMEN

T T

OO

LS

MOST TO LEAST RECOMMENDED

1

Talk to a pool of startups about their needs as part of your design process. It's easy to assume 'they would love this' when the bar for competitive offerings is getting higher.

START TODAY ENGAGE WITH STARTUPS

2

There are many different ways to engage with startups. The key is to keep in mind your objectives, resources and time frame for expected results at all times.

START TODAY ENGAGE WITH STARTUPS

3

You can start small, choosing one channel of engagement at a time and iterate fast based on the results and buy-in. However if you don't shoot for big enough wins from the get go, there may not be enough to show to get you more resources.

START TODAY ENGAGE WITH STARTUPS

4

Select the right partners to share the knowledge and minimise risks. Doing it alone can be scary. Feel free to talk to us at +ANDERSEN & ASSOCIATESif you need some help along the way.

START TODAY ENGAGE WITH STARTUPS

5Whatever you choose to do, be prepared to

work at the speed of startups. Don't keep them waiting on you. You don't want the engagement to backfire.

START TODAY ENGAGE WITH STARTUPS

DO OR DO NOT

THERE IS NO TRY

THANK YOU KEEP IN TOUCH

PLUSANDERSEN.COM

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