Match-Maker Ventures was proud to co-host the first of two Scale Up Now webinar events with Arthur D. Little on May 18th. With the help of the expert-led panels carefully curated by Match-Maker Ventures, the event helped generate discussion and share valuable insights surrounding one of the most attractive topics in business today: collaborations between innovative scaleups and large corporates. With our lineup of world-class speakers, Match-Maker Ventures and Arthur D. Little compared insights on the value, challenges, and different approaches to these collaborations.
What did we talk about?
The topic of our second webinar session this week was the top line growth that can be achieved with corporate-scaleup collaboration. Panelists discussed how to create new, innovative products and services using the power of scaleups. They also considered how far from their comfort zone corporates are willing to look to find and create new growth – both in terms of sector and geography. The content of the session was especially meaningful for corporate leaders looking for an effective way to innovate using scaleups, scaleups who may be frustrated or mystified by the collaboration process, and industry experts looking to better understand the value that scaleups bring to their sectors.
Keep reading to learn more about our expert panelists and the key learnings they shared with our audience!
Who did we talk to?
What did we learn?
Below are our top five key takeaways:
1. Innovation is necessary for growth, and scaleups are agile innovation engines
Though the world seems to have come to a stand-still over the past year, innovation has continued to move at a dizzying pace – and in many cases has even been accelerated by the COVID crisis. Our panelists from a variety of industries, including telecom, medicine, and insurance, expressed an overall impression that recent events have caused corporates to reconsider their priorities – a move which was necessary in order to avoid being left behind.
One panelist highlighted the unprecedented pace at which their company has managed to adapt to the changing conditions thanks to collaboration with innovators. In the midst of the COVID crisis, the company managed to very quickly shift its retails stores to a cashless model – a change which has taken other companies years to implement – due to partnerships with the right scaleups at the right time.
Another panelist shared similar first-hand experience with the rapid pace of innovation that scaleup partnerships can enable. They mentioned that in the medical industry, for example, the vaccine development timeline which would ordinarily have taken years was similarly condensed into a matter of months – an accomplishment which some attribute at least in part to the strong partnerships that medical corporates have across industries. And this wasn’t the first time that the medical industry benefitted massively from innovation partnership: since a considerable amount of new research happens at universities or hospitals and there is an increasing recent push to transition from so-called urgent “sick” care to holistic “health” care, partnerships are a vital component of business.
Other speakers echoed this sentiment: when it is crunch time, agility rather than name recognition is what matters. Though corporates can sometimes prefer the relatively low risk that comes with working with other corporates, mature scaleups can bring a more innovative solution, often in just a fraction of the time. With digital technologies accelerating at an unprecedented speed, corporates will increasingly need to consider the additional value that agile scaleups can bring. In order to achieve their potential with top line growth, corporates must recognize the benefits of scaleup-corporate collaborations. .
2. Corporate and scaleup priorities are not always aligned
Throughout our event, a key theme became clear among the speakers: while scaleups tend to emphasize the value of innovation, corporates tend to get hung up on the issue of risk. These differing priorities make sense, but they must be balanced out in order to create a fruitful partnership.
A major question that was discussed with regards to this balance of risk and innovation was, similar to the concerns voiced by our speakers in session 1, how to decide which scaleups are worth partnering with for their innovation in spite of the risk. A scaleup would need to offer enough impact and growth potential to their potential corporate partner to justify the partnership, and a corporate would need to have the industry acumen to effectively assess which scaleups fit these criteria.
Fortunately, there are mechanisms for vetting scaleups to minimize this risk. Carlos Rodrigues, VP of marketing at Match-Maker Ventures, emphasized the role that match-making can play in this process. Bringing in a partner who is familiar with both a scaleup’s capabilities and a corporate’s needs is a game-changer, facilitating the necessary assessment of the scaleup and reducing the risk on the corporate side.
What can clearly set a scaleup apart and set up the possibility of a successful scaleup-corporate collaboration, our panelists agreed, was a clear business case for the partnership. If a scaleup can demonstrate their potential contribution to a corporate’s top line growth, then the decision to accept the risk of the partnership becomes much easier for the corporate.
3. Geography continues to play a role in innovation opportunities
Though we at Match-Maker Ventures always strive to create a world where business collaborations have no borders, geography is still a crucial factor to consider when it comes to making scaleup-corporate collaborations successful.
One panelist compared their experiences of working in the scaleup-corporate partnership space in different areas of the world, highlighting that regional differences can still play a major factor in the readiness of potential partners to collaborate. In some areas, like in the United States, corporates are more wary of third-party engagement in core business activities, and may even hesitate to engage with external partners for growth opportunities. Unlike in some other regions in the world, partnering with an American company can mean rolling out a solution to 100 million+ users – a factor which decreases the corporate risk appetite, at least for now.
While this attitude seems to be changing within the telecom industry, recent third-party partnerships among corporates in the US have been with other corporates (like recent high profile partnerships between telcos and streaming services). According to our panelists, it may still take time before companies in the US are ready to assume the risk that comes with rolling out a scaleup solution to such a large customer base.
This hesitancy does not mean, however, that scaleup-corporate collaborations are not seen as valuable and cannot be drivers of top line growth; on the contrary, it is simply a matter of partnering the right corporate with the right scaleup/solution at the right time.
4. Global innovators have not completely left hardware behind
A key defining feature of a scaleup lies right in the name: the ability to scale. For some corporates looking for potential innovation partners to drive top line growth, this prerequisite of scaling readiness means a primary emphasis on digital-only solutions, which can be rolled out rapidly with relatively lower marginal cost.
However, while digital solutions are the prevailing form of scaleup-corporate partnerships, there are notable exceptions to prove that hardware can still provide promising opportunities. Match-Maker Ventures highlighted our portfolio scaleup Otodo, an innovative smart-home solution which unifies control of Wi-Fi-enabled smart-home devices using a physical hub. The growing smart-home industry is certainly an exciting avenue for top-line growth for many corporates, and there is therefore sufficient interest in and need for the solution to justify the collaboration with a hardware-enabled solution.
Panelists also mentioned that similarly hardware-enabled innovative add-ons can be seen in recently released Apple technology as well, for example.
5. Both the scaleup and the corporate have to be ready to partner
As we also heard from our panelists in session 1, there are many roadblocks that can hamper well-intentioned scaleup-corporate partnerships if both sides are not adequately prepared for the partnership.
If there is an imbalanced tolerance for or understanding of the risk involved in the partnership, for example, then a scaleup may end up dedicating resources to a partnership that ends up falling through, or vice versa.
Furthermore, if a scaleup approaches a collaboration with a potential partner without a sufficient understanding of their institutional priorities and their regional peculiarities (like the greater hesitancy towards third-party partnerships in the US, for example), then an otherwise promising partnership may end up doomed from the start.
Ultimately, both sides of the partnership need to approach scaleup-corporate collaboration with an intentional consideration for the challenges that may arise. Only then can corporates fully harness the power of these collaborations to drive top line growth.
Interested in learning more? Check this out!
If you have made it this far and you are interested in learning more about scaleup-corporate collaboration, we highly recommend reading the Age of Collaboration, a joint study between Match-Maker Ventures and Arthur D. Little which gives valuable empirical insight into this collaborative phenomenon.
To learn more about our portfolio of innovative scaleups who are making these kinds of collaboration a reality every day, head over to our LinkedIn or check out the rest of our blog to see all of our latest portfolio success stories.
Finally, if you have any questions or would like to learn more, feel free to contact us here.