Startup-corporate partnerships play an increasingly important role in the corporate innovation journey and startup evolution. Yet this topic has not been widely researched or investigated. MIT Corporate Relations, which the Industrial Liaison Program (ILP) and MIT Startup Exchange are a part of, were delighted to collaborate with Innovation Leader to better understand the challenges and best practices of startup-corporate partnerships.
Together, we reached out to a broad range of startups, early and late stage, as well as global corporations working across sectors and geographies to capture their expectations and perspectives about pain points and what needs to be done to make startup-corporate partnerships more successful. This report captures some of the most interesting findings and, even more importantly, further illuminates the white spaces and raises additional questions that will guide future research into this important topic. As one example, we found that for 80 percent of our corporate respondents globally, engagement with the startup ecosystem had either increased through the course of the COVID-19 pandemic, or remained steady.
The strong corporate relations that MIT has been forging since 1861 have proven to be a key success factor to creating transformational impact on the world. More recently, as corporations increasingly expand and accelerate their open innovation efforts, the MIT Startup Exchange platform was created to help them leverage MIT’s world-class startups and entrepreneurial spirit by facilitating highly-vetted and targeted connections between them. Currently, MIT Startup Exchange has over 1400 active startups, and it is adding MIT-connected startups at an average rate of 140 per year. Together, the two programs have a unique understanding about how large global corporations and startups work together.
The value of leveraging complementary capabilities and the prospective impact that startup-corporate partnerships entail are potentially-game changing. For corporations, it may be an opportunity to reinvent their product offerings, rapidly de-risk, test, and acquire innovative technologies, foster in-house innovation, and/or quickly acquire new skills or creative talent.
The value of leveraging complementary capabilities and the prospective impact that startup-corporate partnerships entail are potentially-game changing. For a small, high-growth startup, it may mean leveraging distribution channels, building up their reputation to help initiate other partnerships, and/or validating their technology or business model. For corporations, it may be an opportunity to reinvent their product offerings; rapidly de-risk, test, and acquire innovative technologies; foster in-house innovation; and/or quickly acquire new skills or creative talent.
While both sides naturally strive to achieve positive outcomes, the truth is, these relationships can be very challenging for both parties, and many end up being a disappointment or failure. On top of that, 2020 brought us a global pandemic that is pushing us to rethink the way we work and collaborate, and is making us pivot in ways never tried before.
So, what are the root causes of failures and/or inefficiencies when startups and corporations work together? What is not working for entrepreneurs? Where do corporations fall short? How can we decrease the risk associated with these relationships and, more importantly, how can we improve them so they deliver on their full potential? In collaboration with Innovation Leader, we asked both parties to share their views and best practices. In addition, the Innovation Leader team conducted in-depth interviews with corporate innovation experts and startup founders. These are some of the questions we posed:
- What drives you to seek startup/corporate engagement? Which are the most challenging aspects of it, when initiating collaborations and then scaling up?
- Which resources do corporates have in place, and which ones are considered most needed to support startup engagement? Who are the senior leaders supporting (and investing in) this activity?
- How did the level of startup/corporate interaction change, and what were the most challenging aspects of operating throughout the pandemic?
- How do you measure success? Can you point to successful outcomes? And what advice would you offer to help others get there?
In the report itself, you will find interesting and useful statistics, revealing interviews with founders and corporate leaders, as well as some anonymous advice provided by entrepreneurs and corporate professionals who responded to our survey. As we reflect on it, it is our goal to incorporate these learnings into our practice. We hope these will help you as well. The more we learn about challenges and solutions to startup-corporate partnerships, the better equipped we will be to support our innovation networks and entrepreneurial ecosystems.