Corporate Acquisitions of Startups: Why Do They Fail?

by steveblank

The Innovation PortfolioMost large companies manage three types of innovation: process innovation (making existing products incrementally better), continuous innovation (building on the strength of the company’s current business model but creating new elements) anddisruptive innovation (creating products or services that did not exist before.)

Companies manage these three types of innovation with an innovation portfolio – theybuild innovation internally, they buy it or they partner with resources outside their company.

Five Types of Innovation to Buy
If they decide to buy, large companies can:

1. license/acquire intellectual property
2. acquire startups for their teams (and discard the product)
3. buy out another company’s product line for the product
4. acquire a company for the product and its installed base of users
5. buy out an entire company for its revenue and profits.

Silicon Valley – a Corporate Innovation Candy StoreCorporate business development and strategic partner executives are flocking to Silicon Valley to find these five types of innovation. In response, venture capital firms like Sequoia and Andreessen/Horowitz are hiring new partners just to work with their portfolio companies and match them to corporations. They are actively organizing annual and quarterly activities to bring the portfolio and Fortune 500 decision makers together–  in both large events and one-on-one visits. The goal is to get a corporate investment or an outright acquisition of the startup.

Read more at: http://steveblank.com/2014/04/23/corporate-acquisitions-of-startups-why-do-they-fail/?utm_source=Foundora&utm_medium=Email&utm_campaign=Issue-308