And corporates and start-ups lived happily ever after
Defining the objectives and setting the foundations of successful relationships
By Nico Valenti Gatto and Tanguy Confavreux
A top executive from a very large multinational once told us, “you could say we’re the start-up inside the Group”, referring to the team of 10k (yes, ten thousand) people that reported to her!
This potentially funny anecdote does in a way show how companies today are looking to be part of the start-up trend that has been both a godsend and a nightmare for incumbents. Many publications have gone through the importance that start-ups have had in almost all industries over the past decade, or more, so there’s no need to repeat that here.
The topic is not a new one: a lot has been said and put in place, but relationships between start-ups and large corporates are still not mature.
Partech has been investing in start-ups since 1982. Today we have offices in San Francisco, Paris, Berlin and Dakar and we dedicate our $1.3B funds to the most promising and disruptive companies from seed stage to pre-IPO, from the US to Europe, Africa and Southeast Asia. We have built the funds we manage today with the support of many investors, of which 30 corporate LPs and we can safely say that they are an invaluable asset as they continuously help us support our portfolio, dealflow and investment activities as a whole. We also benefit from a larger network of 100 corporations that we have built over the years. At Partech today, a team of 6 people is dedicated to managing the opportunities and tasks that working with large corporations entail.
As a VC, we say it’s a win-win-win situation. Startups are willing to work with key players in their verticals and to leverage them for growth, corporates want to be close to start-ups, and we find added value for our portfolio and investors
We intended to write a white-paper for decision makers in large groups as a guideline tool to manage expectations and prepare according to the underlying reason for wanting to work with startups. Founders and CEOs of start-ups might find this interesting to learn more about the dynamics of large companies that will eventually try and work with, or invest in, their business.
We start from the very first question a corporate should ask itself: why would I want to work with start-ups? Once the different rationales are explained, we go through what a corporate can achieve with these companies, followed by an analysis of how. As a conclusion we tried to summarize it all in one simple table comparing the approaches we’ve seen from the corporates Partech works with.
Reasons for big companies working with start-ups include improvement of their employer, investor and corporate branding. This is not enough however, and the most advanced reasons are to improve internal knowledge and operational excellence, and to seek competitiveness in their core businesses.
Only once a corporate has clarified these objectives, can the different actions be defined. Branding and knowledge can be improved with quick wins. Working with start-ups as a customer, a provider or even as a partner is the best way to help both operational excellence and competitiveness. Obviously, investments and M&A are also an attractive option to remain competitive in the market.
In any case, it’s hard to make it happen properly. We proceed by suggesting some tools, KPIs, processes and HR policies we’ve identified as efficient. We then go into the details of corporate governance structures that are usually adopted and try to show the pros and cons of each.
Download the full white paper here.
About the authors:
Nico Valenti Gatto
Is Principal in the Investor Relations & Portfolio Support team at Partech. Before joining in 2015, Nico worked at Edenred in London and Paris and was responsible for internal and external innovation. He started his career in strategy consulting in Milan where he worked on internationalization, M&A and new product development projects for large multinationals. Nico holds an MBA, with Distinction, from Cass Business School in London and a BSc in Economics and Business from Bocconi University.
Joined the Investor Relations & Portfolio Support team in 2017. Prior to Partech, in Lyon, Tanguy founded Startsquare, a one-stop-shop for deeptech projects and technology transfers. He also worked for B2C and B2B start-ups. He graduated from EMLYON Business School.