The number of corporate-venture units worldwide has doubled to 1100 over the past five years. According to the Economist, America’s corporate investors were involved in 18% of the country’s venture-capital deals last year.
Globally, large corporations have been running venture-capital funds for years. Intel established its corporate venture fund already in 1991. Today companies such as Google, Alibaba and BMW are partnering with start-up companies to complement their product development and to get intelligence on new, disruptive technologies.
The Finnish large companies are still taking their first steps in the start-up world. A recent Tekes publication “Different – The experiences of Finnish large companies with startups” gives examples of the collaboration happening in Finland.
3M sees investments into startups as a means to enable collaboration
3M, the giant American corporation producing over 55 000 products from car-care waxes to Post-it notes, medical products and optical components, has been looking for new talents from start-up companies since 2008.
“At the moment, we have 15 active investments and this year our objective is to make 8 investments globally, each around 1 to 5 million dollars. We have already completed two. Half of our portfolio companies are based in the USA, the rest is spread across Israel, Germany, Singapore, Canada and Chile. We haven’t made any investments in the Nordic countries so far,” says Ewa Grzechnik, a 3M New Venture Manager, who came to Helsinki in the beginning of March to meet-up with some of the promising Finnish start-ups.
Most 3M New Ventures’ companies offer technologies or business models, which complement 3Ms businesses.
“When we meet with a start-up, we discuss how our collaboration could build on one or multiple of 3Ms core strengths: technology, manufacturing capabilities, brand and global presence. Usually, a startup offers a technology platform, while 3M helps to develop it further, provides applications and access to market.”
Before investing in a start-up company, 3M makes sure there is common ground for collaboration. Together with the start-up, they draft an investment agreement and agree on a collaboration plan.
Start-ups can benefit from the corporate investments in other ways as well. Recent data published by the Economist points out that having a corporate investor on board increases the probability of a startup going public compared to if it had been backed by VCs only.
In search of disruptive digital technologies
Around 30 % of the 3M New Ventures’ investments are focused on totally new ideas outside of 3M’s current business to understand, what opportunities there could emerge in the future.
“Such technologies could be focused, for example, on sensors and software embedded in analog products or virtual reality in industrial setup,” Ewa Grzechnik hints.
That is what she is also looking for in Helsinki at the opening event of the three new Tekes digitalisation programmes: the 5th Gear, Bits of Health and Industrial Internet.
“In Finland, I see a lot of promising Nokia legacy companies that are working in ICT and electronics, which makes it an attractive country to look for innovation,” she notes.
Ewa has set up meetings with dozens of Finnish start-ups. For them there is s a clear message:
“We want to meet exceptional entrepreneurial teams, hungry to bring their product to the market. 3M is a technology heavy company with a great interest in innovation. We want to hear about the technology: What does it do? What problem does it solve? How do you want to sell it? It is key that you can explain it in a clear and convincing way, giving examples of specific use cases for your solution.”
- Tekes publication: “Different – The experiences of Finnish large companies with startups” (pdf)
- 3M New Ventures
Text: Eeva Landowski
Article first published in www.tekes.fi