The stereotypes of fancy suits, high heels and cubicles are oft-juxtaposed with the scrappy, fast-moving, T-shirt-wearing tech companies. Despite their differences, startups and corporations are often at their best when working together; leaning into their strengths to cover each other’s weaknesses.
In 2021, global Corporate Venture Capital (CVC) funding skyrocketed. It increased 142% year on year, reaching an all-time high of US$169.3B. This massive uptick in startup interest from the corporate world highlights a realisation in the market: startups have something corporates don’t.
“Often, corporations find startups are ahead of them in their markets and want to bring them in-house. They might want to gain early insights into experimental technologies and new verticals. They may also be looking to transform how they work, to become more agile. Access to top talent is also a frequent rationale”, elaborated Tawanda Sibanda, a Partner at Leap by McKinsey, when asked about the main motivations of a team-up.
The innovative and disruptive methods of startup companies are alluring to corporations that are searching for ways to change and stay relevant in their industry. Innovation could well be cited as the word of the decade and, publicly, it has become synonymous with startup culture.
We recently chatted with Vikram Palit, Founder and CEO of Consultmed—an Investible portfolio company—about starting his business. In the conversation, he mentioned his time leading innovation in the UK-based hospital system and referred to innovation as simply “disrupting what we currently do and improving it”.
This neat definition highlights why innovation is the meeting point for startups and larger organisations. Startups are disrupting industries from outside the norm; corporations are searching for a cutting edge but struggle to break outside of ‘regular practice’. Aligning the two, if done well, cancels out their weaknesses.
Other types of collaborations include ecosystem workshops and advisory structures—informal or otherwise.
In the case of workshops, a founder can be placed with the internal team of a company, or even with one of their key customers, where one of the parties uses the other’s product or service and creates a feedback loop between the two: a pseudo-secondment for mutual benefit. This has been piloted worldwide in accelerators run by companies like Deloitte and Microsoft.
Advisor relationships can also be powerful tools for bridging the startup-corporate gap. When founders have dedicated advisors with deep knowledge of certain industries, they can find the right threads and fast-track their company's growth. Investible has long focused on helping founders formalise these powerful connections, including through our active investor network Club Investible.
Supporting the Investible Climate Tech Fund is another strategic advisory group. This panel of experts, investors and operators with experience in the multi-faceted climate technology sector work in an informal capacity, bringing valuable insights and connections to our portfolio companies.
Companies, both big and small, are instrumental in solving problems affecting people and our planet. Particularly in the realm of climate change, businesses will be the pioneers in transforming how we work, live, eat, and move.
These new modes of operating will require new technologies and innovative ways of thinking. Startups and corporates won’t be able to successfully create change in isolation. The most impactful innovations will be a product of collaboration between the two.
Whether you’re donning the gold watch or the startup merch, we all have a part to play in building a better future.
This will be on the agenda of the upcoming Impact X Summit in Sydney – a gathering of business executives, startup founders, government officials and investors interested in tackling climate change through innovation.
Held on the of November at Sydney’s ICC, the Impact X Summit will be home to world-class investors, startups, advisors, and industry leaders, all with a focus on collaboration and unification in solving humanity’s largest problem: climate change.
Get your discounted tickets to The Summit here.