VCs are not just for tech giants anymore. Since 2010, about 400 food startups have received more than $6 billion in funding. Campbell Soup is the latest to get on board, investing $125 million thru Acre Venture Partners. 7-Eleven and Walgreens are also funneling money into startups – generally ones disrupting their industries.
It’s worth noting that most startups fail. I am not overly optimistic that anything useful will come out of most of these partnerships – primarily because the mindset and ethos of big corporations vs. start ups are not aligned. At its basest, we’re talking about creative and mission-oriented start-ups vs. more mercenary corporate values.
Read below, however, for what can be learned from start ups as well as tips for big companies on how they can best collaborate with their much smaller competitors (from hbr.org).
Startups and established companies bring two distinct and equally integral skills to the table. Startups excel at giving birth to successful proof of concepts; larger companies are much better at successfully scaling proof of concepts.
58% of startups successfully figure out a clear market need for what they have.
In contrast, big companies often end up launching things they can make, not what people want.
Successful collaborations between startups and established companies must go beyond financial deals: it must be personal and mission-oriented.
Consumer packaged goods executives should regularly spend time in hothouses of consumer packaged goods startups: Boulder and Austin.
They should also take their teams to regularly walk the aisles of Whole Foods, which is as much a greenhouse incubator of the hottest new brands as it is a retailer.
They should explore up and coming datasets. SPINs is a retail measurement company that covers natural and organic grocers. Too many companies don’t even bother to acquire this data because they dismiss it as too small to matter.
CEOs spend about 17% of their time with customers. Not only should that number be higher, the mix needs to skew toward emerging customers.
Collaboration needs to be mission-oriented, meaning it has to be focused on something larger than financial success. Within both the startup and established companies, there are missionaries and mercenaries. For a successful collaboration between a startup and established company, correctly match-making like mindsets is critical.
Essential for success: Protecting and adhering to the mission of the brand to grow the business without the usual “organ rejection” that can happen in a new company.