Bringing in corporate innovation is very challenging looking at the present day’s startup scenario. There are many firms that have established development and research or even corporate development teams, but there are no innovation teams. It is difficult for any specific team to get a complete idea of the big story. This is because the organizational charts of the corporations are complex and with a wide range of divisions of people. So many entrepreneurship programs may boost internal innovation, but this is a risky and expensive corporate innovation model to support.
What Is Corporate Innovation?
Corporate innovation can be strongly described as the course of enterprises enforcing new innovation chances into the prevailing models of business. Established entities who engage in this course typically have a team that is completely dedicated to the efforts of creating innovation.
Taking into account one of the main concerns of innovations in the corporate sectors, which is to enforce a new technology strategically, one clear way in sourcing for the startups. Common ways for this purpose include internal corporate innovation programs, external accelerators, and also the Corporate venture firms.
The Nature Of Corporate Venture Capital
The fame of corporate venture capital has developed over the years. Firms like Dell and Boeing have discarded their internal teams of venture capital, yet as per recent reports, big tech companies have raised their investments in startups from $7.9 billion to $16.7 billion in just one year. Intel Capital, Qualcomm, and Google Venture are some examples of successful corporate venture capital entities. However, this is a structure that becomes difficult when it comes to replication.
The main aim of corporate innovation is to help to meet the views of the company by exploiting innovation power. Startups are naturally disruptive and are the most trusted source of such innovations. They generally bridge the technology gap for the corporations, and they might bring access to new clients or the market. To access such resources in an effective and quick manner, investment is the best option.
However, this is a big challenge for any corporation to evaluate which startup is well operated and incurs the right solutions to develop its business. It is also hard to set up an internal team of venture capital as it is challenging to evaluate experienced, smart people. They become very expensive to hire, especially in places like Silicon Valley, and also, it isn’t easy to motivate them to stay around. A corporation can spend millions of dollars to gather even a small team internally.
Solving The Problem Of Corporate Innovation
Outsourcing corporate innovation, which is often termed as “Venture Capital-as-a-service” is an efficient way to attain innovation in an affordable and flexible manner. In this context, the partners of the corporations with the venture capital firms. They agree upon the indicators of the performance, and the venture capital firms are responsible for meeting them. According to a report, about 75% of venture backed firms in the United States do not return the capital of the investors, so it makes sense to depend on venture capitalists who are experienced to make such investments.
Outsourcing corporate venture capital may be more cost-effective if we compare it with designing an internal team for investments. Along with that, this approach enables the entity to modify and pivot its choices anytime. The venture capital firms will modify their scaling and adjust their strategies depending on the requirement of the clients.
Since the venture capital firms do good research and construct strong relationships, they are capable of identifying the startup team that has the right innovation and technology that will benefit their corporate partners.
Since startups that are successful have no crisis of potential investors, the prevailing relationships of established venture capital firms make it easier for them to get hold of an investment. Looking from the corporate dimension, the company gets an advantage from almost immediate access to technology and new innovation. So corporate innovation may seem hard to implement initially, but it is of great use to startups and also corporate bodies.