Several large Indian corporations and conglomerates approach and collaborate with the entrepreneurial ecosystem looking for new opportunities for the future. For example, Reliance Industries (http://www.ril.com) has a venture capital unit, GenNext Ventures, which has entered into an agreement with Microsoft Ventures (https://microsoftventures.com) to create the GenNext Innovation Hub (http://www.gennexthub.com), an accelerator that supports entrepreneurs in diverse technological areas. The GenNext program lasts 4 months and it is expected that some of the companies that leave the program will be financed by GenNext Ventures. The accelerator is thus a deal-flow contributor. Some dozens of startups have already graduated from the program, which operates in sectors such as education, health, transportation or human resources.
The Mahindra group launched its $1 million Rise Prize with two challenges: 1) mobility in India, searching for cars without driver, and 2) getting solar products more accessible to people.
A few years ago, the Tata Group promoted the Tata First Dot initiative to foster entrepreneurship among the country’s students, facilitating their access to resources, mentoring and networking that allowed them to refine their business models. More recently, emeritus chairman Ratan Tata has supported the Kumbhathon of the MIT Media Lab, which addresses solutions to the challenges each year when 30 million people move through the Kumbh Mela in India. Ratan Tata has made several personal investments in startups, like many other CEOs of major companies, either directly or through their family offices. Sanat Rao of the think tank The Indian Software Products Industry Roundtable (iSPIRT) believes that these large corporations “assimilate startups who have ideas with a potential to change the rules of the game and therefore believe that they can eventually break or change the current business model of the corporation”
Persistent Systems (www.persistent.com) located in Pune initially planned to invest in 2 or 3 startups. They later set up his Persistent Venture Fund for this purpose. Its investments are oriented to social, mobile, analytical and cloud.
But in India it is not just local companies that approach the country’s startups. Also the multinationals present in the country act in this way. We have already commented in previous posts the case of Cisco. But also Google itself is active going looking for startups to India. In early 2015 he opened a delegation of Google Capital (www.capitalg.com) in that country, with the aim of doubling investments in growth stages. Google believes that in less than 5 years around 30% of the world’s companies worth more than one trillion dollars will be from India.
Public entity Spring Singapore has the Partnerships for Capability Transformation (PACT) program to facilitate collaboration between large and small businesses, including startups. Since its inception, 160 agreements have been formalized. It follows the idea of co-innovation.
SEMI (www.semi.org/en/About) is the global association of the nano and microelectronics industry, with 1,900 member companies. The Association coordinates every year the Silicon Innovation Forum (SIF) where investors and key players in the sector visualize the emerging startups that work the future technologies of the microelectronics sector. The SIF is coordinated by the Association and is led by:
- Applied Ventures (appliedmaterials.com/company/applied-ventures)
- Intel Capital (intelcapital.com)
- Micron Ventures (micron.com/about/our-company/ventures)
- Dow Chemical
- TEL Venture Capital (tel.com/about/telvc.htm)
- Samsung Venture Investment (samsungventures.com)
- And BASF Venture Capital (https://on.basf.com/2rH736s)
That is, the capital funds of the main companies in the sector.
Financial institutions are also there. Banks follow the same trail as these more industrial corporations and seek disruptive innovation and technology through startups.
In 2010 Accenture created in New York its first Fintech Innovation Lab (www.fintechinnovationlab.com). This was done in conjunction with Partnership Fund for New York City, a 110 million euro New York City fund that aims to identify and support entrepreneurs. The Fintech Innovation Lab is a 12-week mentoring program that promotes innovation in the financial sector. The 7 startups that participated in the 2015 edition were chosen by executives from the 15 participating financial institutions. Following the success of the Fintech Innovation Lab in New York, Accenture created other Fintech Innovation Labs, specifically in London in 2012. The major UK banks are clearly interested in the developments of the startups, mainly in electronic security. The London Laboratory was promoted by Accenture, financial institutions, the City of London Corporation and Innovate UK. Like the others, it aims to grow startups that develop new technologies for the financial sector. The involvement of the city of London responds to its will to continue being the great world financial center. The Fintech Innovation Lab of Hong Kong was created in 2014. Accenture promoted the Asian initiative jointly with several financial institutions but also with companies like Cyberport and Airbnb. The startups that have so far participated in the Labs have raised $176 million in funding and one of the companies was recently acquired for $175 million.
Already earlier, specifically in 2009, American Express had acquired Revolution Money, an alternative system of Pin for credit cards and a person – to – person payment network. At that time financial institutions were already looking with interest at the technology startups environment.
Financial holding company Wells Fargo selects startups for its Wells Fargo Innovation Incubator (IN2) (http://in2.wf.com). Wells Fargo has allocated 10 million dollars of budget to the initiative to promote innovation in environmental technologies. The project has but a more philanthropic vision than a strategic interest.
Yodlee, the first cloud financial system for global money management, establishes agreements with entrepreneurs of the main incubators and investors of the United States through the Aggregation and Categorization Application Programming Interfaces (APIs) (http://bit.ly/2qrvdxn). It is a platform that provides access to bank accounts, credit cards, investment accounts, mortgages, etc. of its users to startups that want to improve their technological solutions in this area. They have entered into agreements with startups like 10Sheet (of TechStars), Wallaby (MuckerLab), ReadyForZero (Y Combinator & 500 Startups) and Coinbase (Y Combinator). In addition, a part from these agreements with the main incubators, Yodlee created its own acceleration program, to have even more access to entrepreneurs.
The same trend occurs in the insurance sector. AXA recently announced the creation of a €200M venture capital fund. A little earlier American Family created American Family Ventures (www.amfamventures.com) with Microsoft. Companies in the sector as The Principal and Farm Bureau Financial have established agreements with startup accelerators. Not long ago, XL Group introduced XL Innovate (http://xlinnovate.com), its venture capital fund. Its strategic focus is to generate new technologies for the insurance sector.
This review of Corporate Venturing (in these last 3 posts) advocates the great global interest of traditional companies for the startup phenomenon. Startups are today the best source of disruptive innovations. The activities of the more than 50 large industrial and services corporations that we have analyzed in the 3 posts suggest it.