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Innnovation Advice

Deciding to Build, Buy, Partner or Invest

As a Cube insider, you'll get access to interesting new trends, what we think about them and how you can benefit.

New Trend: Corporate Ventures

When it comes to new corporate ventures there are multiple avenues a company can take to achieve success. The most traditional path is building business internally with existing employees or newly hired employees tailored for the exact venture. The next would be buying or acquiring a company to add their innovation, stall and capabilities to your own under your brand.

The new trend would be partnering and investing - and a combination of both. Partnering involves collaborating with a start up or larger company to put forth a shared idea both companies can benefit from or one company paying the other to develop for them like an outside agency. Investing capital, typically in a startup or smaller company, has become increasingly more popular, grants access to new information from that company and minority control for cash.

New Insight: Comparing Each Approach

The table below which is the result of N³ Innovation research from various sources (Crunchbase, PWC, Hubspot) shows that partnering with companies tends to be expeditious. Partnering is often coupled with small investments. The relatively quick ROI time mixed with the smaller cost are favorable for many established companies looking to expand into new markets or add new capabilities. Oftentimes the best partnerships leverage the different strengths and resources each company brings to the table. The continued climb of startups generally and proven results in innovation has also pushed many companies to partner and invest with startups when engaging in corporate ventures, corporate development and pre-M&A.

New Action: Guiding Your Next Steps

Recent years have shown how acquiring a company can not only be costly or ineffective, but also outright halted. Investing, while not requiring near the same capital, offers little control and can be a waste of time, but can be leveraged for a return on capital in an alternative market. For a modern economic landscape the best options are now to either build or partner. Both have advantages and disadvantages depending on the stability of that venture's existing market or lack of.

Steps that should be taken when considering new ventures:

  1. Identify the new venture

  2. Scan the existing market or lack thereof

  3. Build infrastructure or partner with existing company

  4. Make optional investment

  5. Develop new venture

  6. Pilot new venture

  7. Make adjustments (Increase or cease investments)

  8. Launch new venture

If you're interested in learning more about corporate venturing, we can help you evaluate the market and determine the best next steps. Contact us today!

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N³ Innovation does not endorse the organizations or products mentioned in this newsletter. If you are interested to learn more, contact us today for a full landscape and targeted solutions.


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