Partner, Corporate Venturing
Why invest millions on working with the startup ecosystem?
Finnish companies should be asking themselves when looking at different options for building venture arms: why should they invest heavily in these operations?
I have had a privilege to meet 100s of people from large Finnish corporations in the last couple of years and most of them are looking at corporate venturing, and what it could mean for them. Some of them have already had experiences in working with the startup ecosystem, through hackathons or from some form of investment activities. Most have been happy with the experience, but a lot of the time the question has remained on what this means for their bottom line.
Last week I had the pleasure of facilitating some fireside chats around corporate venturing with companies such as BMW, Nokia and Statkraft at Arctic15 event. All of them see the opportunity for staying ahead of the game in working actively with the startup community.
Nokia already has deep roots in working with smaller companies through their Nokia Growth Partners fund as well as running several global “labs” that provide the structures for working with different size companies and finding partners in their quest of being leaders in 5G and IoT. BMW can't be too public around the activities of the BMW Startup Garage, but are saying the garage works very closely with their R&D and have been very happy with the results. Statkraft have set up Statkraft Ventures, which is a corporate venture fund and invests in cleantech areas that are growing as a strategic importance for Statkraft, but might not be significant yet for the parent company as markets.
Corporate venturing tools for different purposes
When looking across Europe, most of the significant European companies have corporate venturing activities, ranging from innovation competitions to setting up corporate venture funds. So, the question again is what corporate venturing models would be right for large Finnish corporations? The answer is ALL OF THEM.
The reason why European corporations invest so heavily currently in corporate venturing is because most have set up structures for doing ALL corporate venturing activities. They hold hackathons and innovation programs to tap into earlier stage companies to get market insight and find partners/future investment targets/add-ons to their existing business. They have set up venture labs to work closer with later stage companies, and build pilot projects with selected companies. They have started investment activities or have set up their own fund to take part in all investment activities (screening, deep dives, deal making, investment), which are just as important as the actual investment
World is changing too fast for corporations to keep up
European corporations’ approach is programmatic, not project based. They have accepted the fact that they are learning from all these different activities, they won’t get it right immediately, and need to look at this in a long-term perspective. But the reason they do this is because they believe that the world around them is changing faster than their organisation can keep up, and this can present corporations with bigger threats or opportunities, depending on their readiness in reacting to these trends. Investing into a world of fast turning startups will yield better results and faster growth. This will happen through insight, shifted culture, faster go-to-market and pure ROI from M&As that were achieved with larger deal flow.
Corporate venturing is a big opportunity for Finnish corporations
The bottom line? The bottom line in corporate venturing is fat and versatile, but unpredictable. More importantly, corporate venturing will shield your current bottom line and hedge your bets in finding growth opportunities in the future.
Corporations in Finland have an unprecedented opportunity to find growth utilizing Corporate Venturing tools, as the Nordic start up ecosystem is one of the strongest in the world, they just need a bit of courage and faith to invest in it at the levels where the activities become significant.