Working with start-ups to stay ahead of the competition
In Inspiration, Planning growth - 3 years ago - 5 min
Working with start-ups to stay ahead of the competition
Why you should be considering working with start-ups to stay ahead of the competition, according to Seedcamp co-founder Reshma Sohoni.
Reshma Sohoni is one of the UK’s most prolific investors in start-ups. As co-founder, partner and former CEO of Seedcamp, she is part of a team that is fostering the next generation of corporate success stories globally.
Here, she describes the UK’s bubbling entrepreneurial sector and explains what more established businesses must do to survive the tidal wave of innovative and ambitious British start-ups.
How does Seedcamp work?
Seedcamp is an acceleration fund; it invests between £75,000 and £200,000 as a first-round investor in pre-seed and seed-stage European start-ups. We also have a platform of support for our companies across three pillars: learning, network and capital.
Who do you work with?
Property Partner is one example. It’s revolutionising home ownership for ‘generation rent’. As it gets harder for people to own a property outright, Property Partner helps them to own partial properties across London and beyond.
We knew the founding team from other businesses before they started Property Partner. One was a mentor and one was already in one of our other companies.
TransferWise is another high-profile example. It’s a well-known company now; it’s revolutionising peer-to-peer currency transfer.
What are the most successful start-ups right now?
In financial technology. Fintech is undergoing a revolution across the entire value chain of the industry. There is disruption inside and outside the organisations that dominate fintech. We refer to it as ‘Death by a Thousand Cuts’ to the traditionalists.
Proptech, or technology supporting the property sector, is another area. Similar to fintech, customers are unhappy with the way this industry functions, particularly in the way that it still has slow and unresponsive systems that operate on information arbitrage.
They want transparent services where they know how they are being delivered value. Millennials are used to on-demand and apps that fulfil their needs immediately.
Enterprisetech – you can see a theme here – is another hot area. As customers get used to on-demand, customer-led services and transparency in their personal lives, they demand this more and more in their corporate lives as well.
The cost of doing business for corporates across sectors such as finance, agriculture, property, aviation and telecoms is marginally much higher using old, closed systems.
It’s no longer possible for enterprises to ignore innovation and to conduct their internal processes and customer services in the same way. They have to adopt innovation within their own organisations.
How are start-ups competing with larger businesses?
Start-ups are doing a couple of things as they scale up. They are being very pointed about the problems they are solving and are building complete solutions to address this problem better than a large business can serve that particular need. As they scale up, they broaden out the functionality and features.
Start-ups are hiring better talent than they did historically. They can raise bigger funding rounds, so are able to hire talent at a higher level. They are also arming their teams with experience on policy, regulations and customer service.
What technologies do start-ups use that bigger companies should consider?
Open-source and third-party technologies. Fundamentally, for start-ups to scale they can’t build everything in-house at speed, so they tend to focus on core competences and then use as much off-the-shelf technology as possible to deliver what customers want.
Should bigger companies be ‘thinking lean’?
It’s actually about acting lean, not just thinking lean. Big companies sometimes get distracted by financial pressures to the detriment of bringing value to customers. So there’s a completely different way of thinking about the purpose of the business that big companies need to undertake; a true customer service-oriented thinking.
Do start-ups you work with partner with larger firms? If so, in what ways?
Yes, we certainly have start-ups that partner with larger firms as they scale up. If a large firm is a customer, the start-up tends to deploy its solutions within one part of the organisation, either one geography or one business unit. Once it proves itself, it scales to the rest of the organisation.
Sometimes a larger firm acts as a reseller or partner. Companies such as Starcom Media, WPP, Nielsen, Cisco and others can be very valuable partners and resellers. The key is to navigate the decision-makers in these organisations to get them deployed quickly.
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Do you think more established firms should work with start-ups and, if so, why?
Established firms such as Blockbuster and others absolutely should have worked with start-ups, and others should certainly do so, going forward.
It’s difficult to predict disruption and to know what you don’t know. It’s best to stay connected and work with start-ups. That said, there has to be action, not just paying lip service.
What is your tip for UK firms that want to become more dynamic?
Act lean, deploy across smaller units and then scale start-up solutions across your business.
This applies especially to mid-sized businesses that are in a chokepoint by not being a big firm nor a nimble start-up… and of course they should work with Seedcamp to help them work the start-up way better.
This is an edited version of an article which first appeared on Strategies for growth.
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