Last month, we shared insights into how the Venture Engine® supports industry leaders to turn venture collaborations into bottom line results. A strong startup ecosystem presence is crucial to our Venture Engine® methodology. In this article we will share the 3 best practices to become a go-to brand for ventures in your strategic domains: Position, Network and Attract.

 

Why it is important to become the go-to brand for innovation ventures in your strategic domains

Emerging ventures bring new technologies and business models that industry leaders need to stay ahead of the competition. By having a strong ecosystem presence, you become approachable for startups. Below you can find an example of how we started collaborating with Gashouders out of our ecosystem presence.

The power of the ecosystem: A case on how a circular biogas startup found their strategic partner for funding and scalable market access

At the beginning of this year, we invested in Gashouders, a Dutch venture that is reducing carbon emissions and fossil fuel usage by making biogas out of waste streams available to the industry.

The energy transition is one of the key domains in which we support impactful ventures with funding and scalable market access. Therefore, our startup analysts closely monitor emerging trends in the space, and we meet new energy ventures every day.

However, trend analysis is done on large amounts of data and can never cover every individual use case. Circular biogas was not on our radar before the Gashouders team walked into our office, and we would have never invested in this niche if they hadn’t.

Mark Deutekom, Global Energy Director at Unknown Group: ‘It was great to meet the Gashouders team and learn more about their impactful circular biogas solution. We share huge ambitions, and we are excited to fuel the energy transition together.’

This is the power of a strong ecosystem presence for investors, but even more so for industry leaders. If you are top of mind for startups in your strategic domains, you will be the first to learn about the innovative technologies and use cases they bring. Use cases you could never search for in startup databases like CB Insights and Pitchbook, simply because it is impossible to scout without defined search criteria.

However, the startup ecosystem is crowded and thousands of industry leaders, investors, accelerators, and other players are targeting the same ventures as you. In our experience, the following three practices make you stand out in the ecosystem as the go-to brand for innovative ventures in your strategic domains.

 

1. Position

A key element to a strong ecosystem presence is having a clear and attractive value proposition for ventures. Ventures are looking for partners who can help them grow, by providing knowledge, facilities, production, traction, distribution, and funding. A good value proposition describes a superior promise on one or more of these topics.

Over the last years we have seen ventures becoming increasingly critical about the partners they want to work with. And they have all the reasons to be so.

Most founders we know have spent large amounts of time and resources applying for innovation challenges and attending programs that turned out to be worthless for their business. Therefore, formulating an attractive value proposition alone is not enough.

A strong ecosystem presence doesn’t happen overnight. If you fail to deliver upon your value proposition, ventures will stay away in the future.

Demonstrating proof that you will deliver, for example in the form of successful collaboration cases, will help to build credibility in the ecosystem and will make ventures eager to work with you.

Pieter Mans, CEO of Gashouders: ‘We initially approached Unknown Group because we were looking for support getting ready for a new investment round. We could have turned to one of the Big Four for this, but we wanted a partner that shares our entrepreneurial culture. Furthermore, it was clear to us that Unknown Group could support us with fundraising and business development as well.’

2. Network

To enable the best ventures to get in touch with you, your message needs to reach them. Building a strong online presence and leveraging all relevant channels to get the word out gets you a long way. But to reach all the relevant ventures in an ecosystem, you need to work together.

The startup ecosystem is dense and full of organizations like incubators, accelerators, technology labs, and investors. Their shared ambition is to help ventures succeed throughout various stages of their growth.

If you do it right, your value proposition will be complementary to the ones of many of these network partners. This means that there is value for them to refer targeted ventures out of their networks to you.

These kinds of exchanges do not only support the best ventures to get in touch with you. They also support a stronger and better mobilized startup ecosystem.

The best and most relevant ventures in your strategic domains can come from anywhere. Therefore, the more network partnerships you build, the better.

