Gave beach: the summer of Open Innovation and Open Startups
While Venture Capital enters winter, facing stagnation, uncertainty and reduction of investments at a global level, Open Innovation continues in the middle of summer, maturing and expanding more and more.
It’s time for prosperity for open startups! That’s what you read! If, before the pandemic, open innovation was increasingly important for companies of all sectors and all sizes, in recent years it has become essential, and even mandatory.
Open startups — those that open up to corporations in open innovation movements — are gaining more and more space and opportunities to impact markets and society with their innovations. Alongside them, a community of leading corporations was consolidated, executives increasingly capable of dealing with startups and a series of other actors that foster these relationships.
The consequence of this: in recent decades, we have seen the strengthening of an innovation ecosystem in the country, with more solid, sustainable bases and guided by a culture that is increasingly open to collaboration, generating positive results and impacts for the market and society.
According to data from the Ranking 100 Open Startups , the open innovation movement grew more than 60 times between 2016 and 2021, and the pace continues to accelerate in 2022, with a new growth projection.
On the other hand, there is venture capital . Specialists have called the moment of stagnation, uncertainty and reduction in the pace of investments as the “winter of venture capital ”. After a cycle of abundance in the last decade, venture capital is once again affected by financial crises. The combination of turbulent financial markets and inflation brings a crucial moment of uncertainty and changes in the venture capital scenario .
Also read: Open innovation outperforms venture capital in generating value for startups
The summer of Open Innovation and Open Startup
If the situation is not the best in the venture capital universe, the reality of stagnation is far from reaching open startups. This is the real phenomenon of open innovation!
The generation of value is a differential! From this vision, leading corporations have realized that innovation is not necessarily a valuation race — the strength lies in the impact that open startup innovations generate for society. Thus, open innovation has become the main innovation strategy adopted by leading corporations, which seek, in the relationship with the innovation ecosystem, the necessary resources to sustain their transformation and growth through innovation, whether to build their business platforms or participating in existing ones.
“Innovation has increasingly become an ecosystem product. In the past, there has been an organizational move by companies to focus their innovation efforts on R&D centers. In parallel, venture capital emerged by placing bets on startup portfolios, and it was very successful in doing so. But now, companies are leading the way in building innovation ecosystems around their businesses and making venture capital obsolete,” says Bruno Rondani, CEO of 100 Open Startups.
With an increasingly attentive look to the outside, corporations have structured their open innovation programs, processes and vehicles. One of the most important movements observed is the increasing concern of companies to train their executives to create and capture value with external actors. This effort to give business areas the ability to relate directly to the innovation ecosystem in a more decentralized way has exponentially increased the intensity of relationships, the quality of attracted startups and innovation performance.
As a natural evolution movement, corporate venture capital (CVC) has been one of the fastest growing open innovation strategies in recent years. Corporations are occupying an increasing space as investors in startups, from creating their own funds to boost their innovation strategies.
This year, around $0.36 billion has already been invested in startups of different sizes and sectors, from CVC funds created by large companies, such as B3, Locaweb, TOTVS, Renner and Valid, according to Startups .
It is no wonder that, in this context, executives from large corporations have shown an increasing interest in becoming mentors and individual investors in startups. This is reflected in the increase in the practice of equity crowdfunding . This type of investment continues to grow exponentially.
See: CVM 88: What is the impact of the new equity crowdfunding rules for Open Startups?
And the tide will continue to rise!
Open Innovation with Startups more than doubles each year, and there are no signs that this growth will stop anytime soon.
The years 2020 and 2021 were especially challenging for the global economy, due to the impacts of the Covid-19 pandemic and the economic recession. Even so, it was possible to notice a large increase in open innovation activity among corporations and startups in these years. In 2021, 26,348 open innovation relationships were registered, and the numbers for 2022 are already showing even higher.
The intensity of open innovation increases according to the companies’ learning curve, as they develop in practice and relate more to startups and to the adherence of more and more companies to the practice of open innovation .
The study that predicted this growth (and was right) raised other encouraging insights into the innovation ecosystem and how strategy has made a difference to leverage business.