Thanks to new investment models, such as crowdfunding, angel investing and start-up accelerators, which offer resources and mentoring in exchange for equity, we are witnessing an explosion of new enterprises. The traditional innovation landscape is undergoing fundamental change as small businesses and large companies work together on different, yet mutually beneficial, goals.
Corporations play an important part in the long-term success of start-ups by granting them access to worldwide markets, allowing them to make use of their established supply chains and capitalize on their brand.
Conversely, start-ups help bigger companies by connecting them to little-known innovations – whether technologies, products or business models. A partnership of this kind can deliver growth in new markets for both the start-up and the corporation, while at the same time taking some pressure off research and development departments. But while these relationships are here to stay, the interplay between big business and small start-ups has never been more complex.
Companies now realize that the sheer number of start-ups presents a new problem: that of sorting through the vast haystack of new companies to find the best partner. Start-ups might be located far from the company’s headquarters, and they may not make concerted efforts to raise their profile. Even when they do, over-stretched corporate teams can miss opportunities because of the sheer, overwhelming numbers of new ventures bubbling up everywhere.
Fortunately, we live in the age of ubiquitous data and analytics, and we can tap social media for insights. Leading companies in Silicon Valley and Europe are already applying these powerful tools in three ways:
· To identify and track interesting new markets and start-ups.
· To gain foresight about new and little-known markets.
· To find the best partners to achieve the company’s aims.
These tools take the randomness and uncertainty out of working with start-ups, allowing corporations to track a larger number of ventures at an earlier stage in their development. The tools also make it possible to track start-ups over time, instead of looking at a static snapshot, to sift through successes and failures in order to identify winning teams, business models and product-market combinations in new and neighbouring markets. Consumer goods companies that use these tools may realize they have not only found the needle in the haystack, they have found a whole load of new haystacks, in a number of new fields.
In short, these new tools make the start-up world more accessible and easy to navigate. Corporations can now take advantage of this vast pool of creativity and potential, and enjoy a higher chance of success.
This blog is part of a series of articles lending context to the World Economic Forum’s work in the field of European entrepreneurship. Click here to read Nicholas Davis’s introduction to the series.
For more articles on entrepreneurship in Europe, click here.
Author: Paul Campbell is the Chief Executive Officer and Co-Founder of Start-Up Genie.
Image: A magnifying glass is held in front of a computer screen, May 21, 2013. REUTERS/Pawel Kopczynski.