Why Corporations and Startups Should Become Best Mates?

Today's startups are a significant source of innovation, as they employ emerging technologies in inventing and reinventing products and business models. Corporations that are brave enough to embrace a more open innovation strategy, increasingly look to startups as a source of external innovation. It has been proven that this type of co-operation is mutually beneficial, although, sometimes a challenge.

Startups: Stirring Up The Competition

Studies have showed that virtually all new net job creation over the past three decades has come from new businesses that are less than a year old. New businesses create on average 3 million new jobs each year (USA) compared to older companies of any age, type or size that in aggregate, create a net average of 1 million jobs annually. In the UK entrepreneurs made a new record as 80 new companies were being born per hour in 2016. From these new businesses approximately half make it to their fifth year of operating. Data also shows that where the average life-span of a company used to be 75 years, it’s now estimated to be approximately 15 years. This means that the younger companies that are more agile and innovative, are taking over the markets, and the majority of the most successful companies in the world at the moment, have been founded after the 21st century.  In order for the corporations to keep up with the markets and stick around for that 75 years, they need to collaborate with startups or change their working culture dramatically. More than often though, more mature corporations lack the business structures, time and the know-how to actually make the collaboration with startups happen. Everyone in the business and corporate world loves numbers, so it’s about time to take notice of them. Corporations need to realize the value startups can bring to their business. Startups spark innovation, speed and well, balls, that corporations often lack. 

Why Corporations are Falling Behind

Central elements for an innovation process are considered to be the mobility of resources and the alignment of incentives. Innovations are the most disruptive for the existing markets in organizational structures and management processes, which makes implementing these innovations challenging for more mature corporations. These challenges stem from the decision-making processes. Corporations tend to favor decisions that fit the company’s timeframe and risk profiles, that are characteristic of its on-going business. When risks occur in product life cycles that are prolonged and difficult to predict, corporations tend to stick with their existing patterns. In a corporate setting, risk taking is not as encouraged as it is in a more entrepreneurial setting and this type of shortcoming in the incentives can lead to a slower innovation process. 

Instead of hiring entrepreneurs, corporations are admitting the areas where they need help and are now pitching to startups and innovators. Many corporations are involved in hackathons and even have their own accelerator programs, but for some reason the implementation part is too often unfulfilled. Some corporations even have a department that takes care of investments in new businesses and is responsible for new business development and acquisitions. These companies are doing what they’re supposed to, but tend to do it inefficiently. The most common way of finding startups for their business development needs (or as we at Catapult say the scanning of  startups) corporations attend different startup events all over the globe. This is a great way of networking, but not the most effective way to find the startups that actually have a well established product and already have market proof. In most cases these later stage startups are too busy to attend events like this, but they are the players corporations should want to side with. By attending startup events and organizing hackathons, the company is most likely to go through roughly 60-100 startups a year. Now, that’s a good amount of companies in general, but there is a more efficient and fool proof way of using your time and resources. Another way of finding startups is scanning services, like Startup Catapult’s service called Leaders Group. By outsourcing these types of services you can save money and time and find startups that are a perfect fit to the corporations business development needs. These automated platform services use a data-base of over 100 000 startups instead of the 60 or a 100 and only pick out the ones that are perfect for your defined business development needs. If the corporation wants to use innovations in its business development, then why not do it in a more modern and automated way that's effective and saves your valuable resources. It’s an easier and more efficient way to actually get the ball rolling.

Pitfalls, But Mostly Benefits of Working Together

One of the biggest pitfalls of corporation-startup  collaboration involves issues with agility. Successful startups can be adamant on keeping their own identity, pace and their own way of doing things and can be reluctant to work with larger established companies. They like autonomy, ping pong tables and bars in their offices. Startups have in general, a risk-taking spirit that can seem intimidating and reckless to the slower-paced corporations, but really what new businesses are doing, is that they’re reacting to the markets faster. This doesn’t necessarily mean that new businesses are taking careless risks, they just have lighter structures which enable faster decision making and development. Of course taking risks doesn’t always lead to the best outcome, but that’s not the point. In the startup ecosystem making mistakes is allowed and encouraged even. Making mistakes allows startups to learn and implement what they have learned into practice, instead of wasting a year on product development and after launching it, realizing that it’s not at all what the customers are after. So, lighter business structures make the collaboration run a bit smoother, and so does not involving lawyers. Ask any startup entrepreneur and they will tell you that lawyers only come up with obstacles and risks and tend to slow things down to the point where innovation is killed. 

If you have ever worked in a large company, you know that decisions take time between all the conference calls, rounds of approvals, and the view points and weigh-in different people with different goals and agendas. Corporations should utilize the risk-taking innovators, aka startups, and let them run the project. Startups get moving quickly without having to go through extensive protocols so the job gets done for the corporation. The product made by the startups does not risk the corporation’s financial security either, since they haven’t had to implement a new department, acquire new resources, or onboard any new employees.

A startup-corporate partnership gives freedom to both parties. Corporations can pursue their market opportunities quicker and startups have the freedom to execute on innovative ideas with less limited resources. In addition to the product itself, corporations can benefit from startups culturally as well. Studies show that companies that have less strict areas of responsibility are more innovative, because fresh views and ideas come up more often when stirred up and shifted in a group.

