What’s Next 2016: How to make corporate-startup collaboration work

By Masyitha Baziad July 29, 2016

Set specific collaboration goals, take small steps at first
Startups need to see the value, enterprises need to cut red tape

What’s Next 2016: How to make corporate-startup collaboration work

INSTEAD of worrying about startups disrupting traditional industries and large corporations, the question now should be: Why not work together?

1337 Ventures founder and chief executive officer Bikesh Lakhmichand (pic above) said such collaboration could be very valuable, as long as both parties play their cards right.

If you want to create a programme to cooperate with startups, he advised large corporates, the secret is to pay attention to the building blocks: What your programme design looks like; ensuring there are measurable outputs; and assuring there will be implementation.

In designing such a collaborative programme, you need to be very specific and start on a small scale, he said, arguing that most corporates want to go big on their first journey, which can instead be a big mistake.

“We see a lot of companies wanting to jump in to invest in 15 companies or acquire 20 companies – they go too big and create a big fund, without taking the baby steps to try and work with startups first,” he said at Digital News Asia’s What’s Next 2016 conference in Kuala Lumpur yesterday (July 28).

Cut the red tape

According to Bikesh, one of the first things large companies should do before embarking on a startup collaboration process is determine what they want to achieve – whether it is to diversify, expand, or innovate.

He said that he found that in his more than 10 years’ experience training companies and entrepreneurs via his other company, iTrain (M) Sdn Bhd, the most difficult part in working with large companies was their inefficiency and bureaucracy – sometimes it could take up to three months to sign a simple deal.

“What more if you want to start a pilot programme with startups – can you imagine the amount of paperwork you need to go through?” he said, adding that large companies should not let too much bureaucracy drag them down when dealing with startups or starting an investment programme.

Bikesh also noted that despite having separate innovation centres, many large companies still need to go back to the head office or parent company to approve any initiative – this defeats the purpose of having an innovation centre in the first place.

Indeed, he argued that creating such an innovation centre was not even necessary if the company could build a cross-departmental team that understands the importance of business and innovation.

If you like it, put a price on it

Many startups these days want to work with large and established companies, and the reverse is also true.

This means startups have options. If they are not attracted to any deal, they can walk away much more easily and quickly, Bikesh cautioned.

“Put aside a budget – no-one does anything for free, not even startups. When you do not put in any budget, this means you do not see any value in that particular product from that particular startup,” he said.

Bikesh argued that startups would value the company based on how the company valued them. And with money on the table, it would be a lot easier to start the innovation and collaboration process.

He also shared nine ways on how traditional companies could have a successful collaboration with startups.

Acquisition: Although this sounds easy, companies will need a lot of resources to complete the process. But for big companies, this can be worth it, mainly because they can focus on the business side without worrying too much of the technical or technology aspects.
Corporate VC: This falls under acquisition strategies. When companies start their own corporate venture capital (VC) fund, it means they are going to take a 50% or above stake in a particular startup.
Accelerator: A slightly different approach, this means you want an outcome in the fastest means possible. Usually, it will take about 100 days to go from the idea to the product stage, according to Bikesh.
Collaborate: This is the simpler way to go to. If the company wants to launch a product, it can collaborate with startups or developers to provide the content, for example. Startups and developers like this type of collaboration because they can build something for a company and maybe get some cash out of it.
Hackathons: This is a great way to get certain things developed for the company, or to get proofs-of-concepts built over a weekend. Developers like hackathons because they see them as outlets for their creativity.
Startup competition: A good way for startups to showcase their products, as well as for companies to check on which startups have potential. Being in a competition also gives startups a sense of achievement, and even some form of recognition.
Conferences: There are limited tech-related conferences in the region, especially in Malaysia, and most are organised by media outlets (including DNA’s own What’s Next). He urged large corporates to organise tech-related conferences to connect experts, organisations, startups, and even government officials.
Startup as customers: Another way of getting into the startup scene is to start offering your products or best deals to startups, Bikesh said, citing as an example telcos offering startups special services and product such as data plans.
Startup tour: This is a trip company officials can take to visit key startup players in select countries or regions, to build networks, learn about their products and services, and hopefully seal collaborative deals.