The untapped potential of collaboration between Corporates and Startups

Corporates are one of the ecosystem enablers for startups. The collaboration between a corporate and a Startup, if balanced and navigated with care, could bring out the best results while benefitting both parties.

A reciprocated win-win collaboration

The corporate sector is an important partner for startups and SMEs at multiple levels. Through their innovation programmes, they seed startups. Also, corporates can be the customers to startups as well as SMEs in a more inclusive manner. In addition, they use the corporate networks to support startups and SMEs. The Indian laws allow them to deploy their CSR funds to support startup incubators. To summarise on the opportunities for both parties, the figure below could be referred.

 

  Source: World Economic Forum, 2018

 

The weak state of collaboration

Though corporates are working towards structured support, the models that offer mutual value are weak. The depth of engagement and set scope is limited to a funds endowment through CSR or often through investment and being a client for tech products developed by Startups in some cases.

The corporate sector is active in innovation, startup, Social impact space in Hyderabad. But the level of involvement differs from corporate to corporate. A handful of corporates engage with startups and participate in strengthening the ecosystem. Corporate engagement with the innovation and entrepreneurship space is inconsistent in Hyderabad. While some active players are active such as PwC, TCS and Qualcomm JV, Microsoft, M12 (formerly Microsoft Ventures, Pernod Ricard India Foundation (PRIF), Boeing, HDFC, Rural Electrification Corporation, CYIENT, they form a small percentage.

 

Innovation-minded Corporates beginning to explore

Corporates have several models to work in alliance with a Startup. Some of these are lesser known and yet unexplored fir Hyderabad Ecosystem. As per the whitepaper Collaboration between Start-ups and Corporates – A Practical Guide for Mutual Understanding published by WEF in 2018, Studies, anecdotal experience, a questionnaire and in-depth interviews with innovators and entrepreneurs have identified five prevalent models of interaction between start-ups and corporates as they collaborate to bring innovation into corporate business processes:

A direct engagement with startups through sourcing the product/solutions from startups or re-selling the Startup’s product to create value for customers.

Establishing a separate innovation entity working closely with startups for building solutions.

A corporate accelerator or corporate case study challenges for startups with complementary products or to build products catering to corporate’s needs and integrate at a later stage.

Delegating task to an external subsidiary to prototype for existing business models.

Entrepreneurial co-creation model; collaboration between an Incubator with the corresponding segment of startups wherein the corporate funds the entity by becoming an investor, either by itself, or together with other investors.

While all these models are being exploited in Hyderabad ecosystem in some or the other way, a deeper Corporate engagement with startups is needed. One of the most utilised and accessible model is collaboration between incubators and corporates.

CIE IIITH  bringing together startups and research to enable corporate innovation

CIE IIITH acknowledges the need for innovation for both Corporates and Startups. In a  Competitive world, differentiation is imperative. This differentiation is brought through creative ideas, emerging technologies and interesting solutions. And Corporates follow a standardised  process that has the least scope for innovation. Hence, Companies need to leverage open innovation through working with startups and research based solution groups to build innovative products and services.

CIE IITH has multiple active commitments with corporate actors such as PwC, TCS, Intel, Amazon, Microsoft, Pernod Ricard India etc. The arrangements have been implemented through working vigorously with Corporates over the years, such as:

Startup co-creation – facilitating startups to work with the company to jointly create a specific solution the company needs

Three-way emerging tech co-innovation – Research, Startup and the Corporate jointly pivoting a startup solution. Enriched by research to enable innovation for the corporate’s needs

Applied Research solutions – Product labs creating a solution required by a corporate based on research

Startup discovery – a simple discover and connect startups relevant to company’s pursuits

New tech seeding – a corporate initiates open innovation for a specific challenge through an incubator. Finding domain  entrepreneurs, connect research and deep tech, and corporate to provide domain inputs and requirements.

Each of these models have a huge margin to be introduced or implemented in Hyderabad Startup ecosystem. Also, there is a need for more direct programmatic engagement with startups at the B2B level and active support across the board for women entrepreneurs and entrepreneurs from marginalised sections. Deployment of CSR funds to support startups is also in need of enlargement.

 

Until next time!
|Stay healthy, Stay safe|

– Sunita Kumari, Team CIE

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