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Corporate-Startup Collaboration Can Work
The 100+ Accelerator is proof. It's not easy, but it's possible. (#44)
In early 2018, Maisie Devine from AB InBev reached out to me. She wanted to build a new corporate-startup accelerator program.
I had first met Maisie while Highline Beta was doing work for ZX Ventures, AB InBev’s internal innovation and venture capital group. She knew that I had startup & accelerator experience and a team that could help.
The new accelerator would focus on helping AB InBev achieve their sustainability goals. After months of designing the program, the 100+ Accelerator went live on August 2, 2018.
Fast forward to today, and the 4th cohort of the program just finished their Demo Day. The accelerator has worked with 116 startups in 30 countries. Many of the pilots have scaled and are creating significant impact for AB InBev and the startups. AB InBev also added additional partners, including Colgate-Palmolive, Unilever and Coca-Cola. This brings together four of the largest CPG companies in the world to collaborate on solving critical sustainability challenges.
Flat out, 100+ Accelerator is one of the coolest and most impactful things I’ve been involved in. Reflecting back, I’ve learned a ton and want to share some of that with you.
Corporate-Startup Collaboration is Possible
It’s incredibly difficult for big and small companies to work together. Let’s not sugarcoat it. You’ll see lots of advice telling startups to avoid dealing with giant, enterprise customers early on, it’s simply too risky. That’s totally fair. I’ve seen startups get crushed or wither away desperately trying to close an enterprise deal while their own runway evaporates. I get it. But this is where broad-based, sweeping advice is tricky. What if there are ways for big and small companies to collaborate successfully?
When designing the 100+ Accelerator, we knew this challenge had to be addressed.
The program has a few key attributes that stand out:
1. Problem focused
Most corporate accelerator programs are problem or challenge focused, where the corporate puts out a challenge into the market looking for solutions. Unfortunately, many of these programs aren’t setup to actually solve problems. You can’t put a challenge into the market that’s high-level or generic and expect the right solutions to show up. If Maisie and the 100+ team put out a challenge called “Climate Action” without getting into the weeds—into the key problems faced by specific business units within AB InBev—they wouldn’t find the right solutions. Instead, the 100+ Accelerator has 200+ very specific challenges listed on its website, because the team works closely with the right stakeholders and business units within the company
Most corporate-startup accelerators are brand building exercises and little more
Too often, big companies want to show that they’re open to collaborating and committed to open innovation, but very little gets done. Occasionally these programs are run by 3rd parties (“in the middle”), who are often more interested in getting 5-6% equity in each startup participating than they are helping the corporate solve real problems that matter.
Accelerators can and should help corporates build a brand in market, but this can’t be the primary reason to run these types of open innovation initiatives. If that’s the case, I guarantee the program will die after 2-3 years because the ROI won’t be there.
Here’s the lesson for startups: You need to deeply understand the corporate’s pain point and where it ranks amongst everything else they’re dealing with. If you’re going to engage in a collaboration program or corporate accelerator, make sure you’re clear on the primary goal. Is it to implement your solution in a meaningful way, or is it to trot you out like the latest shiny toy but never get serious about working with you?
2. Contracts, not equity
AB InBev doesn’t take equity in the startups that participate in the 100+ Accelerator. I love this. Equity muddles things. It makes negotiating with each startup much harder, because they come into the program across different stages (from seed to Series B), and giving up equity is complicated. It also means the corporate ends up on the cap table of a lot of startups, which increases risk and becomes challenging to manage.
We didn’t want startups to opt-out because they’d have to give up equity. We’ve kept the focus on executing pilots instead of negotiating with founders and their Board / investors around the value of the program versus the equity they’d have to exchange.
Here’s the lesson for startups: You might want a big company on your cap table, but what you really want is commercial spend. That’s where there’s real budget and potential to scale. Imagine going from piloting in one facility to forty facilities. Imagine engaging with one brand during a pilot and then working with two or three brands after. Big companies can deliver serious scale.
3. Internal champions & lots of support
No program like this works without top-down and bottom-up support. If executives aren’t committed to the program, it’ll eventually fail. I remember the ex-CEO of AB InBev, Carlos Brito, talking about BanQu1 (one of Cohort 1’s startups) at Davos. That was a strong signal of support that’s carried through the program over the last 5 years.
But executives don’t execute pilots. That’s why it’s equally important that you have teams “on the ground” to execute the work alongside the startups.
Getting things done inside of big companies is incredibly challenging. Let’s not be naive about it. But if you can get people aligned and committed, they’ll move mountains.
Here’s the lesson for startups: You need to understand how big companies work. They’re “rush” looks different from yours. Six months may be an eternity for you, but to them it’s a blip. They also don’t have unlimited budgets. They certainly have more money than you do, but don’t assume that the specific department or team you’re working with is swimming in gold coins like Scrooge McDuck. As a startup you need to be equal parts aggressive and patient. You need to be smart about how you engage a corporate and how you define the scope of a pilot. You want to do enough to prove your technology / solution but not overdo it, resulting in a pilot that takes too long and costs too much.
