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MNC-Startup collaboration models

MNC-Startup collaboration models

20 Mar, 2017

In the dynamic landscape of global innovation, India stands tall as the third-largest start-up ecosystem worldwide, boasting approximately 4800 technology-driven product start-ups. Surpassing the likes of Israel and China, India’s vibrant tech landscape has become a hotbed for collaboration between multinational corporations (MNCs) and innovative start-ups. Over the past five years, this ecosystem has been growing steadily, pushing the boundaries of technology and business model innovation, prompting MNCs to actively seek opportunities to engage and collaborate in a myriad of ways.

Reasons for MNC – Start-up Collaboration

The collaboration between MNCs and start-ups is fueled by a variety of factors:

1. Access to New Markets and Complementary Products: MNCs tap into the diverse offerings of start-ups, gaining access to new markets and products that complement their existing portfolios.

2. Identifying Potential Disruptors: Collaborating with start-ups allows MNCs to stay ahead of the curve, identifying potential disruptors in their industry and adapting proactively.

3. M&A Opportunities: MNCs scout for potential mergers and acquisitions, seizing opportunities to integrate innovative start-ups into their operations.

4. Collaboration for Disruptive Innovation: Joint efforts push the boundaries of innovation, fostering disruptive technologies that redefine industries.

5. Exposure to Employees – Culture Hack: MNCs engage with start-ups to expose their employees to an entrepreneurial culture, promoting a mindset shift within their organizations.

6. Promotion of Own Technologies: Such collaboration provides a platform for MNCs to showcase and promote their own technologies in innovative ways.

7. Potential Acqui-hiring Opportunities: The prospect of acquiring talent through start-up collaborations presents an attractive avenue for MNCs.

Collaboration Models

1. Ecosystem Outreach Programs: Initiatives like meet-ups, bootcamps, roundtables, competitions, and sponsorships create low-risk avenues for collaboration.

2. Partnerships: MNCs and start-ups join forces to address business and technology needs, facilitating go-to-market strategies and joint product development.

3. Product/Platform: MNCs offer their platforms or products, providing start-ups with a foundation to build and deploy their innovative offerings.

4. Accelerators/Incubators: MNCs provide mentorship, investment, infrastructure support, and ecosystem connections to nurture and accelerate start-ups.

5. Venture Funds/Investments: Strategic investments drive profits or revenue in a complementary manner, fostering a symbiotic relationship between MNCs and start-ups.

Charting the Landscape: A Snapshot of Collaborations in India

Despite India hosting 928 MNCs with R&D centers, only 111 engage in start-up collaborations. Surprisingly, less than 12% of all MNCs in India have formal start-up collaboration programs in place. An even lower percentage, a mere 31%, of G500 companies in India actively pursue MNC-start-up collaborations. Software MNCs lead the way, showcasing the highest number of active collaborations, while only six companies employ all five collaboration models to engage with start-ups. Interestingly, the majority of these collaborations are orchestrated by non-R&D centers, with automotive and industrial MNCs predominantly engaging in ecosystem outreach programs and venture investments.

Navigating the Collaboration Journey: What MNCs Should Keep in Mind

For MNCs venturing into the collaborative landscape with start-ups, several key considerations are imperative:

1. Define Clear Objectives: Carefully consider the objectives of collaboration, focusing on real internal needs rather than succumbing to PR or CSR motives.

2. Pitch a Strong Business Case: Articulate a compelling business case to gain buy-in from stakeholders on a global scale.

3. Scout Locally and Internationally: Cast a wide net to attract the best start-ups that align with the collaboration’s objectives, both locally and internationally.

4. Allocate Internal Champions: Empower internal champions with decision-making authority and budgetary control to drive collaboration initiatives.

5. Entrepreneurial Mindset: Entrust start-up programs to individuals with an entrepreneurial mindset or consider outsourcing program management to external experts.

6. Develop Key Performance Indicators (KPIs): Establish KPIs, including long-term metrics, to measure and monitor the progress and success of the collaboration.

7. Promote Innovation Culture: Leverage start-ups not only for their products but also to infuse an internal culture of innovation and an entrepreneurial mindset within the organization.

The synergy between MNCs and start-ups in India’s tech ecosystem exemplifies a thriving collaboration that goes beyond the conventional boundaries of business. As the landscape continues to evolve, MNCs have the opportunity to tap into the boundless potential of start-ups, driving innovation, and collectively shaping the future of technology and business.

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