Start-up collaboration models and trade-offs
Which approach might work for your business? Explore the models in more detail and click on the quadrants below for an overview of the benefits and challenges involved with each approach.
Compatibility of innovation with core business
Incompatible
Compatible
High
Level of investment
Outside-in
Inside-out
Source of innovation
Faster
Slower
Speed to impact
Corporate venture building
(e.g. incubator/innovation lab, R&D)
Corporate venture building
(e.g. company builder, accelerator)
Venture clienting
(e.g. partnerships/ co-creation, ecosystems)
Corporate venture capital
(e.g. direct investing, M&A)
Benefits:
Allows the parent company to maintain control while creating ventures from scratch.
Can facilitate the scaling of the new venture through hands-on guidance, resource access, and long-term planning from the established company.
Challenges:
Closer compatibility with core business can limit transformative impact of new venture on organisations in need of significant reinvention.
May not be as effective for established companies looking for the significant boost to innovation capabilities an outside perspective can provide.
Benefits:
Creates fast and substantial impact on key business goals through strategic investments.
Provides access to an unmatched pool of external innovation.
Offers deep insights into the latest trends and developments via dedicated screening, sourcing, and due-diligence efforts.
Helps companies build a strong M&A pipeline through early insights and access to new targets.
Challenges:
Requires significant and sustainable investment to set up, with the risk of total loss.
Calls for persistence and long-term commitment to reap the benefits.
Challenging to commercialise new products and technologies while integrating them with the core business.
Can be difficult to find the right balance between closeness (allowing the acquired company to influence the core business) and distance (giving the start-up the freedom to operate and grow).
Benefits:
Accelerates access to outside innovation, new markets, and complementary capabilities.
Reduces risk and investment required through cost- and resource-sharing among ecosystem partners.
Enables real-world solutions through collaboration, often leading to faster innovation and market entry.
Challenges:
Requires significant alignment and trust between companies.
Can be tricky to navigate intellectual property and governance complexities when working with ecosystem partners.
Benefits:
Allows the parent company to maintain control while creating ventures from scratch.
Can facilitate the scaling of the new venture through hands-on guidance, resource access, and long-term planning from the established company.
Challenges:
Requires significant investment, as well as specialised capabilities that large, established companies often lack.
Incompatibility of new venture with the core business can create integration and culture challenges.
Low
Source: Adapted from Vogt, W.C., 2 May 2019. “Every corporate innovation discipline has its sweet spot; don’t use them across the board.”
Corporate venture capital
(e.g. direct investing, M&A)
Venture clienting
(e.g. partnerships/ co-creation, ecosystems)
Corporate venture building
(e.g. incubator/innovation lab, R&D)
Corporate venture building
(e.g. company builder, accelerator)