Founders Come From Everywhere
In the most recent 100+ cohort, 22 out of 27 startups that presented are HQ’d outside the United States. If you add the two alumni startups that presented (Chanzi and Sunman), both of whom are scaling significantly, it’s 24 out of 29.
Great startups are founded everywhere, including places that are not considered startup hubs, such as Iceland, Ethiopia, Ecuador, Spain, etc.
There are startup hubs like San Francisco/Silicon Valley and New York for a reason, but it’d be foolish to ignore everywhere else. And don’t forget, many of the startups in those hubs are founded by immigrants.
I understand when founders outside of the major hubs have an inferiority complex. Or have a strong case of imposter’s syndrome. You won’t necessarily have the level of support, understanding or capital needed to grow your business, and you’ll have to deal with that as you scale. But you can.
One of the advantages of working with multi-national companies is that they’ve got a global footprint. Most of the pilots run in the 100+ Accelerator aren’t based in the U.S. AB InBev’s sustainability challenges and goals are worldwide. Many U.S. investors won’t realize that, because they have a myopic view of how the world works and where great startups are built. But global companies care a lot less about that and much more about where they need their problems solved. If that’s in Vietnam, Brazil, South Africa, Belgium, Singapore, Tanzania or somewhere else, so be it.
Founders Always Need Help Telling Their Stories
Too few founders are great at telling their stories. I’ve met founders that have raised millions of dollars who struggle with this. The big challenge is being able to adapt the story to the audience.
During the 100+ Accelerator Demo Day, startups have 5 minutes to present. They’re doing so on stage in front of a couple hundred people. The audience is a mix of big companies, investors, NGOs/non-profits, other partners and other founders. In 5 minutes, you can’t go into a ton of detail, you have to tell a compelling story that stands out amongst the others.
Your job at Demo Day isn’t to have investors write a check or for customers to buy from you on the spot. Your job is to get people coming up to you after to engage. A Demo Day presentation is designed to get people excited to speak with you—it’s a door opener to future potential opportunities.
A lot of founders think they’re great at doing a 5 minute, high level, story-driven pitch. Most are not. 😅
Here are some common mistakes:
Focused too much on the solution and technology. In a quick pitch you can’t go into “how it works” in a ton of detail; the on-stage Demo Day pitch isn’t the place for that. But founders love their solutions & technology.
Too little focus on framing the problem. This is especially true for later stage startups (say Series A+) that assume the problem is self-evident.
Too few examples / use cases. Demo Days are known for making every startup look like a superstar. That’s of course not the case. The ones that show examples or use cases of how their solutions work, as a way of demonstrating traction, tend to stand out. Simple use cases and examples are easy for an audience to understand and have the double benefit of proving you’ve implemented your solution somewhere.
A lack of storytelling. If you’re one of X startups presenting at a Demo Day, everything tends to blend together for the audience. A strong story, ideally a personal one, is a great way to stand out. Why are you the right person to start this company? Some Demo Days only provide 2 or 3 minutes to present, which makes this even tougher, but I still believe a great story will be more memorable than anything else.
During the 100+ Accelerator I spend a lot of time working with founders on their pitch for Demo Day. I always go back to a simple framework: Hearts - Minds - Wallets.
Some are pros at it, but many others don’t have the experience. On top of that, English isn’t everyone’s first language. If I had to get on stage and present in another language, I’d 💩 myself.
One of my favourite pitches was from Francisca Olivares Rojas at Kran Nanobubble. When Fran first pitched in a practice session I genuinely did not understand what the business did. What’s a nanobubble? What problem does it solve? How does the technology work? It was confusing.
Francisca crushed the pitch. 😁
She explained nanobubbles simply — they’re so small most microscopes can’t see them; they become part of the liquid they’re injected into, enhancing that liquid with special properties.
She used memorable catch phrases that stick with you, “Nanobubbles give water superpowers.”
She used several use cases to make the point that nanobubbles are incredibly versatile. For example: they can enhance the structure of ice, making it melt slowly; increase the oxygenation of an algae-filled pond to clean it up; help fruit grow bigger; and improve how companies clean factories.
She used big, bold images with minimal text to highlight key value propositions (i.e. water reduction use with a small modular footprint inside of a facility).
She added a bit of humor too. Did you know there’s an association for nanobubbles in Japan (the FBIA)? (It was funny, you had to be there!)
Francisca made us care about something we didn’t even know existed: nanobubbles. She did it simply enough that everyone could understand, while also giving us confidence that the technology, traction and business are real, with a lot of potential.
Getting the pitch right always takes more practice than people realize.
But going through it pays dividends, not only at Demo Day, but after. I know many founders/presenters that gain significant confidence in how they’re telling their stories after presenting on stage. They’re now better equipped with how to pitch in different scenarios.
Tech is Cool, But Impact is Cooler
Here’s a quick video (high speed) showing technicians gutting an old diesel truck and installing EV technology. The company behind the tech is Evolectric. They’re an incredibly cool startup that’s able to convert old gas guzzling vehicles into circular EVs, giving them 10 more years of life, drastically reducing costs for fleet owners and significantly decreasing carbon emissions. The tech is awesome, but more important is the impact they can have to businesses and the planet.
