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Disruptive innovation combining corporate power and startup agility

Mar 17, 2022 11:52:03 AM

Traditional multibillion-dollar corporations have dominated the modern economy due to their market access, structured processes, and well-known, trusted products. Uncertainty is being caused by the emergence of new trends, technologies, and market opportunities. In this environment, startups thrive. They are quick, problem-oriented, and fearless, but they lack experience and economy of scale. Collaboration between corporations and startups appears to be a perfect match, but it is not as simple as it sounds. They need help.

Matchmaking: where to start

Collaboration between corporations and startups is not easy. These two organizations have very different agendas and methods of operation. In general, collaboration occurs unless the startup overtakes the corporation by the time both parties have reached an agreement. Time and effort are detrimental for both in establishing the connection and very often a common communication ground is missing. Without a catalyst that actively reduces the effort required for both parties to meet, find the right position of interaction, and find a clear way to direct the energy, it simply takes time.

RootCamp is a platform for open innovation (also known as "innovation hub") that caters to the needs of startups and corporations. On the one hand, we understand startups, interacts with them on a regular basis, and assists them whenever possible. On the other hand, we help corporations in their innovation strategy by  injecting new life into departments that have been doing the same thing for far too long. RootCamp bridges the gap between the industrial environment and the disruptive impulses of the startup world.

Learning by doing

Not all startups are created equal, and there is no one-size-fits-all solution. Young startups are given assistance and training to help them reach investor readiness and market viability of their products as quickly as possible. More mature startups with newly marketed products benefit from accelerated market access and scalability, and they serve as inspiration to corporations. Established startups are matched with specific products and challenges that industrial partners face.

Our goal is to create pilot projects in explorative real-world and facilitates them between startups and corporations. We serve as a neutral intermediary. We lay out a clear structure for conceptualizing projects and managing them through milestones and quality gates. The milestone process helps all parties to reduce risk. Decisions are made quickly, and the budget is set up from the start. Important topics, such as joint inventions, which cannot be planned from the start, are addressed as they arise throughout the project.

A negative outcome can have a positive effect

It's a common belief that exploratory projects are impossible, especially in the zero-error culture prevalent in many German corporations. But are "mistakes" part of these exploratory projects? In reality, there are no "mistakes." The true goal of these projects is to collect data to make decisions: to determine the commercial viability of a trend, a new technology, or an innovative application. A real-world check provides the best due diligence. Decisions are based on facts and information, and these projects teach both startups and corporations this lesson. If, at the end of a project, information about the performance and whether to continue could be gathered, that's it! Even better if this information could be collected quickly and with few resources.

Startups learn how to apply technology, achieve product-market fit, and deal with the increased complexity of the real world. Corporations learn to think differently, to look at known problems in new ways, and to decide whether these new applications are worth pursuing or abandoning. The most important KPI at RootCamp is the number of projects supported, not the number of successful/unsuccessful projects.

There are many ways to a rich harvest

Profit from shareholdings is one way for the industry to participate in the value increase of startups. This means that the corporation becomes a direct shareholder of the startup and invests money in it to receive dividends/profits later. Only the best-organized players with the longest strategic horizons, such as Boehringer, BASF, and Evonik, were able to establish Corporate Venture Funds. They provide not only money, as pure financial Venture Capital Investors do, but also coaching, experience, and market reach.

As an innovation hub RootCamp does not own any stock of startups. The goal is to connect the best solutions independently from their cap table. The interaction within the acceleration program and the joint project can be considered due diligence. After the project is completed, the startup and the corporation will decide whether to continue working together. Depending on the goal of the collaboration, the options include a joint development agreement, a customer-supplier relationship, the expansion of an existing product portfolio, or a license agreement. Either party can take the lead as long as both parties profit - typically through a revenue share model.

Wakeup call: times are changing

Sustainability is no longer a fringe concept, but rather a widely acknowledged issue by society. It is finally regarded as a necessity, which gradually leads to a reduction in emissions and the establishment of new corporate goals. Climate change will accelerate innovation to the point where only companies that can adapt quickly will survive. The ability to relearn and change is the order of the day. To keep up with the speed of innovation, businesses of all sizes, large and small, require innovation hubs.

RootCamp is a center of knowledge and knowledge sharing in our fast-paced and changing world, thanks to the exposure and exchange of internal and external innovation. No single entity can reach the level of exchange that RootCamp can provide between different sectors, different players, within organizations, and between peers of different companies.

 

To keep up to date with our integration projects from our partners and startups, follow us on our social media channels: LinkedIn and Instagram and subscribe to our newsletter.

Philipp Rittershaus

Written by Philipp Rittershaus

Philipp is the Managing Director of RootCamp. He has gained extensive experience as an investor in the Life Science sector at the High-Tech Gruenderfonds. He holds a Doctorate degree in Biotechnology from the University of Hohenheim, an MBA in Engineering Management from the University of Applied Sciences Mannheim and a Master in technical Biology from the University of Stuttgart.

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