Howdy! Entrepreneurial-hearted recent Master’s graduate signing in. I’m Eljas, a SLUSH wacky, startup founder and one of the newest additions in Avanto’s ranks. I’m building new ventures and working with startups, towards which I developed a passion while designing a corporate startup program for Nokia as my thesis. Here I’ll share some of the insights I discovered. Enjoy!
Setting up a corporate startup program contains a whole bunch of elements, so I'm writing this post to help you grasp the importance of the different concepts better. I'll go through what the successful programs got right and what the unsuccessful ones got wrong. Measuring the success of a program is a science of its own but in this case, they are classified by the amount of capital raised by startups and the amount of startups still in business half a year after the program. Evade the pitfalls and follow the virtues.
The 6 failing blunders
There are as many reasons for failure as there are failures. While I'm a strong believer in learning through mistakes, it's preferable to learn from the mistakes of others first and avoid the most common pitfalls. Here's where many corporate startup programs get derailed into the bin of cancelled projects never to be seen again.
1. Lack of high-level support: Without the approval of executives and managers in other operational units, you won't get to use any of the human resources needed. Your program will be seen as a nuisance, always asking for favours from already busy people. To get their buy-in, you must share the credit and benefit of successful projects.
2. Goal misalignment: One of the first things you must do with the selected startups is to align your objectives. This will save you a lot of trouble and prevent the situation where you find out you both had different ideas of the goals of the collaboration. Also, everyone in your corporation needs to be clear about the goals.
3. Unsuited startups: If your selection criteria are off-point, you won't be able to do any business with the startups. Don't just choose those with the coolest sounding idea but focus on the collaboration roadmap in the selection process already.
4. Lack of communication: Painstakingly slow communication within the corporation is a very common symptom of unhealthy startup programs. It is caused by not having the right people involved from the beginning. If you want others to participate, get them on board at the start. Your sudden email to the procurement department which goes "Hey, we have this startup case which needs to be approved asap. Can we skip all the normal procedures? Thanks!" is headed straight towards the trash bin.
5. Unclear startup relationship: Are they tech partners? Are they suppliers? What should we do with them? You will hear these questions from your colleagues who are supposed to carry out the projects with startups. Define the role of the startups and make sure everyone is on the same page.
6. Process misalignment: Unless your processes have been designed with agility and speed in mind, just forget about even trying to use them with startups. You must craft separate procedures to handle business with startups in the early phases of the collaboration.
The 6 success factors
Here are the characteristics shared by the best programs. They are easy to overlook and underestimate, as have done the numerous companies who have attempted collaborating with startups and failed to produce results. The winners of the game know the importance of putting effort into nailing each of them.
1. Active outbound recruiting effort: The best startups know their value and it's you who has to convince them to collaborate, not the other way around. Participate, hustle, mingle, contact and be present where your ideal startups are.
2. Clear vertical and sector focus: Staying focused on a certain theme is vital for running the program efficiently and kicking up the speed. You may change the vertical and sector later on but don't try to work in all areas at the same time.
3. Highly engaged mentors: The bridge between your corporation and the startup is just as sturdy or wobbly as the mentor you have selected builds it. The best mentors are truly interested in startup collaboration and have good internal connections.
4. Large investor network: Startups are always thinking about their next funding round. If your collaboration with them is a success, the startup must be able to quickly scale up their operations. They need a ton of money for it so you must do everything you can to help them find funds.
5. Active peer-to-peer interaction: Having all the startups in your program interact together brings about new ideas and makes the whole process less stressful for them. Creating a sense of community lays the foundation for an ecosystem.
6. Active alumni interaction: The alumni are a valuable source of feedback for you, so listen and improve. They know best how it’s like to collaborate with your corporation. Also, connecting your new startups with those who have already gone through the process helps the new ones get started.
Give it a go
Setting up a properly functioning program is a delicate task and there’s a lot more to it than a simple do’s and don’ts list. I will soon publish my thesis in which I lay out the steps for setting up a corporate startup program on as practical level as possible. Stay tuned!