Becoming a go-to brand: how building a network of partners can get you in touch with the best ventures

We exchange value with more than 300 network partners through Get in the Ring, our global pitch competition. On top of that, we build dense networks of partners in our focus regions and domains.

Gashouders got in touch with us via ION+. This is an investor targeting the early-stage funding gap for innovative ventures in the east of the Netherlands. ION+ referred Gashouders to us and we ended up investing in the company together.

3. Attract

A great value proposition and strong network partners will increase the number of great ventures getting in touch with you. However, it is difficult to plan your innovation roadmap around these spontaneous interactions. To align your innovation activities with the ecosystem, you need to support ventures to reach out at the right moment.

This can be done through open innovation challenges. Calls for applications for ventures in a specific domain you are working on at that moment. By setting an application deadline, the open innovation program you organize for these ventures becomes plannable.

The power of open innovation challenges: An example of how Shell attracts the best startups and scale-ups in their domains

A great example is the Shell New Energy Challenge, which we have supported since 2016. The New Energy Challenge runs annually, and each year Shell is calling out to new energy startups and scale-ups to apply.

In the coming weeks, we will publish a case describing how Shell is combining Position, Network and Attract to leverage the power of the ecosystem.

To select the best ventures to work with, great Ecosystem presence must be complemented with Intelligence activities. In the following article we will deepdive on the next Venture Engine dimension: Intelligence.

Explore the Venture Engine® for open innovation with Unknown

Unknown Group is an early-stage venture capital firm headquartered in the Netherlands with local offices in Europe, Southeast Asia, the US and Latin America.

Our Venture Engine® for industry leaders effectively turns their collaborations into bottom line results through a combination of ecosystem, intelligence, business and portfolio activities. Over the past 14 years, we have built assets across these four dimensions. Industry leaders can leverage these assets to accelerate their collaborations.

 

BENCHMARK YOUR VENTURE COLLABORATION STRATEGY

Participate in our benchmark research and compare your performance to other industry leaders. You will receive a personalized report with actionable advice to improve your open innovation and venture collaboration strategy.

By building strategic relationships with industry leaders around the world, we have found that our work as investors and that of corporate innovators are very similar and require a similar approach. Based on this, we have successfully introduced the Venture Engine® methodology for open innovation to several of our corporate partners in the last few years. Here is how it works.

 

Global transitions are fueled by founders and amplified by industry leaders

Unknown Group invests in purpose-driven founders worldwide who are developing solutions that support the critical, global transitions of the coming decades. Such as the energy transition, the food transition, and the healthcare transition.

We strongly believe that these transitions will be fueled by founders and amplified by industry leaders. That’s why we define our investment areas in close collaboration with our corporate partners and actively support industry leaders and ventures to jointly develop impactful solutions.

 

Better bets and bottom line results: The Venture Engine™ for open innovation

While the value of industry partnerships for ventures is clear, industry leaders have just as much to gain. When done right, open innovation can deliver bottom line results faster, cheaper and with lower risk compared to internal innovation projects.

Moreover, no single company could implement even a fraction of the millions of ideas, products and technologies that ventures work on every day.

Many executives would agree that realizing the full potential of the global startup and scale-up world remains a challenge. Bad deal flow, differences in culture and scale, and a lack of internal coordination and mandate often kill joint projects before any impact was made. 

Our Venture Engine® methodology addresses many of these challenges. It enables industry leaders to effectively turn their collaborations into bottom line results.

 

The Venture Engine® methodology 

For Unknown Group, the Venture Engine® methodology creates broad funnels with emerging ventures in relevant strategic domains, out of which we can make the best bets.

In addition, the model optimizes our return on investment for these bets by providing key assets for further growth: Ecosystem connections, capital, and industry access.

For industry leaders, the Venture Engine® effectively turns their venture collaborations into bottom line results, by enabling them to work with the best, and creating a long-term internal commitment towards these collaborations.

The model works on 4 dimensions: Ecosystem, Intelligence, Business and Portfolio.

