How can a tech startup get money and support, no strings attached, from the Fortune Global 500 and other large enterprises?
The Fortune 500 corporations are stressed about where they can get growth and how to plug into the innovative and nimble entrepreneurial ecosystem. The chasm between the typical Fortune 500 company and a startup is typically too vast for a standard partnership. So the large company needs to build the equivalent of a standard API to handle the significant number of startups with which any given large company can work.
The most common ways in which the Fortune 500 are working with the startup community at scale is through:
- Corporate VC
- Free benefits geared to startups
- Accelerator programs.
1) Corporate Venture Capital
Most VCs (including ours) collect money from independent limited partners in order to form their fund. Some corporations emulate this model by creating their own wholly-owned VC entities, typically with one LP: the corporate balance sheet. The advantage of taking capital from these players is that they become your internal allies at the firm. However, you have to be very careful about such investors restricting your ability to exit to a competitor, as well as the potential that they may create something competitive with your product. Some traditional VCs are highly averse to working with corporate VCs.
You can find corporate VCs in the major databases; for a list of free VC databases, see Fundraising Hacks: What type of capital should you raise, and how do you meet investors? Dell Innovators Credit Fund is an unusual take on this model, offering debt. Also, some corporates invest directly in stand-alone VC funds as LPs, typically to enhance their sourcing.
The second tactic we’ve seen the Fortune 500 use is contests. This is a cheap way to attract a range of startups to work on problems the company can’t solve in-house. It’s the same logic as the X Prize Foundation. A $250,000 prize is meaningful for most startups, but it’s far less than what it takes to run a formal R&D team inside a company. Skild is a company specializing in producing “transformative innovation challenge programs.”
- Verizon, through their 5G lab, welcomes 5G innovators to enter their 5G challenges in order to receive funding and access to the Verizon 5G Ultra Wideband network.
- AWS offers AWS Activate, which includes AWS credits, AWS support plan credits, and training. Amazon hosts an annual startup challenge for companies using Amazon Web Services (AWS). Attendees “get hands-on experience, insight, tips and tricks from AWS experts on how to architect [their] applications, optimize [their] costs and deploy quickly to the AWS cloud.” Winners receive a $50,000 credit for AWS paid services, another $50,000 in cash, and AWS mentoring and support.
- Cisco Global Problem Solver Challenge looks to support business ideas and early-stage entrepreneurs that use technology for social impact worldwide. There is more than $1,000,000 in prize money to help accelerate these technology solutions.
- Estée Lauder Elevate Innovation has a series of challenges for startups with solutions at the intersection of beauty and technology. Startups submit their pitches, go through a pressure test, and a finalist demo to win funding and partnership with Estée Lauder.
- The HSBC Future Skills Innovation Challenge is an international competition for social entrepreneurs with winners receiving up to $25,000 in cash and support from HSBC and Ashoka to scale and raise additional funding.
- Johnson and Johnson Quickfire Challenges has a series of targeted challenges to identify, support, and accelerate the best ideas in healthcare with grant funding of up to $100,000.
- The Visa Everywhere Initiative invites fintechs and startups to submit their solutions to compete in challenges surrounding topics such as digital payments and commerce solutions. Highly performing submissions receive validation, exposure, and monetary prizes.
For a longer list, see Startup contests.
The most common tactic we’ve seen from large corporations is providing a package of benefits for startups in order to build relationships with early-stage companies. This promotes the company’s core services to new customers and hopefully locks them in as permanent customers.
- GitHub (owned by Microsoft), offers the GitHub Student Developer Pack which offers more than $200k in developer tools/training. Some companies offering benefits include Canva, Namecheap, DigitalOcean, and Stripe.
- Microsoft for Startups offers access to $120,000 in cloud technology tools, other developer tools, technical support, and business enablement to B2B startups looking to scale their companies. In addition, they offer business training and a network of over 2,000 partners to connect members with incubators, investors, advisors, government agencies, and other resources.
- NVIDIA Inception is a program that provides support to startups in the form of marketing support, cloud credits, training through NVIDIA’s Deep Learning Institute, and more. Startups must be in the fields of AI, data science, or HPC.
- Oracle for Startups offers some free cloud tools as well as free credits for their other cloud services, followed by a 70% cloud discount for two years. In addition, the startups in the program receive mentorship, market connections, and more. There are no restrictions on industry or technology areas. The only requirement is that the company be a startup.
