Startups & Corporates: A Symbiotic Relationship

The growing collaborations between startups and corporates are fostering new-age developments wherein both partners are learning from the two different ecosystems

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A relationship can thrive only if feelings are mutual, and that precisely is the point of a report by McKinsey which states that startups can benefit from corporate funding, resources and customer access, whereas corporations need to innovate to stay ahead of competitors and disruption and also access new technology. "This makes it an important time for collaborations between corporates and startups," noted the report.

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The report gives insight into how having a corporate partner helps startups in financing as it ignites investors' interest. Startups are often interested in a corporation's customer and industry data to develop capabilities. At the same time, by partnering with startups, corporates want to gain early insights into experimental technologies and new verticals. It's a symbiotic relationship, wherein both partners mutually benefit and grow together.

India's large conglomerates such as Reliance Industries Ltd (RIL), Tata group and Mahindra & Mahindra, among others, have joined hands with the startup industry. RIL acquired Embibe, Fynd, Grab, Haptik and Reverie, among others. Tata group recently acquired tech startups Tejas Network, Saankhya Labs, Cambric Corporation, URJA and AccessBell. Tata Digital also acquired a majority stake in 1mg.

Not only tech startups, FMCG, too, is a hot favorite of top Indian companies. Recently, FMCG firm Marico acquired a majority stake in healthy breakfast and snacks brand True Elements. "There is significant strategic growth happening in the FMCG sector through the startup ecosystem. We are a strategic investor of choice and we believe in inorganic participation. After we make the acquisition, most entrepreneurs stay with us for around three years based on the runout model," said Saugata Gupta, MD and CEO of Marico.

The company has also invested in beauty startups Beardo and Just Herbs. "We learn a lot from these digital brands and try to embed it in our culture. The operational ways, culture, processes are way different from the traditional companies. The velocity of innovation, digital marketing and operating models are the key takeaways from this thriving startup ecosystem," added Gupta.

Apart from the food sector, the dairy section in the FMCG market is also growing. The space is serviced by startups such as Country Delight, Stellapps, Happy Milk, Klimom, Milk Mantra and Milkbasket, among others. Dairy heavyweight Amul has been ruling the space for years now. Talking about the growing acquisition trends in the startup ecosystem and whether Amul is bullish on acquiring any startup, R.S. Sodhi, the MD of Amul told Entrepreneur India in a previous interview, "We believe in joining hands with the startup ecosystem and complimenting them, the term acquisition doesn't suit our portfolio. The startup ecosystem is bringing transparency and with the dairy startups the farmers are benefitting and anything that aids a farmer's growth is always held in high regards at Amul."

The rise of digital-native, new-age competitors challenges the traditional ways of enterprises and the business landscape is evolving at an unprecedented pace. The emergence of digital technologies and rapid innovation in business models is redefining consumer behavior.

Tapping into the extended partner ecosystem of startups, global enterprises are driving new models of engagement. There are corporate, startups partnership programs across strategic focus areas, several of which are already yielding significant success. One such collaboration is NASSCOM's 'Co-Innovation: Enterprise Startup Collaboration', which underlines how enterprises and startups work together to solve industry issues and create new products and services.

Similarly, T-Hub, the world's largest innovation center is fostering corporate startups collaborations. Boeing, Microsoft, Maruti Suzuki, Intel, are among the top enterprises it is working with to foster collaborations.

There are individual corporate-startups collaboration programs. One such program is Maruti Suzuki's MAIL: a startup accelerator for mobility and automobile software startups in India. MAIL aims to create an environment that fosters and accelerates growth of the digital startups participating in the program. It seeks to create an ecosystem in India to drive progressive thinking fueled by digital innovations and a commitment to bring the very best to Indian roads.

While working through such programs, big companies witness certain challenges. "When it comes to working with big companies such as Maruti, sometimes it becomes difficult for startups to connect with the right team members. Our innovation team helps startups get in touch with the concerned people, the project starts with identifying the solutions that would work for the company and then the implementation process begins. Through the process there is a lot of mentorship involved and it's a very symbiotic relationship as both parties learn from the collaborations," said Aditya Aggarwal, head digital enterprise of Maruti Suzuki India.

Recently, Ratan Tata backed energy startup Repos Energy. Such corporate collaborations are very beneficial for exposure and experience because the scale at which corporations operate is huge. As startups, we too are embarking on the journey to match up to the corporate scale, said the founders, Chetan Walunj and Aditi Bhosale Walunj of Repos.

However, such collaborations come with its set of challenges, "Being a startup we are very agile and flexible to changes. Therefore at times when we need some changes, we have to go through a rigid process and there is a slight mindset difference as well," the founders added.