Building upon our research on successful corporate-startup collaboration, today we launch ‘Open Innovation in Europe - A Snapshot of the SEP Europe’s Corporate Startup Stars 2017’, a report we produced in partnership with Mind the Bridge as part of the Startup Europe Partnership initiative. Based on data from around 30 of the most successful corporates in Europe, the report seeks to map out best practices in open innovation strategies.
Our research complements SEP Europe’s Corporate Startup Stars, a ranking of corporates who engage effectively with European startups. The ranking and report will be revealed today at an awards ceremony in Brussels where the 12 most ‘startup-friendly’ corporates will be recognised. The event will see the participation of Carlos Moedas, EU Commissioner for Research, Science and Innovation, as well as the Directors and Heads of Innovation of the most startup-friendly corporates in Europe.
Our report found that many European corporates (e.g., Teléfonica, Orange, and Enel) have been innovating via a wide range of clear tactics, from setting up global innovation competitions to directly acquiring startups. In this blog, we sum up the main findings from the report, all of which reflect activities that took place in 2016.
30 out of 31 corporates reported providing free resources, putting together competitions, and setting up co-working spaces for startups.
29 out of 31 corporates indicated implementing at least one practice aimed at sparking employees’ entrepreneurial spirit. Some of these practices include giving intrapreneurs time with C-level executives to discuss their ideas, exposing employees to innovation via missions and incentive programmes to tech hotspots (e.g., Silicon Valley), and putting together internal competitions/contests to encourage employees to develop ideas.
27 corporates reported procuring from a median number of 10 startups each. Out of these 27 corporates, 24 indicated having established “startup friendly” processes (i.e., fast-tracking, special legal templates, and other dedicated procedures) to facilitate procurement and adapt to startups’ needs.
26 out of 31 corporates had a dedicated open innovation unit. Of those with an open innovation unit, 33 per cent reported directly to the CEO or Board of Directors, 38 per cent reported to other C-level executives, whilst 29 per cent reported to non C-level executives, such as the Head of Innovation or Executive Vice President.
22 corporates have invested in 3.5 startups on average (median value). Of these, half invested through Corporate Venture Capital (CVC) funds, 27 per cent invested through off-balance-sheet (direct investments), and 23 per cent employed both.
16 corporates have run at least one accelerator in-house (i.e., managed with corporates’ own resources), with a significant proportion running more than one across the globe. When we consider corporate accelerators run by third parties, such as TechStars, Plug and Play, and Startupbootcamp, this percentage rises to 84 per cent. Corporate accelerators have accepted 19 startups on average (median value).
Only 9 out of 31 corporates reported acquiring European startups in 2016. If we also consider acquisitions of non-European startups, this percentage rises to 37 per cent. Out of those that relied on acquisitions, they acquired a median value of one European startup (two if we also consider non-European startups). Looking at a broader period (from 2010 onwards), 61 per cent of the top European corporates have been active in startup acquisition.
Although our sample is not representative of all European corporates, this report highlights some important current and future trends of open innovation strategies within leading firms. Overall, our findings indicate that top corporates in Europe have delineated a clear path to ensure they are not left behind in the innovation race. Based on these results and conversations we have held with a few leading corporates, we can provide some insights into what the short-term future of corporate open innovation will look like.
Compared to other strategies, procurement with startups was perceived by corporates as yielding the greatest value for money, giving them access to cutting-edge technology at a relatively affordable price. We estimate that procurement will play an increasingly important role in corporates’ open innovation strategies.
Given the challenges in measuring accelerators’ financial impact, corporates will shift from costly in-house accelerators to “budget-friendly” third-party-managed and shared accelerators.
We forecast a gradual reduction in the use of CVC funds in favour of off-balance investments. Decisions on startup investments will not only be driven by financial returns, but also by strategic, long-term considerations.
Internal corporates structures are shifting (and will continue to do so) to accommodate the fast-paced nature of innovation.