Co-Innovation – Insights on Startup and Corporate Collaborations

Recently ClearViewIP had the opportunity to attend a panel discussion on the competitive advantages of co-innovation hosted by UK Tech News (UKTN) and EDF Energy. The panel was chaired by UKTN editor Yessi Bello Perez and featured; Shetal Edwards, head of innovation at EDF’s incubator, Blue Lab; Matthew Bradley, an investor with London-based VC firm Forward Partners; David Barlow, Business Development at the HTI gesture control company Gestoos; and Devrim Celal, CEO of Upside Energy, a participant in EDF’s Blue Lab incubator. The panel was well balanced allowing for perspectives from the investment and incubator side as well as the founder and startup side of the co-innovation discussion. Some of the key themes and takeaways from the discussion were the need to define desired outcomes and to find the right partnerships through proper due diligence.

Incentives and Concerns of Co-Innovation

There are many incentives for startups and corporates to collaborate, but there are also concerns that need to be understood for successful co-innovation. Corporates are very aware innovation is not always going to be home-grown. While they are still investing heavily in R&D, they understand the innovation landscape is an ever-changing, interconnected map of various and emerging technologies. Shetal Edwards of Blue Labs commented that they anticipate a good portion of their innovative ideas will come from outside the organization, outside their core business sector, and that many will be driven by consumers. For startups, access to the resources corporates have and the capital they can provide can mean life or death. And having a partnership with a corporate can open doors and provide recognition they wouldn’t be able to achieve on their own. This is all true if the goals of both the corporate and the startup are genuinely aligned.

When desired outcomes aren’t communicated clearly, co-innovation doesn’t work. Startups can get distracted, go off track, or risk changing their product too much to fit the corporate’s goals and then finding themselves unable to meet the needs of the general market. For incubators, if the startup doesn’t have the designated resources to make the incubation experience work, time and money will be lost. Often the decision to invite a startup to join an incubator is made quickly after a 15-minute pitch. This isn’t always enough time to know if the startup has an internal champion to see the process through.

There are also cultural issues that can have an impact on co-innovation. Startups are agile, corporates are process driven. Startups are used to working on tight deadlines with tight budgets, while corporates have resources and time to execute, as Devrim Celal, commented, “startups are one bad decision away from dying”. Corporates are excellent at communicating and selling to other big corporates and startups can learn a lot from their buying and selling process. Both parties benefit from learning how to behave like each other and from supporting each other when goals are properly aligned.

What about intellectual property?

With defined objectives and proper due diligence being two of the main themes of the discussion, it was interesting that the first question from the audience was about the role of IP. This led to comments around legal ownership, licensing models and how expensive lawyers can be, but it’s also important to point out the important role IP has in increasing successful outcomes for co-innovation. From our perspective as IP strategists, there is a direct correlation between defined outcomes, due diligence, intellectual property and increasing the chances of successful outcomes.

With our clients, our first interaction is always to explore what they are trying to achieve as a company and then looking at how their innovation and IP strategy aligns with their goals. This is important for large corporates as well as startups. By doing this IP due diligence up front, our clients are able to articulate their business objectives and clearly communicate their innovation story. Startups are then able to use their IP positioning as proof of their long-term goals and the relevance of their innovation when seeking investment. By having a defined IP strategy, and doing an IP due diligence of potential portfolio companies, investors and incubators are able to identify and understand if the IP they are looking to invest in fits with their objectives.

Suggestions for startups looking to partner with corporates

Corporates have objectives they want to meet with their incubators, startups should look for specific corporates and incubators that fit with their own objectives. They should find the right fund for what they are trying to create. Upside Energy and Blue Lab are a good example of a startup and corporate collaborating around similar objectives. David Barlow also had a good comment about looking for corporates who may need you. He commented that Cisco might not seem like an obvious partner to his company but they have been a valuable relationship for Gestoos. Their innovation investment fund created a lot of opportunities and recognition for both parties.

When looking to partner with a corporate, it’s important for young companies to have a strong grasp of the strength of their innovations. For startups, investing in IP is not always a priority, but the IP they own and are developing is a huge part of their attractiveness to investors and incubators. Therefore, it’s very important to be able to communicate its relevance and value. Barlow made this point well when he commented: “corporates don’t know how to build what you have created, if they did, they wouldn’t be coming to you, stand your ground.” Doing your due diligence up front and having a strong IP position will allow you to do this.

Suggestions for corporates looking to partner with startups

To increase the chances of an incubator project succeeding, there needs to be a clearly communicated process, goal and the right person or people need to be on board to make everything happen. When a startup doesn’t have a champion within their organization working with the corporate incubator to ensure things are moving forward, the co-innovation project will fail.

Additionally, the technology you are investing in needs to be understood from all angles. This wasn’t particularly stressed during the panel discussion, but once you have an idea of the product or solution the startup has pitched, it’s important to know its technical relevance. Where does the technology fit into the big picture? How innovative are they really? These are important questions investors ask and is part of the due diligence process which includes IP data analysis and market research. This will give an overview of the startup’s IP position, Does the startup have a patent portfolio? Are the patents any good? Is the startup using open source software? Do they have freedom to operate? Ownership of the innovations that come out of the co-innovation process are often well defined, but due diligence up front on the patent positioning of the startup could both increase the chances of future success and prevent potential pitfalls and lawsuits that could discredit any products to come out of the process.

Thank you to UKTN and EDF Energy for Hosting

The topic of co-innovation is very relevant for us as we see many of our clients struggling with finding, navigating, and nurturing these sorts of relationships. It is always interesting to hear all sides of a topic and this panel did an excellent job of sharing their views and experiences. The event also provided some excellent and warm networking opportunities.