Targeted Startup Scouting: 3 Key Steps to Finding Partners Aligned with Your Corporate Growth Goals

Step 1. Craft your corporate investment thesis

For corporations looking to engage in startup scouting, developing a clear investment thesis is paramount. This will become a strategic foundation that guides your scouting activities. Start by asking yourself the following key questions:

• What specific business challenges or opportunities are we addressing?
• What gaps exist in our product or service offerings that startups could fill?
• How much risk are we willing to take on with our startup investments?
• What's our timeline for seeing returns on these investments?

Next, you’ll want to pinpoint the type of innovation that aligns best with your corporate strategy and growth goals:

• Core: Refining and enhancing your existing products, services, and market approaches. Often less risky and can be integrated into current business models
• Adjacent: Opportunities that extend your existing capabilities into new markets. 
• Radical: Ventures that represent a significant departure from current operations. These are high-risk but potentially high-reward bets that could redefine the industry landscape.

Knowing the type of innovation you’ll be pursuing will help target your scouting efforts later on. 

Lastly (and perhaps most importantly), you’ll want to ensure your investment thesis supports the overall corporate objectives and long-term vision. Here are a few tips to get you started:

• Regularly review your investment thesis against your company's long-term vision and strategic plan.
• Involve key stakeholders from various departments in the thesis development process.
• Create a feedback loop that allows for continuous refinement of your thesis based on scouting results and market changes.
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Step 2. Prioritise your focus areas and innovation opportunities

With countless startups emerging across various sectors, deciding how to focus your scouting efforts can be a daunting process. A good place to start is by developing a clear innovation thesis and prioritisation frameworks. 

Your innovation thesis should be a natural extension of your investment thesis, providing a more granular view of the types of ventures that will have the most significant impact on your goals. Here are a few tips to get you started:

• Conduct a thorough analysis of your value chain, identifying areas ripe for disruption.
• Map emerging technologies to your business processes, highlighting potential efficiency gains or new revenue streams.
• Engage with customers to understand their unmet needs and pain points.
• Analyse competitors' innovation strategies to identify gaps and opportunities.

Once you've identified potential focus areas, you’ll need a systematic way to evaluate and prioritise them. Consider some of the following:

• The Impact/Effort Matrix: Plot opportunities based on their potential impact versus the effort required to implement them.
• The Innovation Ambition Matrix: Categorise opportunities based on their proximity to your core business (core, adjacent, transformational).
• The Strategic Buckets Model: Allocate resources across different types of innovation initiatives based on strategic importance.

Once you’ve prioritised your focus areas, keep refining them to ensure they stay relevant and up to date:

• Schedule periodic review sessions to assess progress and recalibrate your strategies.
• Leverage data analytics to measure the effectiveness of your scouting activities.
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Step 3. Use targeted scouting to find startups you need

When scouting for startups in niche sectors like FinTech or InsurTech, a targeted approach is essential. Here are a few tips to help fine-tune your efforts:

• Use specialised databases and platforms like Crunchbase, CB Insights, and PitchBook to filter startups by sector, technology, funding stage, and more.
• Attend niche conferences and events like WebSummit, Slush and TechCrunch Disrupt to meet startups and gain insights about the latest industry trends.
• Partner with incubator and accelerator programs that focus on your areas of interest to get early access to promising startups. Examples include Plug and Play and Techstars. 
• Set up Google Alerts and RSS feed to stay updated on news and developments in your target sectors.

Technology mapping can also be a powerful tool to optimise your startup scouting efforts, providing a structured way to visualise and understand the tech landscape you want to play in. This systematic approach helps ensure you don't overlook important areas or emerging technologies.

By mapping out existing and emerging technologies, you can more easily spot gaps in your current capabilities or areas where startups might provide innovative solutions. Here are a few tips to help you leverage it to boost your scouting efforts:

• Create a visual representation (like a radar chart) of relevant technologies.
• Categorise technologies based on their potential impact and maturity level.
• Regularly update your map to reflect changes in the tech landscape.
• Use the map as a starting point for discussions about which areas to prioritise in your scouting efforts.
• Consider involving cross-functional teams in the mapping process to get diverse perspectives.

It’s a good idea to link your map to concrete actions, like setting specific goals for each area and assigning specific team members to execute. 
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Final thoughts

Don't be afraid to start small and iterate. Your first scouting efforts may not yield immediate results, but they will provide invaluable learnings that will shape your future strategy. Embrace the uncertainty, stay curious, and be prepared to pivot when necessary.

For more practical startup scouting tips, be sure to check out our article: 8 Startup Scouting Techniques to Boost Your Corporate Venturing Strategy.

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Want to find the right startup partners? We can help you create a tailored strategy that leverages your unique corporate assets to fuel innovation and meet your growth goals.