|19 February, 2019

Big firms and start-ups: why collaboration is the way forward

Larger companies crave the agility of start-ups, while young firms often need scale and support that established corporations can provide.

The relationship between start-ups and corporate investors is a two-way street. Often beneficial to both parties, large firms can gain an agility and fresh way of thinking, while smaller companies can learn from the experience of corporations as they leverage their scale and network to expand.

But the partnership is sometimes murky, obstructed by the potential for plagiarism of ideas and a lack of concrete cooperation.

Microsoft works extensively with start-ups, helping them to expand around the world via its global network of vendors, according to Sherif Tawfik, regional director of commercial partners, channel, and SMEs at Microsoft Gulf.

“When we started to work with start-ups, we felt younger,” Tawfik said. “Way younger.”

The energy levels and innovation that Microsoft gained from collaborating with new companies was “something that is honestly priceless,” he said.

Compared to working with big corporates, which involved learning “process, rigidness, and structure,” working with start-ups showed Microsoft the importance of “agility, innovation, energy, and passion”, Tawfik added.

“Start-ups can solve the problems our customers have in a much more agile way,” he added.

At Microsoft, the company said its mission is to empower every person and every organization to achieve more. “That includes start-ups,” Tawfik said, speaking on a panel at the Step Conference in Dubai last week.

Big firms working with start-ups

According to the executive, the company’s strategy is to build Intelligent Cloud and Intelligent Edge platforms. “If you think about start-ups today, they’re all tech companies in one way or another, that needs platforms that enable them to scale.”

Over the past year, he said, Microsoft had dedicated more than USD 1 billion in funds to support start-ups. Half of that, Tawfik continued, would be used to provide access to Microsoft’s platforms, and the other half would be used to help start-ups actually get to the market.

“We want to enable them, from a sales point of view, and leverage our 30,000 sellers around the world,” he said. “It’s our biggest asset today.”

This would allow start-ups to sell their technology and ideas more easily, he said.

Nestlé, the Swiss food and consumer goods giant, also works extensively with start-ups.

The company launched its Henri project in 2016, focusing on issues such as sustainability, nutrition, health, and wellness. Over the last two years, the platform has launched 12 projects, with over 400 applications from start-ups.

“We realized the importance in 2016 of being faster, bolder, and having the agility that start-ups have,” said Nestlé spokesperson Lynn Al Khatib.

Asked whether she saw start-ups as a threat, a charity initiative, or as a necessity to thrive, Al Khatib said the company certainly did not see them as a threat.

“[We see them] more as a necessity [to] thrive. For sure not a threat,” Al Khatib said. “And for sure it’s not a charity.”

“We definitely see the value of collaboration, and it’s not really us versus them. We work with suppliers and companies that help us succeed, and definitely start-ups are another big part of that.”

According to Khatib, Nestlé looks to start-ups to help with innovation requirements, while contributing in return to the start-ups in the company’s local communities.

The value in partnership

This mutually beneficial relationship appears to be reflected in the data: 81% of Middle East and North Africa-based entrepreneurs said they would develop new products to secure a partnership with a large corporation, according to a survey conducted by Wamda and Expo 2020 Dubai.

A further 73% said they would make changes to their existing products, and 68% said they were even willing to adapt their business model, in order to work with a large, established company.

So why are corporate partnerships so valuable to start-ups?

“We, as a corporate, can give them advice and structure, and to help them understand what works and what doesn’t work,” said Tawfik. “We can also help them with ideation, and we can tell them what our clients need.”

Ultimately, the relationships between start-ups and large corporations are essential for both parties to thrive, and collaboration is key, the panelists said.

“If companies want to innovate in the existing marketplace…they cannot do it without the budgets or scale or resources that [corporations] have,” said Anis Zantout, regional digital director at FP7, an advertising agency. “They have to partner, there’s no other way.”

In 2016, the company launched  FP7/START, a platform that is aimed at fostering collaboration between start-ups.

“It’s still, to be honest, a fragmented ecosystem, especially in our region,” Zantout said, which made collaborations between start-ups and large corporations even more essential.

© Accelerate SME 2019