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Tapping into startup innovation on the cheap

The Bully of Bentonville is a great moniker, but it doesn’t really square with a company that happily plunks down $3.3 billion for a cash-burning startup — with no other bidders in sight. I don’t know if Walmart’s acquisition of will pay off, but it is a high-profile example of what seems to be a pronounced uptick in the number of big companies buying up startups to gain access to innovative technologies, business models, and products and services.

In case your company doesn’t have a few billion lying around, a new study by MassChallenge and Imaginatik describes an alternative worth considering. “Corporate executives see enormous potential to innovate by working with early-stage ventures,” says Imaginatik CMO Chris Townsend. “The exact approaches are evolving constantly, but the trend is clear: Startup/corporate collaboration is becoming critical.”

Instead of buying or investing in startups, the study finds that established companies are increasingly entering “flexible, early-stage, open-ended partnerships” with them. The key to these partnerships is strategic intent. “In fact, strategic intent determines not only which startups a corporation chooses to interact with, but also how they build the relationship, and which vehicles, processes, and people are involved,” write the study’s authors. Generally, the strategic intent of the companies that enter these partnerships falls into three categories: improving their core business; staying ahead of disruptions; and gaining access to technical or product innovation.

Read the full article here.

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