The impact of startup-corporate collaborations

Free resources 1. February 2023.

Among the many different collaboration and innovation vehicles, Corp-Up (startup-corporate collaborations) is the most used and least stopped – with corporates acknowledging the importance of startup-powered innovation and startups ranking corporate collaborations among their top priorities. However, in part due to a failure of sufficient measurement and tracking, many companies are simply not fully aware of the value of Corp-Up, neither in non-financial nor financial terms.

Read on to discover the true extent of the business impact brought by startup-corporate collaborations (Corp-Up) to both corporates and startups.

Corp-Up drives financial performance

Although most corporates (55%) report less than 3% of their revenues to be impacted by collaborating with startups, it is clear that corporates are underestimating the full scope of this impact.

An analysis of the financial reports of a selected group of publicly listed corporates who took part in our 2022 Age of Collaboration III, in fact, demonstrated how an active use of Corp-Up translates to financial impact. These companies reported better financial performance across the board than those who never engaged in Corp-Up roughly double the CAGR of their end of year stock price on average, over 60% higher EBIDTA CAGR on average, and a drastically higher revenue CAGR on average.

Corp-Up sharpens market strategies

But the benefits of Corp-Up are farther reaching and more significant than collaborators are measuring or acknowledging.

Corporates who engage with startups perform better because of their exposure to (and ingestion of) diverse approaches, agile solutions, and a mindset that is willing to challenge the status quo. When a startup collaboration comes to life with a corporate, these collaborations can touch the lives of 100+ people within the organization, challenging institutional norms that can otherwise hold a corporate back from shaping the future. The end result is an organization which better understands what is going on around it, and which can make smart decisions about where to focus next and why. While one might argue the extent of this clearly visible relationship, there undoubtedly is a very strong one.

For startups, too, the impact is bigger than they may currently understand. Beyond the potential financial incentive, startups also receive a host of significant intangible benefits as a result of their collaborations with corporates. Not least among these is the crucial market feedback that a collaboration with a more experienced corporate player provides: for a startup with a potentially powerful solution, being pointed in the direction of concrete corporate pain-points & possible use cases can be the push that they need to move in the right direction as a young company. Many of the startups and corporate we interviewed for this report indicated that this identification of extended use cases and market opportunities was a key result of their collaborations together.

In addition, especially for startups who are ready to scale, the successful navigation of a large corporate collaboration can both be instructive for improving their own future collaborations, and game-changing as a proven reference for their product or solution’s effectiveness. By working with one corporate, startups gain the power to more easily and quickly scale with further corporate clients, leveraging their own know-how and an increased level of corporate trust in their solutions to do so.

That is why startups who are more successful at collaboration end up attaining increased funding levels: 57% of startups who report “very” or “extremely” successful Corp-Up report having achieved over €10 million in funding, compared with just 47% of “somewhat,” “slightly,” or “not at all” successful startups.

Corp-Up has a bright future

Challenges remain to grasp the full potential of Corp-Up, but the power and awareness is in the hands of both corporates and startups to bring it to the next level.

Only 11% of collaborations make it from first introductions to full-scale deployment, highlighting that despite all the success startups and corporates derive from collaboration, there is more to be done to optimize it; nevertheless, corporates and startups acknowledge the faults on both sides of the collaborations that contribute to these challenges, showing a maturity that we believe points to a willingness to do what it takes to make collaborations improve in the future – the future of Corp-Up is bright, indeed!

Corporates expect the future of Corp-Up will be even brighter: 72% of corporate respondents expect financial impact to increase or strongly increase over the next three years, indicating that corporates are already willing to bet on the further growth of this valuable innovation vehicle.

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