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During the last few years, corporate venturing has emerged as a proven tool to accelerate growth and innovation, across a variety of industries. The proof is in the pudding, with companies like Google, GE, and Microsoft all enjoying stellar results from their corporate venturing efforts, including:
- Exposure to untapped markets
- The development of new offerings
- A better understanding of their customer base
- Higher profit margins
The list of benefits is endless and they all contribute to the commercial success and longevity of a business. But what is corporate venturing?
Corporate venturing is a commonly used innovation strategy in which a corporation backs a startup with resources (e.g. funding, networks, expertise, etc.) in exchange for access to new technologies, markets, and business strategies.
The backing for corporate startups can be accomplished through several tools including incubators, accelerators, or the development of external or internal innovation units (i.e. intrapreneurship).
To give you a better idea of how a successful corporate venture works, we’ve listed 5 inspiring examples from global market leaders in different industries. Each of these companies leveraged their corporate assets to nurture a corporate startup and in so doing, they gained a competitive advantage against potential disruptors in their market.
1. Vipps by DNB.
DNB is a Norwegian financial services group that offers savings, loans, insurance, pension, and advisory services to both individual and corporate customers.
In 2015, they launched Vipps, a mobile banking application that gives users the possibility to make payments via the receiver’s telephone number instead of an account number. The service enables anyone with a Norwegian bank card to split bills, expenses, or make payments between friends, acquaintances, stores, and restaurants.
- Industry: Fintech
- Parent Company: DNB
- Headquarters: Oslo, Norway
- Employees: 287
- Revenue: $91,5 million
- Status: Private
Today, Vipps is replacing credit cards, debit cards, and cash in Norway in part because the service is so easy and convenient. For example:
- Norwegian diners can “Vippse” their order, eat, and pay without needing a waiter.
- Team Norway fans can “Vippse” their hockey tickets instantly.
- Shoppers both online and offline can “Vippse” their purchases for quick, hassle-free payments.
What made it a successful venture?
- Establishing partnerships with all Norwegian banks ensured nationwide usage.
- A strong focus on ease and convenience.
- A willingness to expand the offering.
In 2019 Vipps partnered with Alipay and five other European wallets (Blucode, Pivo, ePassi, Momo Pocket, Pagaqui) to further their reach beyond Norway. Their goal is to create a financial highway that will make cross border payments easy and quick.
2. Car2Go by Daimler.
Daimler’s product portfolio includes multiple brands like Mercedes-Benz Cars, Daimler Trucks, Daimler Buses, and Mercedes-Benz Vans (among others). In 2010, Daimler’s independent innovation lab, Lab1886 launched Car2Go, a pioneer of “free-floating” car-sharing services.
The concept was simple: to enable users to reserve and rent a car via a cost-free smartphone app, anytime and at a low cost. The company has since joined with BMW’s DriveNow to become “Share Now”.
- Industry: Mobility
- Parent Company: Daimler
- Headquarters: Berlin, Germany
- Employees: 404
- Revenue: $69 million
- Status: Merged into ShareNow
Today, over four million customers use this flexible mobility concept in 24 locations across Europe and China.
What made it a successful venture?
- A slow and strategic expansion with early market testing.
- Daimler’s corporate assets and networks set Car2Go up for success.
- Exploring outside of Daimler’s core business provided a new revenue stream.
- Autonomy was vital in allowing this venture to accelerate.
Lab1886 operates independently from its parent company, giving its employees the freedom to develop new ventures outside the corporate hierarchy.
3. Evidation by GE.
Founded in 2014, Evidation Health is the product of a collaboration between GE Ventures (GE’s venture capital subsidiary) and Stanford Health Care. The company’s platform turns raw, high-frequency behavior data from sensors, devices, speech, video, and other sources into new knowledge about health and disease. This enables individuals and innovative companies to understand and influence everyday behaviors for positive change.
- Industry: Health, Data Analytics
- Parent Company: GE
- Headquarters: California, USA
- Employees: 232
- Revenue: $51 million
- Status: Late-stage Venture
Since then the company has played a role in the development of a COVID-19 early-detection algorithm with partners like Apple, Johnson & Johnson, Eli Lilly, Tidepool, and others. To date, Evidation has over 3.7 million users and has earned $45 million in series D funding.
What made it a successful venture?
- Strategic partnerships with medical research centers, hospitals, and biopharma companies.
- Gamification with the purpose of keeping people healthy provided a rich source of data.
- The strategic combination of academic expertise (e.g. Stanford Health) and innovative technology.
4. Niantic by Google.
Niantic Labs was founded in 2010 as an internal startup within Google. The company became an independent entity in October 2015. Since then they have been working on a planet-scale augmented reality platform for current and future generations of AR hardware.
Its flagship products include Pokemon Go, Ingress, and Harry Potter: Wizards Unite.
- Industry: AR, Mobile Apps
- Parent Company: Google
- Headquarters: California, USA
- Employees: 668
- Revenue: $900 million
- Status: Late-stage venture
By 2019, Niantic had made $894 million in revenue and gained 412 million active users.
What made it a successful venture?
- Niantic games differentiate themselves by combining social components with physical movement to play.
- Partnering with Nintendo provided a solid user base.
- Google’s pro-innovation culture fostered the development of the startup.
- Autonomy within the company meant Niantic was free to explore new opportunities.
By 2019, Niantic had made $894 million in revenue and gained 412 million active users.
5. Livongo by Microsoft.
Livongo offers digital services and products to help people struggling to manage chronic conditions like diabetes, hypertension, and mental health issues. Users receive a starter kit at the beginning of the program, followed by regular coaching and continuous monitoring, all of which is paid by the user’s employer or insurance through a monthly subscription model.
- Industry: Healthcare, Data Analytics
- Parent Company: Microsoft
- Headquarters: California, USA
- Employees: 615
- Revenue: $167 million
- Status: Acquired by Teladoc Health
By 2020, the company had gained 410.000 users and was bought by telemedicine provider Teladoc Health for $18.5 billion.
What made it a successful venture?
- A focus on prevention as a critical lever for reimagining healthcare delivery.
- Establishing strategic partnerships with companies like Lowe’s, Microsoft, Blue Shield, and Blue Cross enabled the company to access vital talent and clientele.
- Constant product development was a central part of the strategy.
Key takeaways.
As you can see from these five examples, corporate venturing is an effective tool for companies looking to discover new markets, develop new offerings, future-proof, and experiment with new technologies.
Here are a few key takeaways that might help you on your own corporate venturing journey:
Corporate assets can be used to accelerate ventures.
Giving startups access to corporate assets can boost their chances of growing significantly and exploring new markets e.g.:
- Google letting Niantic experiment on their Google Maps engine.
- Daimler offering Car2Go Smart & Mercedes cars.
Ventures are more agile.
Because of their agility and flexibility, corporate startups are able to operate in new markets faster & leaner than the corporates themselves e.g.:
- Vipps and Livongo became leaders in their markets by expanding their product offering rapidly based on their customer needs.
- Partnerships are key to growing fast.
- Strong partnerships are the key to developing opportunities for startups e.g.:
- Evidation Health’s connection to Stanford Health and GE gave them credibility and expertise.
- Livongo’s revenue increased after joining Microsoft.
Want to know more about how you can use corporate venturing to take your innovation strategy to the next level? Get in touch! We’re happy to help!
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