The accelerator model has produced some notable companies, and some of the Fortune 500 also want to get in the game. We track all of the no-money, no-equity free accelerators.
- Apple Entrepreneur Camp is a technology lab that focuses on female and black entrepreneurs and gives them access to one free year of membership to publish apps on the Apple app store, a community of mentors and like-minded innovators, and continuous support from Apple engineers.
- AT&T Aspire Accelerator provides a $100,000 investment plus $25,000 program costs to founders working on redefining student outcomes and preparing students for success.
- Coca-Cola Founders is an equity-free program supporting founders with or without a start-up idea. The program provides founders with strong relationships, expansive reach, and many resources.
- The Cisco Startup Program is a 6-month equity-free program for mid-to-late stage technology startups. Benefits include working space, mentorship, industry connections, and access to Cisco technology platforms.
- Deloitte Launchpad is a program that supports Israeli growth-stage startups as they expand their growth in the US. The program is also equity and fee-free.
- Disney Accelerator focuses on startups looking to make an impact on “the future of technology and entertainment” and provides investment capital, working space, and support/mentorship.
- Facebook Accelerators are for startups that have launched a product on the market and are looking to scale. These startups receive expert mentorship, training, and access to partners through Facebook’s network.
- Facebook Startup Circles are for startups that are looking to take their prototype and find market fit. These startups receive access to a peer network, lessons from startup experts, and coaching from business and strategy experts.
- Google provides a directory of resources for startups (both from Google and elsewhere) through its platform Google for Entrepreneurs. On the platform, you can find tools, education on best practices, and communities.
- Intuit Prosperity Accelerator selects startups to work for 4 months on specific challenge areas concerning consumers and small businesses post COVID-19. Participating startups receive access to a mentorship network, $20,000, and an investment opportunity.
- IBM Alpha Zone Accelerator is a 6-month program for seed and round A funded companies with areas of focus including Cloud, Big Data, Mobile, Internet of Things, etc. Benefits include up to $120,000 in cloud services credit, free office space, and takes no equity. This program is designated for Israeli startups only.
- Johnson and Johnson Innovation JLABS is a global network of innovation locations focusing on healthcare ideas and innovations. Eligibility varies by program and location.
- JPMorgan In-Residence seeks to connect startups with JPMorgan’s data, expertise, network, and more to help participants make breakthroughs in the wholesale banking space. May also further support and fund startups after completion of the program.
- Mastercard Start Path is a 6-month program for later-stage FinTech startups with at least 6-12 months runway. They receive support in the form of mentorship, access to a strong network, as well as an introduction to prospective customers.
- PayPal Incubator provides co-working space, education, mentorship, access to funding, and more to startups. Ideal applicants are a FinTech or commerce startup in Singapore with an MVP that addresses one of the given themes of interest.
- REACH supports real estate tech entrepreneurs in several locations around the world. The accelerator provides startups with association with a strong brand, access to a vast network within the industry, and a better market penetration opportunity.
- SAP.IO Foundry NY accelerator is for B2B software startups in professional/business services led by women or diverse founders. It is a no-equity program for Seed to Series C startups offering mentorship, SAP technologies, and engagement with SAP customers.
- Startup Autobahn Daimler Chrysler’s start-up accelerator works with startups to start a joint pilot project with Daimler AG and develop concepts and prototypes. Startup Autobahn looks to mediate between startups and large corporations to forge partnerships between the two.
- Startup with IBM is a program that provides startups with up to $120,000 in cloud credits, expert guidance, and access to cutting-edge technologies.
- Target Accelerators has multiple programs for areas such as retail and technology with criteria varying between programs. The program is also equity and fee-free.
- The Venture Crush Pods Program (backed by Lowenstein Sandler) is a program that doesn’t charge or take equity and puts accepted applicants into pods of 10-15 startups plus 3 pod leaders to expand the founders’ networks and educate them.
- The Wells Fargo Startup Accelerator offers a 6 months equity-free and no-fee program focused on driving innovation in financial services forward; will invest up to $1M in select start-ups who complete the program.
Startups should certainly research these opportunities, and take advantage of the resources of the large companies. Hopefully, the Fortune 500 will buy from, invest in, and perhaps eventually acquire them.