8 Cooperation Flashcards
Start-up Corporate Cooperation: Basics
Start-ups enhance cooperation networks for corporates by involving customers, suppliers, and universities, particularly in innovative projects (Kuckertz & Allmedinger, 2017). This collaboration has led to new forms of partnership, such as corporate venture capital, which expand beyond traditional investments (Weiblen & Chesbrough, 2015). The primary goal of these cooperations is to leverage complementary resources: start-ups contribute agility and innovation, while corporates provide resources and market power. These partnerships are increasingly common due to the low funding and risk for corporates, coupled with potentially high returns (Kuckertz & Allmedinger, 2017). Empirically, the market presents a promising framework where a few established companies dominate access, while numerous new start-ups introduce novel and innovative technologies.
Determinants of successful cooperation
Create a company-wide collaboration plan
Align objectives between partners.
Show empathy and mutual understanding.
Engage as equals
Use fair, transparent contracts .
Avoid power abuse—start-ups bear innovation risks, corporates prevent failure
Prevent poaching employees or stealing ideas.
What are the central aspects of strategy development for corporates in start-up cooperation?
Corporates need to understand current trends and developments by analyzing the start-up ecosystem to learn what start-ups need. They should also** clarify the values they want** to share, ensuring cooperation is tailored to both the start-up’s and corporate’s goals. Cooperation goals must be clearly defined, including:
- definition of primary and secondary objectives
Outside-In strategy: Using the start-up’s creativity and innovation to revitalize the corporate.
Inside-Out strategy: Letting the start-up commercialize new technologies that don’t fit the corporate’s main business.
What are the basics of corporate venturing?
Definition:
Structured programs by established companies to cooperate with spin-offs and start-ups.
Goals:
Increase the probability of start-up success.
Support the corporate’s strategic and financial objectives.
Forms of Cooperation: Incubators: Provide resources and a temporary (6–12 months) protected space for start-up development.
Company Builder: Utilize entrepreneurial talents to work on predefined start-up projects (e.g., Rocket Internet).
Accelerators: Offer small financial contributions and a structured curriculum for limited periods (3–6 months) to accelerate start-up growth.
What are corporate accelerators and their characteristics?
Definition:
Company-supported programs of limited duration that help start-ups through mentoring, education, and corporate resources.
Characteristics:
Open application process. Focus on small teams rather than single founders. Temporary support through interaction and mentoring. Support is provided to group of start-ups instead of individual companies.
What are the strategic goals of corporates using corporate accelerators?
Build knowledge about market developments, trends, and technologies.
Develop and integrate new products and services.
Evaluate potentially disruptive products and services.
Gain and retain entrepreneurial talents.
Transfer the founding spirit into the company.
Create a creative and innovative image to enhance external presentation.
What are the different characteristics and central advantages of corporate accelerators?
Corporate supports start-up pilot project:
Reduces costs, accelerates processes, and minimizes risks through funding of innovative solutions.
Corporate becomes a customer:
Gains familiarity with start-up solutions; start-ups benefit from reference customers and test scalability.
Corporate becomes a distribution partner:
Provides distribution channels and resources through shared networks.
Corporate invests in start-up (CVC):
Enables faster and cheaper entry into new markets and capabilities; better terms for start-ups compared to traditional VCs.
Corporate buys start-up:
Solves specific problems, opens new markets, and offers an attractive exit for start-ups.
What are the critical success factors for corporate accelerators?
Clear alignment: Activities must align with a clear superior goal
Top management support: Strong backing from leadership is essential.
Long-term focus: Efforts should prioritize start-up value creation:
Provide access to corporate resources. Enhance credibility and legitimacy. Facilitate market access. Ensure financing of projects
What is Corporate Venture Capital (CVC) and how does it differ from traditional VC?
Definition:
Temporary equity participation by established companies in young, technologically oriented, unlisted SMEs through funds, management know-how, and other support.
Key Characteristics:
Pursues both financial and strategic goals, unlike traditional VC which focuses only on financial returns.
Inspiration:
Modeled after independent venture capital companies but extends to strategic motives.
Basis:
Theory of financial intermediation (Denis, 2004): VCs have superior monitoring capabilities, better understanding investment objects than general fund investors.
What are the advantages of Corporate Venture Capital (CVC) for start-ups?
Image:
Helps overcome "Liability of Newness" and "Liability of Smallness," signaling seriousness and professionalism.
Market Access:
Provides access to corporate sales channels or makes the corporate a customer.
Network:
Grants access to the corporate's extensive network.
Knowledge:
Corporates offer industry insights (e.g., customer needs), accelerating the start-up's learning curve.
Administrative Resources:
Eases daily operations, allowing start-ups to focus on value creation.
What are the goals of established companies in Corporate Venture Capital (CVC)?
Financial Goals:
Achieve high returns on investment (ROI). Spread risks across balanced portfolios.
Social and Image Goals:
Build an entrepreneurial and innovative external image. Enhance reputation and stakeholder relationships (e.g., employer branding). Support the regional ecosystem.
Strategic Goals:
Monitor promising technologies and gain access to industry experts. Drive company growth and access new markets. Strengthen internal entrepreneurial spirit by creating opportunities for intrapreneurs.
What are the major barriers to Corporate Venture Capital (CVC)?
Lack of clear mission and direction:
Unclear goals can hinder CVC effectiveness (Röhm et al., 2018).
Difficulty in finding suitable investment managers:
Requires experienced managers familiar with start-ups and corporate goals.
Challenges in remuneration for investment managers:
Compensation structures can be a barrier to attracting and retaining talent (Kuckertz, 2017).
What are the central determinants of success for Corporate Venture Capital (CVC)?
Structure of the Program:
Use a two-dimensional target system balancing financial and strategic goals, with a focus on strategic goals. Engage experienced investment managers (entrepreneurs/investors) with appropriate remuneration. Maintain structural independence of the CVC company.
Selection of Start-ups:
Target young companies with a unique value proposition in large, fast-growing markets. Prioritize teams with experience, competence, and high success potential (Kollmann & Kuckertz, 2010; Kuckertz, 2017). Select start-ups with proven business models requiring minimal adaptation. Focus on highly developed products that efficiently meet customer needs. Ensure alignment in corporate culture for smoother integration. Prefer start-up managers with management or corporate experience. Opt for companies capable of handling the loss of founders or managers.
