Business success is oftentimes an ephemeral phase. Competition among businesses has always been there, but is now so fierce that being innovative plays a fundamental role when it comes to being successful in the long term. And yet, it is not enough.
Every business nowadays knows innovation has to be a part of the strategic roadmap of a company, but corporations and startups are certainly not the same type of company, and they have advantages towards one another when it comes to coming up with new business ideas.
Corporate venturing: The unfair advantages of corporations towards startups
When it comes to entrepreneurship, we often think of startups as the main player. Their agile way of working and the fact that they have nothing to lose is often a great advantage, and the reason why so many unicorns come from startups with low resources and not big corporations.
But creating new businesses from a big corporation is feasible and there are some intrinsic advantages towards startups – which are not always fair. These unfair advantages need to be taken into account in corporate ventures in order for the new business to be successful (if not an unicorn!). These are some of them.
Prestige and confidence matter, especially in sectors where trust is a key factor for business success, such as finance, insurance, or real estate. It is very likely that a low-resource startup comes up with a great idea in one of these fields, but convincing your target market and –more importantly, your investors– that your company is reliable is harder.
On the opposite side, if you rely on a corporate investor and you can use a solid brand image, it is way more likely that you can raise serious rounds of investors and close deals with clients.
Access to a valuable asset
Big corporations have access to several resources that create an unfair advantage towards startups - access to a valuable assets is one of them. Defining what a valuable asset is for a new business is not always an easy task, but we are pretty confident that data is one the most valuable assets there is, and it is shared among every type of business. Data is the new gold, and no other player like big corporations manage this asset.
Deeper market vision
Similarly to having access to a valuable asset, having advantageous information about a certain sector can also be considered an unfair advantage of corporations towards startups. A big company that works with a venture builder can count on a deeper market vision, sustained by large market research carried out during years, and therefore also a good perspective on what the market will look like in the future.
Taking advantage of this privileged information ensures coming up with low-competition businesses, plus knowing the needs and pains of the sector.
Being able to have a corporate partner as the first strategic client of the startup is one key aspect for some types of new businesses.
This is a particularly important aspect when it comes to creating hardware-based companies or software-as-a-service (SaaS) companies. These are complex types of companies that take a lot of resources, which generates friction when it comes to investing in them or convincing big companies to use them and include them in their toolbox. However, if the big company is a part of this startup, they can take advantage of its technology and participate in them, as a client.
Network is a broad concept that can include a loyal base of customers or introducing new business to new partners. It is true that startups can also benefit from this network if its investors play the right cards, but a large company has more possibilities of distributing a new business among their contacts.
Human and monetary resources
In more general and broad terms, big corporations have access to all kinds of resources (human, time, money) that startups can only dream of. If we focus on human and monetary resources, the differences between a large or small company is even more obvious.
Having a skilled marketing team that distributes the product correctly or a development team that executes complex ad hoc technologies are two examples of how corporations can benefit from broader resources.
In a nutshell
Even though we often think startups have all the advantages in the innovation and entrepreneurship race, this is untrue. As we have proved, there are many unfair advantages if you decide to innovate within a large company. But as you can imagine, innovation is not a piece of cake for big companies either. Especially when it comes to disruptive innovation, creating a new business model can be one of the hardest things a company can face. In any case, every type of company has their own essential pros. What matters is being aware of what these are and know how to play them wisely.
Corporate Lab is a venture studio specialized in creating new startups for large corporations. We work in an agile way, focus on market validation, and achieve a quick product-market fit. If you too want to take advantage of your unfair advantages, contact our team. We can find out what’s the best business opportunity for your company and build it for you.