Why are big companies so interested in startups?

We have interviewed people in charge of Innovation within large businesses and other players of the ecosystem in order to understand what justifies the proliferation of relationships between startups

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“ Relationships between large companies and startups have proliferated in the last two years and this phenomenon seems even to be increasing. In order to understand what justifies such a craze, identify the genuine reasons of the development of these apparently unnatural ties, we have interviewed people in charge of Innovation within large businesses and other players of the ecosystem. „

In total, we have interviewed 16 people with innovation responsibilities within ALSTOM, AREVA, EDF, ENGIE, HAVAS MEDIA, LA POSTE, MEDEF, ORACLE France, ORANGE, PACTE PME, PSA Peugeot Citroën, SAFRAN, SANOFI, SNCF, SOUFFLET, TOTAL.

Our interviews highlight that very often there is not one single reason, but several intertwined reasons, explaining why big companies try to collaborate with startups.

To summarize, the answers can be related to 4 major reasons:

  1. The most mentioned reason is not a surprise: large companies wish to develop ties with startups for innovation. The quest for assets to innovate is even the only reason cited by half of our interviewees. For them, collaboration with startups is primarily, if only, a means to access new technologies, develop new products or services or to expand their existing offers.
  2. Immediately afterwards, large companies express the strong desire to enhance their agility and advance their culture. They are fascinated by the capabilities of the startups to develop new markets, by their ability to surf the emergence of new technologies combined with new uses. For large companies, developing relationships with some startups is considered rejuvenating. They hope that it will help them to upset their internal rigidities, regain a lost vitality, teach employees new ways of working, change their habits in order to regain flexibility and agility.
  3. For large companies, the world of startups foreshadows tomorrow’s world. Thanks to startups, large companies have a simple means to conduct a strategic intelligence: know market trends, the latest technological developments, applications, anticipate the evolution of uses, behavior … and identify in advance the competitor that could « uberise » them.
  4. Finally, large companies refer to social responsibility: when helping young firms, they contribute to overall economic development and promote entrepreneurial values. This may also be a way of turning some regulatory or legal injunctions into opportunities.

Eventually, we wish to mention another argument, even if it is less emphasized : « working with some startups is also a matter of communication and image ». Any annual report mentions innovation as a key driver of performance. Any entrepreneur highlights the efforts made to innovate. What is more natural than developing ties with startups to give evidence of this ambition?

For sure, the leader of a company does not need to remind the world that his company is innovative. If it really is, there is no use!
It is the same with developing collaborations with startups: as long as the action does not go beyond communication, there is no guarantee of innovation. The cohabitation between large companies and startups can be positive only in a win-win perspective. It must allow both sides to make concrete progress, each in his own project, taking advantage of « real » synergies.

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