14 Apr

Scaling up innovation is key. The time when innovation mainly was about small experiments is over. It is crucial for both startups and corporates to execute innovation on a larger scale to make more impact. In this blog, I will focus on how deals are the answer to scaling up innovations for all relevant players.

Startups know that scaling up is essential to attract talent, convince investors and sell products and services into the market. And yes, we know the chicken-egg problem is here too.

Corporates with experience in innovation know that scaling innovations and making an impact is essential for example to benefit from innovative market initiatives or benefit key issues solved. Especially today, also the contributions to the SDGs are getting vital.

We designed our Open Innovation Ecosystem approach with collaboration and deal flow in mind. Let me explain you why.

Access to markets
For startups, finding talent has long been the most critical factor for scaling. Research shows that for two years in a row, the most important critical factor is: Access to markets and customers.[1] In other words, whom do we sell our products to?

Selling B2B propositions requires experience in sales and experience in entering into collaborations with companies, for example, to co-create. It’s this experience that is lacking in startups according to the aforementioned research.

But guess what – startups can get support from a dozen or more accelerators and startup events. But are they helping on this core issue?  Nope. Often startups have a chance to win prize money provided by a corporate (e.g., EUR 10,000). Indeed, very pleasant, but what startups really need to scale are DEALS!

• Deals with to work with business partners
• Deals to sell their product or service
• Deals for co-creating
• Or even funding deals.

Those deals are worth much more than the one time prize money.

Deal value linking pin corporates & start ups
The remarkable aspect is that these deals are also significant for the corporates. For example, to accelerate their time to market, collaboration with partners is necessary. Increasingly corporates realize that they cannot do everything themselves but need to collaborate with companies in an ecosystem. Partnering helps them being faster and more resilient. And yes, these collaborations are agreed upon in…deals!

Josemaria Siota’s research[2] also showed that venture deals, as he calls them, are among the most effective actions that corporate innovators can take. They deliver value faster and require less effort. Does that mean that other ways of innovating are not important? No, certainly not. Josemaria has explored all forms. The thing is, venture deals often get less attention but are also needed for corporates to achieve more impact and scale. Next to innovation labs, and other initiatives.

Investors also need deal flow
Last but not least, what do investors (note on broader definition including VC/Family office etc.) need for success? Again, the answer is: they need deals, deals, deals!

According to the article in HBR of March/April 2021[3], venture capitalists mainly use their networks to make deals. Of course, they are good networkers, but times are changing. They need access to ‘the unknowns’. Investors with access to open innovation ecosystems attract unknown solutions providers differently. Open innovation creates deal flow for corporates, startups, and investors.

It is a bottom-up way of creating deal flow—a way to get to more deals faster. Open Innovation Ecosystems can help investors to attract unknown solution providers in a non-conventional way. Belonging to these ecosystems helps to place more bets on potential outcomes[4].

Consider exploring this bottom-up method of deal flow creation to scale faster! If you want to see what that might look like, check out this video of one of my personal experiences in a beautiful initiative: Paint the Future[5].

We designed our Open Innovation Ecosystem approach with collaboration and deal flow in mind. Now you know why.

Sources

[1] Scaleup Survey 2020 – ScaleUp Institute, [2] https://media.iese.edu/research/pdfs/74686.pdf, [3] How Venture Capitalists Make Decisions (hbr.org), [4] https://thinkers50.com/thinkers50-books/ecosystems-inc/ Bill Fisher , chapter 5, [5] Paint the Future: – YouTube, https://thinkers50.com/thinkers50-books/ecosystems-inc/ Bill Fisher , chapter 5