1. Ecosystem

To make the best bets, we need to know the best ventures. To some extent, these ventures can be uncovered through active scouting. However, this will only reveal ventures that match the predefined search criteria.

Since the search criteria are always defined based on the current state of knowledge, the solutions will never surprise. While, in our experience, the Unknown ventures are many and high-potential. The only way these ventures become known is if they get in touch themselves.

Therefore, industry leaders should spare no effort to make it quick and easy for them to get in touch by being a go-to-brand for ventures in the global startup ecosystem.

A successful presence in the ecosystem gives companies deep access in- and deal flow from – the startup ecosystems they target.

Combined with a clear value proposition to ventures and a well-defined path into the company, strategically relevant ventures from all parts of the world can easily get in touch.

 

2. Intelligence

The massive deal flow that a successful ecosystem presence leads to is a critical asset in selecting the best ventures to collaborate with. But an abundance of potential collaborations also complicates this task.

Selecting the best collaborations out of a wealth of deal flow can only be organized as a data-driven activity. Intelligence is about using technology to get ahead of emerging trends and connect with the best ventures.

In the early stages when ventures make contact, several factors determine the potential for collaboration. For many of these factors, such as an excellent founding team and a solid problem-solution fit, traction is the best validation.

We have found that the pace at which ventures progress, both financially and in terms of other development goals, has predictive value for their eventual success.

Established databases like CB Insights and Crunchbase do a great job documenting investment rounds and revenues. But to make the best bets, you need deeper traction information.

Since most early-stage ventures do not publish this information, it needs to be captured in a dialogue. Organizing this dialogue at scale requires technology and a clear reason for ventures to participate: Business and funding opportunities.

The traction data collected, as well as the emerging technology and business model trends that can be derived from this data, will enable the best bets in strategic domains.

 

3. Business

The decision to engage is mutual. The best ventures are as selective about who they work with as industry leaders are.

The extent to which industry leaders can help them grow is key to their decision to collaborate. To partner with the best, industry leaders must provide the best value.

This value is a fast and effective way to move from proof-of-concept to scalable and mutually valuable collaboration. The skills required for collaboration should exist in both the innovation department and the business units where the collaboration will eventually scale.

Transparent, objective and milestone-based decision making, as well as realistic procurement and compliance processes and great communication, are critical.

In addition, strategic positions in collaborations are created, as well as a front row seat for follow-up investments and acquisitions.

 

4. Portfolio

The best way to ensure this internal engagement is to align the interests of ventures and industry leaders early on. Investing at an early stage, creates a strong incentive to make collaborations work throughout the company.

In addition, you create a strategic position in collaborations and secure a front row seat for follow-on investments and acquisitions.

However, early stage investing is a high-risk, high-reward activity that does not fit in corporate governance, decision-making and risk-attitude. For this reason, ventures should be very critical when it comes to taking funding from a corporate investor early on. 

For early-stage investments to work, industry leaders should not invest from the business, but from a separate investment vehicle. An opportunity fund positioned outside the company and managed by early-stage investment experts.

This opportunity fund creates a large portfolio of early-stage ventures and serves as a funnel for validated deal flow for corporate venture capital (CVC) and mergers and acquisitions (M&A).

 

BENCHMARK YOUR VENTURE COLLABORATION STRATEGY

Participate in our benchmark research and compare your performance to other industry leaders. You will receive a personalized report with actionable advice to improve your open innovation and venture collaboration strategy.

 

Explore the Venture Engine® for open innovation with Unknown

Unknown Group is an early-stage venture capital firm headquartered in the Netherlands with local offices in Europe, Southeast Asia, the US and Latin America.

Our Venture Engine®  for open innovation effectively turns venture collaborations into bottom line results through a combination of ecosystem, intelligence, business and portfolio activities. Over the past 14 years, we have built assets across these four dimensions. Industry leaders can leverage these assets to accelerate their collaborations.