Startups shouldn’t feel like they’re “selling out” when teaming up with a bigger player. What startups, that are full of hype, innovative ideas and have the drive to change an industry by creating something new, usually lack is capital. Since a corporation typically has plenty of capital, it seems pretty obvious why startups would benefit from a relationship with a larger company. These types of connections not only provide startups the needed resources and large distribution channels, they can also provide startups branding and PR expertise, as well as give them visibility and what’s even more important: credibility. If partnerships between big companies and startups bud, the opportunity for acquisition can make sense for both parties. Combining the agility and nimbleness of startups with the resources and distribution channels of large companies can lead to very profitable partnerships and win-win situations.


How Are Food Tech Companies Solving Food War Issues in 2017 ?

This year is going to be one of the most exciting in the history of food as food technology, agritech, consumer communication and transparency take a more significant role in the field. CB insights estimated that over $1 billion dollars was invested in food startups and projects, last year alone. There’s a reason why food is of interest to startups and bigger companies. Consumers, especially people in their 20’s and 30’s are more and more interested in what they put in their bodies and are increasingly aware of the environmental and health impacts of the food they consume. Not only is food the fuel that keeps us going, it can help make a positive impact in the world and thus meets the sustainability portfolio requirements for investing.

Traditional supermarkets have seen store count downs and slight market share shrinkage, as well as continued loss of sales. Newer food retailers are approaching and stealing customers with a different approach and understanding of shoppers. High quality, low prices and convenience as well as food transparency, set the stage for food retailing. The future holds smart price tags in products, members only stores, zero-waste markets and delivery-only grocers and restaurants.

Enhanced foods are also trending amongst the consumers. Enhanced foods are more than just adding some protein to just about every food category, they are to have even medicinal attributes. As the millenials are increasingly conscious about food trends, the new generation, generation Z, is more likely to eat fresh home-cooked meals and healthier QSR offerings, they also prefer cooking to microwave cooking and are the generation of more intuitive cooks. Ethnic foods are the new norm for this generation. Where producing meat is the unsustainable option and becoming increasingly expensive, the search for alternative sources of protein, such as insects accelerates. The new generations demand good value and transparency from the foods they consume and are less likely to trust brands.

While the industry keeps arguing about the definitions of sustainability, consumers are making their purchasing decisions based on where and how their foods are made, grown, raised, packaged and by whom. Food ideologies have and are becoming more important to people, as studies are showing that our current ways of producing food could in the next decade, lead to the disappearance of some of our favorite foods such as avocados, coffee, chocolate and for example lobsters. People are following more food related lifestyles rather than diets, as we have more information about nutrition and are more aware of it. Food tech companies are making these diets more personalized by gathering data about what they consume and how much, how they move and sleep etc. People also want more information about the food they’re eating. New innovations are flooding the markets to meet these needs. From smart tags that you can scan with your phone with all the information (farm to store) regarding the product to keychain scanners that tell you all about the nutritional values of the products and meals you’re eating. The latest foodtech apps let you take a snap of your food and tells you in seconds how many calories you are consuming with that meal or product. Gamification and VR content are also in the future of food-related communication.

Another thing raising concern is food waste. Did you know that one third of all the food produced, ends up in the bins? At the same time there are millions and millions of people dying from starvation. This presents a massive opportunity for food tech companies. Food delivery services, restaurants and food apps have monetized on this grievance and the amount of new innovations figuring out how to utilize food waste and prevent its incurrence are growing. Indoor composting without any mess, smell or work, will come to every kitchen producing prime fertilizer.

As the population keeps increasing, our natural resources and our climate is stretched to its limits. We need to come up with ways to feed ourselves in the future – synthetic foods could be one solution. Some companies are coming up with foods such as meatless meats and smoothies that have all the nutrients a person needs, others are growing and producing foods in laboratory-like environments, where they can control the climate and the nutrients and gases in the soil and this way optimize the taste and nutritional value of the foods they’re growing. New ways of packaging, shelf life of products and preserving foods are taking leaps in development as well. The amount of plastic we use in food packaging, where that plastic ends up, and the effects those chemicals in plastics and preservatives have in our bodies should be issues that are regarded by companies when taking the next steps in business development.

It is predicted that by 2050, 80% of the global population will live in urban environments, this triggers the growing movement towards cultivating plants in skyscraper greenhouses. The world’s largest vertical farm was opened last year in New York and farms leafy greens and herbs using aeroponics and LED lighting. Agritech is changing the way we farm, in fact, the newest inventions in agritech are methods that don’t use soil at all. Hydroponic and aquaponic farms for instance, use nutrient rich water to grow plants. Aeroponic farms use nutrient- and oxygen-rich water as a mist, using 95% less water than hydroponic and aquaponic farms. These types of farming methods and vertical farms enable us to grow plants faster than the conventional ways of farming and don’t require any pesticides or chemicals in the process. These methods also shorten the path of food from farms to our plates.

Finally we get to consumer convenience, which was one of the fastest-growing consumer demands of 2016, and shows no sign of slowing down this year. One of the things that will answer to this requirement, are 3D food printers that are already available for consumers. All you have to do is prepare the ingredients for the printer and let it take care of the cooking. Besides, as AI is conquering our homes and lives, soon enough your fridge can take care of grocery shopping, so reeeeally all you have to worry about is chopping up your veggies. Although in a few years your very own kitchen robot can take care of that for you too. 3D food printing can also be an opportunity for food companies to personalize products for individual customers. There are a lot of smart kitchen ware for offer as well. Intelligent frying pans for example, use Bluetooth technology and can prevent the under- and overcooking of food. Mind reading menus are already the now of the restaurant industry. Menus can track your retinas as you read the menu from a tablet and suggest meals that it believes you want to order based on what your eyes lingered on the most. Technology will take all the effort away from cooking and eating healthy.