In the sustainability space there’s a lot of tech. Some of it is incredibly complex. These startups aren’t building basic web apps or simple wrappers around OpenAI. I’m always blown away by the sophistication of the tech.
But tech alone doesn’t matter. All that matters is the impact. This is why it’s critical for corporate-startup accelerator programs to focus on pilots. The only way for a big company to have confidence in a startup’s solution is to see it in action. Does the solution actually do what it’s purported to do? Does it create the necessary value?
Here’s the lesson for startups: If you want to be successful with big companies, there are two huge questions you’ll need to answer:
Can your technology scale (economically)?
Is the payback period fast enough?
These two issues trip up a lot of corporate-startup collaborations. I’ve spoken to many people working within large companies that have felt this acutely. They get a pilot going, it works well (i.e. solves a problem / delivers value) but it’s not ready to scale economically.
You have to be able to make a legitimate business case. Proving your tech isn’t enough. You need impact + scaling potential, otherwise the relationship with a corporate partner won’t progress. Payback periods that are 2+ years long are very tough for corporate partners to deal with, especially when we’re in uncertain, wobbly economic times. So as stoked as you may be about the tech, your R&D abilities and all the patents you have, none of that will matter if you can’t make a legitimate business case that meets the needs of your corporate partner.
Ignore the Naysayers
There are lots of “taken for granted” pieces of advice that circulate over and over. I get it. They’re based in truth. But it doesn’t make them 100% right all the time. The real truth is that building a successful startup is full of gray. The same is true for how corporates innovate. Everyone knows it’s hard, and many will say, “Don’t bother trying, it doesn’t work.” Bullshit.
When designing the 100+ Accelerator program, we went through a lot of these “commonly accepted truths”…
“Most accelerators suck and they’re overdone. Startups have accelerator fatigue.” — Totally fair. But does that mean no one can ever build another accelerator program that actually creates value? YC is considered the best accelerator of all time with good reason. Guess what? The 100+ Accelerator has multiple YC (and Techstars) alumni that have participated.
“Successful startups need to be in a major hub…ok, seriously, they need to be in SF.” — This is flat out untrue. For some, SF may be where they need to be, and by all means go there if you want to. But there are smart, ambitious people everywhere (and I mean everywhere). They may not have equal opportunity (and that’s a huge problem), but they’re out there. Some of them are starting companies in places not known for being startup hubs and they’re going to win.
“Big companies are too slow.” — Yup, they’re slow, certainly compared to startups. What’s often missed is that (some of the time) they’re slow for a reason. The regulatory, legal and compliance burden faced by corporates is significant. If you’re a startup looking to work with big companies you need to understand these hurdles. There are ways around these challenges. A program like the 100+ Accelerator helps because it creates the vehicle for fostering internal change. It becomes an internally strong brand, something that people want to rally around and support by stretching what’s possible.
“Big companies aren’t motivated to make things happen.” — Wrong. I know why this is accepted as truth, but it’s simply not the case. Big companies will gravitate to their core business and spend most of their time and money maintaining their existing market share. Public companies will keep most of their attention on the next quarterly earnings report. Why would you expect anything different? But big companies are also full of super bright, experienced hustlers that want to get shit done. I’ve seen it many times. They have to play the game and work the system, which is slower and more painful than anyone might like, but they make things happen. You would be foolish to ignore the chutzpah of those within a large organization. Every big company has them.
Corporate-Startup Collaboration Can Work
Founders: You shouldn’t jump into working with a big company lightly. The risks are real. But accepting the blanket advice “never to do it” is a mistake.
Do your own due diligence on the organization and the people you’re working with at the corporate. Find other startups that they’ve worked with. Figure out what you’re getting yourself into.
Make sure your product is ready for pilot. Define the pilot scope and KPIs clearly. Set timelines and expectations on both sides.
Don’t put all your eggs in one basket. Network into the organization (so you can mitigate any shifts in personnel within the corporate).
Don’t forget the business case.
Big Companies: You need to figure out how to work with startups. You cannot solve every problem you have (or your customers’ have) through internal innovation alone. Eventually you’ll have to look outside of your four walls and find partners. You have a huge opportunity to win at this because the bar for corporate-startup collaboration is very low. Few big companies do this well, which is an opportunity for you.
Build a framework that streamlines the things that typically make collaborating with startups excruciating (for everyone): legal, risk, procurement, communications.
Take (measured) risks.
Build a portfolio of partnerships.
Get quick wins to allow you to chase bigger ones.
I’m blown away by the scope and continued potential of the 100+ Accelerator. There’s always room to iterate and improve, but it’s genuinely a best-in-class corporate-startup program that’s win-win (+ there’s a third win for the environment!) I hope other big companies can embark on a similar journey and prove that corporate-startup collaboration is essential to collectively winning.
(Thank you to Gary Binstock, from Colgate, for providing several of the photos.)
Highline Beta is an investor in BanQu