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It’s no surprise that the majority of startups taking off and becoming scale-ups have significant corporations as investors. The world’s largest corporations have expressed interest in startup sourcing and efficient collaboration strategies. They are searching for creativity, new approaches, and an entrepreneurial attitude.
Source: Whatfix
However, before beginning collaborations, the proper startups must be identified. This entails sourcing startups, either internally or externally.
In this article, we will unpack several methods previously used by large organisations in the selection process. Sourcing entails seeking, qualifying, and shortlisting, i.e. sorting through and identifying the most suitable innovations for the company’s needs.
Large organisations must first understand their market and business demands to effectively identify the startups to collaborate with. The first criterion for orienting and making meaningful their sourcing is to have a comprehensive perspective of the ecosystem and the technologies at risk in their sector. Moreover, it is critical to understand the organisation’s business expectations. Which technology is best suited for which application? Innovation must address a genuine operational need and/or be applicable to internal procedures.
To be able to select the best solutions, innovation professionals should analyse current trends and develop their growth strategy accordingly. In a nutshell, know what’s on the market and what your criteria are. The finest startup solution for one firm may not be the best option for another. As a result, the business divisions may help open innovation teams uncover potential tech gems and people who can solve significant pain problems for the company and its consumers. Indeed, they should prioritise solutions with a potentially high ROI, such as those that increase the company’s revenue or customer satisfaction.
Market knowledge is not easy to gather, especially when trying to keep up with the startup scene. Knowing your wants is extremely positive, but it can lead to only looking for what you expect to find. Meanwhile, the market might inspire open innovation teams to explore new frontiers. Solutions can be found in unexpected places, so it is critical to keep an open mind about new technologies and be informed about current trends in order to predict what will be interesting for the organisation.
Examining a technology’s potential beyond its initial focus is equally important. Young firms frequently put themselves in a market niche when their technology might be applied to other industries. A blockchain solution for validating and tracking legal papers, for example, might also be used to certify luxury goods.
Source: EarlyMetrics
To keep an eye on the ecosystem, open innovation teams go to the best areas to find startups, such as specialised trade shows or startup accelerator programs. Startup and new technology fairs, both virtual and in-person, have proven to be key locations for discovering hidden gems. They provide entrepreneurs with a venue and a set amount of time to present their product, allowing companies to quickly examine various choices. Other channels for finding the finest companies to cooperate with may also be relevant:
Access to a comprehensive database with classified information is required for effective sourcing. The strength of a database resides in its use. Novable covers over 2 million startups globally, allowing you to instantly scan and analyse the whole innovation ecosystem. It provides an extensive shortlist of relevant solutions that matter to you, regardless of your innovation ambitions. Unlike traditional databases, Novable combines artificial and human intelligence and provides the perfect combination to discover the needle in the haystack.
There is no single optimum way, and having a database does not exclude you from attending conferences, for example. Finding your unique blend remains the best recipe for success.
Qualifying a startup entails examining not just the entrepreneurial concept itself, but also the potential synergies with the company and the innovation project. A startup’s growth potential is absolutely connected to the resources that the organisation will make available to its development. A startup can be highly adaptable in its early phases (its business model and growth strategy are not yet fully developed). This opens up options for collaboration with the company. It is critical to understand which weaknesses the group is willing to accept and which qualities it requires.
Furthermore, huge corporations will find it easier to turn to a startup that has already worked with other corporations. When selecting a collaborator, the history of commercial pilots or partnerships is a good signal. If the company is going to enter a test phase with a startup, this track record can provide reassurance.
Sourcing startups is a long-term project. Internal team mobilisation is required to keep an eye on the market, understand the business demands of the various business units, and stay linked to the ecosystem. Or you can automate the whole process, as precisely as you can. All of these channels necessarily produce a more or less complete understanding of the startup ecosystem and technology developments.
By sharing their experience, large organisations may help one other and the startup environment. A business can refer its sourced startups to other companies in a non-competitive context to ignite fresh synergies for distinct use cases. This sort of sourcing, which is more passive but collaborative, is based on recommendations and grows in open innovation teams. In short, sharing expertise can result in improved startup sourcing for everyone.
Companies constantly develop new products, or variations of existing ones, to sell to the market. However, large and well-established businesses are especially prone to resisting change and becoming entrenched in their ways of doing things. They prefer to expand their current offering rather than reinvent it. This is understandable since innovative activities are characterised by a high risk of failure, and a high degree of unpredictability as well as uncertainty. Thus, innovation necessitates a great level of failure tolerance.
Startups are at the forefront of innovation. There is no single area of human activity that is not addressed by entrepreneurial creativity. To drive economic growth, corporations must partner with startups, on a scale never seen before. They may not have a choice, as recent global challenges will quickly require steady external assistance to address them.
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