startups

Large Companies Increasingly Comfortable with Startups as Business Partners


NEW YORK — Large companies increasingly are willing to work with early-stage startups and set up corporate venture capital arms as they pursue digital transformation, venture capitalists said Tuesday at an event hosted by enterprise software vendor SAP SE’s startup accelerator program.

The new willingness to work with startups occurred during the past decade, in part because companies realize they can’t tackle digital transformation alone, said Hilary Gosher, managing director of Insight Venture Partners, a growth equity firm that invests in software and internet companies.That’s especially true when a company’s digital transformation initiatives involve changing their businesses to be more customer-centric, she said.

“As they think about being customer-centric, what they do if they’re honest is they look inside and say, ‘We’re not set up to do this,’” Ms. Gosher said at the event, in which panelists discussed issues related to startup founders and gender inequality in the technology sector. One way these enterprises consider “embracing innovation” is to think through whether to start a digital lab or a corporate venture capital division.

In the past, enterprises would only usually buy technology services from established, large technology vendors, but in recent years they’ve accepted the value of partnering with startups, said Ed Sim, founder and managing partner of seed-stage fund Boldstart Ventures.

He encourages enterprise-focused technology startups in his portfolio to focus on finding an enterprise company to partner with that’s willing to share resources, such as engineering talent.

“We tell our founders that for them, it’s not about getting customers, it’s about getting partners,” he said.

For enterprises, partnering with early-stage startups has its benefits too, said Jennifer Morgan, an executive board member at SAP and Bank of New York Mellon. “We can learn so much, not just about technology, but about different ways of thinking,” she said at the event.

Seeing what entrepreneurs are able to accomplish with very few people and limited time really “opens your eyes when you’re a big company,” and sometimes teaches the company to approach problems in a different way, she said.

For companies both big and small, it’s important to remember that differences in perspectives also can lead to a better approach to solving problems, Ms. Morgan said. Tackling a project and executing a strategy has been much more successful when there has been differences in perspective, she said.

“That diversity of thought and really wrestling through a problem with people that maybe you didn’t think were part of the solution, it really opens your eyes,” she said.

In 2017, 17% of US-based startups had a female founder, SAP executives said, citing a study by Crunchbase.

Venture capital firms are starting to realize that they need more investors in their ranks to reflect the diversity of the workforce, said Ms. Gosher, of Insight Venture Partners.

“Early stage investors need to spend more time finding and working with talented, diverse entrepreneurs, but more than that, the community of investors themselves need to change their own demographics,” she said.



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