“We are often asked by corporates: “How do we set up an accelerator?” or “How can we invest into startups?” We believe this is the wrong starting point.

Before they decide to engage with each other, we strongly believe corporates and startups should pause for a second and reflect on the reason why to engage before starting to discuss how to engage. Only afterwards you should discuss your options.
And there certainly is no shortage of options to collaborate.”

Dr. Nicolai Schaettgen, Managing Partner at Match- Maker Ventures, speaks passionately about this topic dominating the conversation in the innovation field already for a while– corporate-startup collaboration.


“Technological adoption has never been as fast as today, and many corporates have already suffered from not being able to keep up with the pace of change. They just did the same thing online as they did offline. Many businesses were ready to be disrupted and, frankly, it was an easy job to step in to fill those gaps.

Nicolai Schaettgen, Match Maker Ventures

Now it’s much harder – for example, in the financial services industry there was a lot of initial disruption, but it was not really concerning for the established players.

Yet because of increasing complexity and blurring of industry borders, going forward it’s about the capability to form partnerships, to collaborate in any form and with any player – these are the attributes that will characterize the real future winners.”

 

You’re active in the two main ecosystems of innovation: the corporate world and the startup world. As a starter, where’s the overlap between the two?

“While there are many obvious differences in focus and priority, the startup and corporate share several core necessities – the need to grow, to see the realization of their business plans and projections, and to increase the value of the enterprise.

Both parties face serious and legitimate uncertainty engaging in a new venture. For instance, corporations must overcome obstacles inherent to their structures and learning to adapt to a new culture – often far easier said than done. Whereas startups must learn how to pursue and achieve sustainable success through a profitable business model without having a solid base of capital.

As part of the research we did with Arthur D. Little, we measured how both world see each other.

Stating that startups have “poor” sentiments towards corporates would be a huge understatement.

We asked startups and corporates both, what is the first word coming to your mind when you think of the other? The results speak for themselves, and indicate a lot of the work to be done on the corporate side. On the other hand they also state an opportunity for startups: the doors to large corporates have never been this open before.

The future winners, for all parties, will be those who can most effectively identify real value, deliverable potential, and foster successful collaboration.

 

What are some less obvious things you would identify as the biggest challenges startups face today?

“Many startups, though far from lacking in either enthusiasm and innovative potential, lack a structured approach toward large-scale business development. An established corporation, on the other hand, has the extended and practical experience in the world of high-tier global business to overcome obstacles that can, and almost certainly will, confound startups that are simply inexperienced and untested in those circles.

Oftentimes an eager startup company will take on more than they are able to handle logistically.

This overburdening may slow productivity, which in many cases makes the difference between failure or success for the venture, regardless of their initial prospects of innovative potential impact.”

 

So then conversely, what are some things that the established corporate partners may find challenging, in working with startups?

Corporates like to own, but equity has an inherent issue: instead of focusing on creating business impact for your customers, you are inclined to focus on valuation increase. This results in “free riders” on the equity side targeting the maximization of startup valuation within 5 years. Such results are easier to accomplish by playing around with P&L and balance sheets than dealing with actual customers, demand driven product development, and creation of actual revenues.

Or, as someone once said: corporate accelerators want to get rich on your equity, but you want customers.

Corporates are following a fundamental flaw in their own logic. The equity game is far more expensive and far from adhering to a key startup theme: “Trial fast, fail fast.” Once you are invested, you are committed and often your focus becomes blurred.

Throughout the interviews for the research, we increasingly experienced a rising frustration among corporates as neither the strategic investment nor the financial investment into startups starts to pay off. Likewise, startups start to realize that they are not at all set with their first large customer only because they were admitted to a corporate’s accelerator program or the like. 

The equity “obsession” of corporates becomes even more surprising as the main objective across all vehicles clearly lies on “new products & technologies”: 30% of corporates state this is the key objective followed by market/ customer access with 16%.

The question to be asked is, why do you need to own the startup? Corporates are not buying all their suppliers, but acknowledge that specialized companies are simply doing certain things better.

The same should hold true for startups. It’s time that collaboration is moving from being financial-driven to business-driven. It’s time for a new approach.”

 

OK, so how do corporates and startups best collaborate?

When we begin working with a startup client, our focus and intent relate primarily to extracting – explicitly – why a desired corporation would want to pursue the venture. We work to identify the startup’s strongest value-points to make the startup appealing and desirable to partner with. There is a great deal more work entailed in this than may seem obvious at first.

When we’re ready to get to the actual collaboration initiatives, the crucial factor is in creating and maintaining the momentum. We always enter high into the organization – which opens a great many doors internally. This is a critical part of our approach, in that the resident executives have the ability to facilitate a real impact on the company structure and culture very quickly.

We ensure C-level engagement by leading with clearly outlined milestones and timelines with potential projections at the forefront. Wasting a high-level executives time is a certain path to a quickly closing door.

 

Tell us more about your company.

Essentially, we want corporates and startups to embrace a mutually beneficial relationship beyond simple competition,

First impressions tend to peg Match-Maker Ventures as a classical venture capital company – this is far from the case. We don’t invest cash and don’t take equity. What we do is engage in venture human capital – we invest resources and networks to work with startups to help them on their path to success.

In business terms, focusing purely on equity presents the wrong angle of approach – we work to create a real business impact and our measure of success is directly measured by that impact. We only reap dividends when new revenue begins to flow into the books of our clients. Signing the corporation and the startup is only our preliminary achievement. Our business model – by virtue of results first –  defines our credibility.

I’ve worked with corporations where things get slow, bogged down. On the one hand, we need to understand that that’s, often times, a reality of corporate life, and not necessarily reflective of anything intentional.

Nonetheless, one often has to be almost pushy (always professionally of course). The startup, however, has very much to gain and comparatively little to lose.

The corporate partner already has a fairly vast amount of existing revenue but, by that token, they have much more to lose – so it will always be the case that the corporation is initially slower than the startup. For this reason, corporations often need consistent prodding. That’s just how it is.

At the end of the day, business is about people and trust, which as we all know must develop naturally over time.

Honestly, it’s incredibly engaging work, and I am thrilled to be doing these things every day.