How and why should corporations work with startups?

      How and why should corporations work with startups?

      On March 16, the European Business Association together with ISE Corporate Booster and the Ukrainian Startup Fund held an online lecture on cooperation between startups and corporations. There were such speakers: Olena Malytska from ISE Corporate Accelerator, CEO of Radar Tech Maria Romanova, founder and CEO of Center42 Kyrylo Mazur and Vyacheslav Mayakin, Head of Cooperation at Sector X Acceleration Platform. The event was moderated by Iryna Shevchuk.

      The issues discussed in the lecture were: how corporations can better work with startups and vice versa, what types of interaction exist, how can corporations buy startups and in what way they can bring a fresh perspective on existing problems.

      Key messages

      <b>Olena Malytska,</b> CEO and Founder of ISE Corporate Accelerator, over 15 years of experience with a wide range of roles from co-founder of investment bank to CFO in international IT and e-commerce organizations; a technology leader in implementing innovations in corporate sector

      <b>Olena Malytska,</b> CEO and Founder of ISE Corporate Accelerator, over 15 years of experience with a wide range of roles from co-founder of investment bank to CFO in international IT and e-commerce organizations; a technology leader in implementing innovations in corporate sector

      Olena Malytska first took the floor and talked about the fundamentals of cooperation between corporations and startups.

      1. The domestic ecosystem lags behind many European countries in terms of development. For example, the United Kingdom. There are 192 business accelerators, 158 incubators and more than 300 venture funds. In contrast, in Ukraine such innovation providers can be counted on the fingers of two hands, and there are 10 times less venture funds.
      2. Corporations practice the creation of in-house departments and corporate programs for cooperation with startups. For example, Google Ventures, BMW Startup Garage, The Unilever Foundry.
      3. All companies from the Fortune 500 list have their own sub-units for corporate innovation, which is proof of this need in world practice. 40% of companies on this list which do not have such sub-units leave it in the future.
      4. There is a correlation between innovation in corporations and their long-term competitiveness.
      5. Due to startups, corporations get quick access to technology, the opportunity to get a ready-made solution to an existing problem and be the first to bring a new product or service to market. Startups help create things that corporations are often unable to do on their own.
      6. In addition to the technical part, startups contribute to the development of corporate culture and the HR brand of the corporation.
      7. What are the main models of interaction between corporations and startups? First of all, these are hackathons, accelerators, incubators, startup studios, venture funds and venture building.
      <b>Maria Romanova, </b>CEO Radar Tech

      <b>Maria Romanova, </b>CEO Radar Tech

      Maria Romanova focused on the cooperation with startups directly from corporations and its internal processes.

      1. Innovations bring certain benefits to corporations, including updating corporate culture, solving business problems and improving business processes, supporting the brand of an innovative company, entering new markets and creating new products.
      2. Due to ignorance of the specifics of corporations, startups think out-of-box,that allows them to find solutions that are not obvious to corporations.
      3. What are the options for developing corporate innovation and attracting startups? Innovative strategy, internal entrepreneurship, separate innovation team, innovative training / programs for employees, innovative tours, events, own and external accelerators, corporate venture funds.
      4. What the mechanics of working with innovations in corporations looks like? Defining innovation priorities – forming search tasks – determining the format of interaction with startups and the desired result – finding solutions – piloting them in the corporate field – determining the best solutions for implementation or purchase.
      5. Startups don’t like to be bought. Preference is given to contractual relationships, interest or shares in the corporation.
      6. Corporations looking for innovation will definitely need a leader in this area, on whom in most cases the policy and achievement of the search and implementation depend.
      <b>Kyrylo Mazur, </b>Founder and CEO of Center42

      <b>Kyrylo Mazur, </b>Founder and CEO of Center42

      Kyrylo Mazur talked about ways of launching new products and looking for breakthrough ideas.

      1. Internal projects for the company: market research (to find startups and innovations); internal hackathons for employees (online and offline); training programs on startups and innovations.
      2. Projects for a wide audience: competitions for startups and innovative projects; online hackathons (search for ideas and solutions among the general audience); acceleration programs and innovation search programs (for business tasks).
      3. Ecosystem products: Ukraine Innovation Awards; conference for startups 42 Investment Summit; online course Fundraising from Home – investment literacy for IT and startups.
      4. Why work with startups and innovations? McKinsey’s 3 innovation horizons: 1. Sustaining innovation 2. Low-end disruption 3. New market disruption Example: Henkel case and their paint marketplace of other manufacturers and painters.
      5. Board of innovation presents Europe`s corporate innovation map, in which there are 4 types of players: HUNTER (Venture fund, structural partnership, external accelerator, co-development track), BUILDER (innovation lab, innovation transformation, internal accelerator, center of excellence), EXPLORER (external incubator, co-experimentation track, scouting, co-creation session), EXPERIMENTER (internal incubator, community of practice, design sprint, innovation training)
      6. Venture analytics and research. Examples: 1) For Amazon AWS we conducted an IT companies and startups market research in Ukraine to create a base of 1000+ new potential customers for their cloud products. 2) With the financial support of Lenovo and DENTSU, we conducted market research on gamedev and adtech companies, creating a base of more than 500 innovative companies and solutions in the field of advertising and game development.
      7. Search for startups and IT solutions that can improve the customer’s business, become their technology partners or customers of their services. Examples: for the pharmaceutical company Bayer,we organized a training program for potential participants in the Bayer G4A accelerator in Berlin, which chooses innovations in the field of digital health.
      8. Hackathons, startup contests, events are a tool that can be relevant when there are not enough ready-made solutions and you want to stimulate the emergence of new ideas. Example: for the UN program in Ukraine, a unique online hackathon Hack For Locals 2.0 was held with the largest prize pool in the history of hackathons in Ukraine (more than $ 70,000) and focused on finding IT solutions that help peace and security in eastern Ukraine.
      <b>Vyacheslav Mayakin, </b>Head of Cooperation at Sector X Acceleration Platform

      <b>Vyacheslav Mayakin, </b>Head of Cooperation at Sector X Acceleration Platform

      Vyacheslav Mayakin presented theses on how accelerators work with corporations.

      1. Accelerator in the classical sense is a service company that helps the technology business to grow and develop. The base of startups is not an acceleration. The first clients, hypothesis tests, additional profits startups can get in corporations through the accelerator. On its own, the project could hardly enter these markets. Examples of cases: Loreal, Foxtrot, Farmak.
      2. Company’s commitment: Human resource for high-quality work with startups (regular face-to-face meetings + preparation of feedback launch of pilots). Ability and readiness to launch pilots with startups (or invest) based on the results of the Accelerator program; Opportunity to provide your own ideas for working with startups (preferably)
      3. Risks: inability to launch pilots; lack of human resources/motivation/leadership; wrong strategy/goals; сommunication with the startup team.

      The full recording of the webinar can be viewed on the YouTube channel at this link