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Larger firms have a better view of the problem, for which startups prove to be problem-solving. A quick look at how Corporate Venturing acts as a win-win.
Enterprises, Startup, Technology

How Do Larger Firms Depend On Startups To Develop Technology?

A quick look at how Corporate Venturing acts as a win-win for the parties involved, the enterprises and startups.


The interdependence of larger firms and startups has become the norm in the world of technology. While big companies look to maintain their position intact in the competitive market, as they are constantly on the look-out for up-to-date and futuristic technology at the same time, startups become their go-to. Simply called Corporate Venturing, several big companies rely on startups to innovate and explore the industries ensuring minimum damage and maximum growth.

A study claims that Corporate Venturing was on a continuous rise throughout 2018. We cannot deny that the current year and the future will only see better investments.

Why Startups?

1. Innovation

Startups are constantly challenging the status quo and are hungrier than any established firm. The fire within to rise and shine has to be fuelled with proper finances. The big firms already have set systems in place and flexibility becomes rare inside the working environment, making it challenging to innovate at the speed which the market demands. Startups ensure a pipeline of new ideas to continue growth. With an ocean of workers and firmly rooted systems, it is almost impossible to expect speed and precision at the same time.

2. Exchange

In return, these firms offer finances, workforce, an easy establishment in the market, facilities, etc. The little spark of an idea is kept alive by these factors, which most of the startups do not possess. They do not have the means to scale their business. Larger firms act as catalysts to learn, explore and execute their ideas while also understanding existing business problems from a better perspective. In short, larger firms have a better view of the problem, for which startups prove to be problem-solving.

How Do These Firms Make Sure They Engage Well With Startups?

Big companies might not invest only in one startup. While they have their sights on many of them simultaneously, they make use of the specific capabilities of each startup rather than depending on one for every innovation. This results in an all-round development within a short span. In turn, the startups get access to the firm’s customers and the market easily.

When a startup presents an idea, if the firm validates it, there is a huge opportunity for the startup to experiment their solutions in the market practically. Startups are persistent. They are out there to prove a point. Hence, when something fails, it is not the end of the world. With enough trust and patience from the investing firms, their chances of succeeding go higher.

Collaboration need not always mean partnership. A lot of these big firms look for shorter relationships with startups and move on to other options. Sometimes, they can be mere extensions of the existing teams in a firm. Know the impacts of digital transformation in business. The brighter side of this is that the startups gain their customer base and also have a practical validation for their products and solutions. With clear communication on what they expect from the larger firms and where the collaboration leads to ensure a healthy relationship on both sides.

A successful partnering demands discipline, patience, focus and respect from both ends. Clear communication on expectations, demands, and requirements will put away any complication. With the right proportion of win-win in the mind, startups and big firms can collaborate to create a world of technological wonder.

Written by Jayashree in July 18, 2019
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