At BMW’s Startup Garage, the century-old, illustrious company has become a client of entrepreneurs who bring products, services and/or technologies not yet ready for the road. Essentially, the Startup Garage is a venturing program for those hoping to ultimately become BMW suppliers. Here startups offer BMW cutting-edge technical innovations in exchange for the chance to validate their offerings and land a large, renowned client.
From Disruption to Opportunity
Not long ago, established companies and startups would have seemed strange bedfellows. While legacy companies lumbered along, taking only calculated risks, the newcomers were seen to be agile and ready to take a gamble. According to Prats et al., corporate venturing “has turned these big differences into the biggest reasons to build bridges between them.”
A How-to Guide
To arrive at a corporate venturing solution such as this, companies must follow three clear steps: 1) Set-up objectives; 2) Build a venturing strategy; 3) Define the organizational strategy and resources. In addition, they need to think about the tools and other resources at their disposal.
The Venturing Toolkit
The menu of venturing tools spans from traditional to novel approaches, offering companies many ways to achieve their aims. And there’s no need for corporations to limit themselves to a single tool, sometimes a combination is best suited to corporate goals.
The main options include:
Sharing resources: A means to grant startups access to resources while the established corporations get closer to the entrepreneurial ecosystem.
Challenge prize: An open competition that focuses on a specific issue, offering an incentive to field innovators to develop the best solution.
Hackathon: A focused workshop where software developers come together to collaboratively find technological solutions to a corporate innovation challenge.
Scouting mission: The established company appoints an individual within a given industry to scope out innovation opportunities in alignment with the corporate strategy.
Strategic partnership: Alliances between established corporations and startups can take many forms — including the co-development of products and services and the venture client.
Excubator: A combination of an incubator and accelerator, it functions as an external venture builder for an established corporation.
Corporate incubator: This includes mentoring and value-added services to support entrepreneurs building viable, market-ready ideas.
Corporate accelerator: Short or medium-term support offered to cohorts of startups via mentoring, education,work space and more.
Corporate venture capital: Corporations use direct equity investments to target startups of strategic interest.
Acquisition program: Established firms purchase startups in order to access their products.
Corporate venturing is building bridges between two realms that only a decade ago seemed to be completely at odds.
However, the authors warn, corporate venturing also brings many challenges. “These are two deeply different types of organizations with different processes, timing and culture that are as much complementary as they are incompatible and toxic.”
As the rules of the game are still evolving, the important thing is for established companies to look beyond the potential mistrust and understand the opportunities. Learning new ways to join the technological disruptions can help legacy firms not only survive, but also achieve ambitious long-term goals while benefitting the business ecosystem.
About the Paper, Very Briefly
This 40-page report is the first to be published by mVenturesBcn, a program of Mobile World Capital Barcelona, together with IESE, whose participation was led by the Bertrán Foundation Chair holder, Júlia Prats, with research assistant Pau Amigó.