Silicon Valley gets a lot of shine. We get it, the Valley has star power and volume. But, corporations are spread out across the country, and may not need to build up frequent flier mileage to find innovative startups.
At our corporate innovation strategy group Your Ideas Are Terrible, we’ve seen example after example to make the case for adding a new tactic to our startup scouting portfolio — looking in your own backyard to acquire, invest and pilot with local startups.
Be close enough to work together
Close geographic proximity to a startup matters. It takes less orchestration to hold meetings, work on co-creation sprints and provide support in both directions.
Atlanta-based Cox Enterprises took an approach of incubating their own startups locally, and then integrating them into the corporate fold once they’re ready to be acquired. Clutch Technologies, an automobile subscription platform, was invented and incubated as part of Cox Enterprises’ Innovation Fund and acquired by Cox Automotive in August of 2018. Clutch’s President Vince Zappa now serves on the Cox Automotive Mobility Solutions Group.
“New venture exploration within the metro Atlanta area has proven to be a successful approach for Cox Automotive,” says David Liniado, Vice President of New Ventures and Business Development at Cox Automotive Mobility Group. “Frequent face-to-face engagement, and the ability to more easily share resources and best practices, have all contributed to increases in operational efficiency.”
Supporting local talent is a long-term play at upskilling your future workforce
Local communities are cyclical and must nurture their own talent pool to make sure they choose to live and work locally. Startups tend to capture highly-talented but overlooked candidates, as many corporations recruit only from a small number of universities and geographic areas.
When startups inevitably shut down or get acquired, an experienced and talented pool of individuals becomes available for hire. A corporation with a reputation for having an innovative and open-minded culture can capture some of this available talent, while also attracting more diverse candidates. Further, sometimes talent inside a corporation chooses to leave to found or work at startup. Progressive corporations that encourage entrepreneurial behavior stay close to those people and later re-hire them, become their customer, or even acquire them.
This strategy is part of the reason a massive innovation ecosystem exists around Google, who will often invest in former employee-founded startups, and why Google can attract some of the top talent in the world.
Diverse demographics make for diverse ideas
A study released by the National Urban League revealed that at companies like Uber, Twitter and Facebook, fewer than 3 percent of tech workers identify as black. As corporations publicly struggle with inclusionary efforts — recently seen at Nike and Google — they can look locally to find a more diverse array of startups and founders to bolster both their innovation and inclusion efforts.
Let’s look back at Georgia. The state ranks #5 in the U.S. for greatest number of women-owned firms, Metro Atlanta ranks #5 and Georgia ranks #2 in growth in number of women-owned firms. Atlanta is also home to a robust, minority-centric startup ecosystem with programs like Ascend 2020 and Goodie Nation fostering a wave of minority-owned startups to work with.
Local startups are more likely to survive market shocks
It’s no secret that venture dollars are concentrated to the Bay Area, which sucks up 45 percent of total venture capital investment in the U.S. This encourages entrepreneurs elsewhere to bootstrap their business. While not as glamorous as big funding announcements, bootstrapped business are more likely to outlive heavily VC-dependant companies when there are market fluctuations due to lower overhead and a broader customer base.
Get layups from city and state economic development support
It is always a bonus when an external person’s job is to help you do yours.
The Metro Atlanta Chamber’s economic development efforts focus on a broad range of industries — including supply chain, IoT, bioscience, global commerce, technology, innovation and entrepreneurship. Their #supplychaincity initiative is aimed at digitizing the region’s traditional supply chain strength via a cross-section of smart devices and the Internet of Things. As a part of this focus, Georgia Pacific has launched the Point A Center for Supply Chain Innovation, a collaborative space for businesses ranging from multinational corporations to emerging startups and academic institutions.
The Advanced Technology Development Center at Georgia Tech houses startups and a corporate Industry Connect program. Their new director, John Avery, is from the corporate innovation world, most recently serving as the engineering group manager of Panasonic Automotive Systems’ Panasonic Innovation Center. His new startup-focused role is evidence of how a corporate innovator can get in the trenches to connect vetted early-stage companies to those potential corporate clients.
In short, shop local, eat local, and collaborate with local technology entrepreneurs!
Read the rest of the Hacking the Enterprise series here
Carie Davis is a former Coca-Cola Global Director of Innovation & Entrepreneurship. She started Your Ideas Are Terrible and The Enterprise Growth Institute and serves as Program Director of the BridgeCommunity. She works with global companies to implement tools & systems for a steady flow of validated ideas.