Last week saw the third annual ‘Corporate Startup Stars’ - awards for large companies which work well with startups. Organised by Nesta in partnership with Mind the Bridge, as part of the Startup Europe Partnership, the ceremony gathered high-level European policy-makers and top corporates in Brussels to celebrate and share good practice and emerging ideas on corporate-startup collaboration. (See a summary video of the event here) As in 2017, we also published a short report, The Status of Open Innovation in Europe (2018), highlighting the open innovation activities of the 36 leading companies.
Who were the 2018 winners?
Samsung Electronics, KPN and Sodexo were named by the judging panel as the top three firms, out of around 100 applicants, and presented with awards by European Commission Vice-President Jyrki Katainen. In total, 36 renowned companies were presented with awards in various categories, including best procurement practices and most innovative programmes. The full list of 36 awardees is available here.
What are the winners doing?
We have summarised the key open innovation activities of the 36 finalists in the report mentioned above. Some snippets from this include:
- The majority (89%) of the finalists have a dedicated open innovation unit.
- The two main mechanisms by which the corporates engaged with startups were investment (78%) & competitions (78%).
- Accelerators continue to be widely used (by 69% of the winners, who predominantly run these programmes themselves), with over one third running or sponsoring multiple accelerators. However, there are concerns over the sustainability of these programmes.
- Nearly two-thirds (64%) of the finalists reported tailoring their procurement processes to ease collaboration with startups; examples include the use of legal templates and dedicated procurement teams with specialist knowledge of startups.
- Time being of the essence, most of the finalists developed fast-track onboarding processes tailored to startups, and reduced payment time to less than 2 weeks.
- In 2017, the finalists invested in startups from 2 different European countries on average, and acquired an average of 1 startup in 2017.
You can download the full 2018 report here: The Status of Open Innovation in Europe (2018)
How do the winners think open innovation practices need to evolve?
At the event, corporates shared their own experiences and discussed the future of startup-corporate collaborations. Some themes from this discussion included:
- Search is less of an issue than it used to be. Many leading corporates reported having established good mechanisms for scouting emerging startups, compared with a few years ago. Quite often, this involves ‘innovation outposts’ in places such as Silicon Valley or Tel Aviv.
- Frustration with startups’ hype. That said, most of the firms present felt that one of their significant challenges was identifying the small minority of startups who really know their product, market, and had a sound value proposition, from the majority who over-hyped their offering.
- Excessive focus on funding: Whilst CVC can be hugely important in helping firms scale, many large firms felt that startups were often obsessed with chasing funding, rather than thinking more laterally about how the large firm could open doors. In their view, it was better for startups to focus on what problem they could solve; if they could do this, funding would likely follow.
- Recognition that most barriers to open innovation are internal. Even the winning corporates reported that they still struggled to find the right balance between scouting for innovation and staying focused on business objectives. Many still felt that they struggled against aspects of corporate culture and short-termism in decision-making.
- Need for agency from the broader ecosystem. Notwithstanding the above, scaling-up often requires more than a startup and a corporate: for instance, a solution might require permits from city authorities or local government before testing. Policymakers and public bodies should have a role in co-ordinating between stakeholders.
- Need for better innovation metrics. The outcomes of innovation are often hard to measure. This makes communicating the impact internally a challenge for many innovation managers.
- Awareness that Chinese CVC is about to impact Europe. Most firms were aware that Chinese VC (and CVC) was entering Europe’s startup ecosystem, and/or that European startups were being tempted to China. Many innovation leaders felt that this will bring new challenges, but were unsure how exactly it would affect their own collaboration activities.
Nominations for the 2019 Corporate-Startup Stars will open next spring. In addition, we will be publishing various studies relating to corporate-startup collaboration in early 2019. Sign up to receive Nesta’s newsletter for further announcements!