Wayra UK hosts summit discussing new partnerships between startups and corporates in Europe
The folks over at Wayra have announced the opening of Velocity, the United Kingdom’s first healthtech accelerator focusing on preventative health, taking part in the growing global trend for new innovations in this field. This initiative joins the ranks of other accelerators that are looking to corporate backing with hopes of reaching higher scalability in shorter time frames.
The launch of Velocity took place back on September 20, but has been kept under wraps in the lead up to the final selection of the four participating companies, which will be made public on November 25.
In the interim, the team over at Wayra UK has been keeping busy. On October 29, they hosted Disrupting the Ecosystem: Rise of the Corporate Accelerator, a summit focusing on expanding the partnerships between startups and corporates. Over 70 corporate representatives attended, along with a cadre of influential players in the entrepreneurial community.
Over the past four years, Wayra UK has worked with 100 startups as a part of the Telefonica Open Future initiative. This includes intelligent queue management company Qudini, which succeeded in going global. Typically, Telefonica takes 6% equity in participating companies, offering them mentors and a wealth of resources and connections.
Shifting the startup-corporate relationship
Slowly but surly, corporates are becoming more prominent on the scene. In December 2014, a study was released by Telefonica subsidiary O2 that showed that 12% of accelerators are owned by large corporates.
Only a few years ago the idea of mixing free-thinking startups with corporate culture seemed to most like oil and water. This perception has since changed as the two sides have recognized the advantages to be gleaned from these partnerships.
“Anybody that’s tarnishing a partnership between a startup or a large enterprise is either being shortsighted or there’s nothing in it for them,” said EnterpriseJungle’s Emma Sinclair, who at 29 was the youngest woman in the UK to take a company public, adding that, “In many ways, you get back what you put in.”
Tech.eu Editor-in-Chief Robin Wauters cited access to resources and distribution channels as essential factors that can lead to greater scalability for startups. In the case of Telefonica, he noted that companies working within their network have access to a global base of over 300 million customers to sell to.
Wauters told the audience that when it comes to resources, the corporates can play a bigger role in boosting the ecosystem. “Corporates have venture capital arms, which is another way they can invest large sums of money. Europe has always been at a disadvantage when it comes to late-stage funding,” he said. “Early-stage fundings isn’t really a problem. Bigger rounds tend to come from elsewhere. But if corporations can step in at that level and partner with venture capital firms to provide that late stage funding, then it’s a win win situation.”
When it comes to mergers and acquisitions, he said that, ”Typically companies that buy European startups are American. So corporates can buy companies, taking the talent in-house and bring new thinking into the organization.”
Wayra’s Head of Communications Daniel Bartlett tells Geektime that the corporate world is also beginning to find its feet in the startup sector. He says that corporates have found the verticals that interest them and are looking for investment opportunities in companies that can be scaled up quickly.
Flipping the healthcare paradigm
Bartlett explains that the goal at Velocity is to redefine healthcare delivery. Pointing to the National Health Service’s Five Year Forward View report that was published in October 2014, he says that there is a desperate need to move towards more preventative engagement in health, for which only 4% of the NHS budget is currently allocated. Based on the existing system of reactive care, the NHS expects to have a £30 billion shortfall by 2020.
Wayra has already signed a partnership with MSD, a global health company with a background in pharmaceuticals that has expanded into various verticals throughout the healthcare sector.
Healthtech has become increasingly popular over the past year as the number of apps and wearable devices targeting this sector have grown exponentially. Proponents of the preventative health model point to the potential savings derived from the novel concept of living healthier and being aware of issues before they become emergencies.
The launch of Velocity follows Vertical, a Finnish healthtech accelerator that opened its doors earlier this year and is also partnering with large corporates like Samsung to create opportunities with startups.
Facing the long road ahead
Telefonica has been working hard to catch the startup innovation wave and incorporate ideas into their own services. Initiatives like Wayra that act as bridges between the two worlds are essential factors in making the partnerships work.
An alternative model that has been successful is for giants like Barclays to reach out to startups through outside facilitators like Techstars, who already have an active cadre in London.
The move to develop a new phase in the corporate and startup relationship is a truly exciting step in a still unknown direction. There is no doubt of the seemingly unlimited potential for combining massive resources with the creativity that is generally inherent in startups.
This is not to say that the joining of these two sides will come easy. Culturally they have a lot of issues to iron out, both in terms of how they are built hierarchically and in their approaches to problem solving. Moreover, while corporates are turning to startups for new ideas, these kinds of cooperations are likely to be focused on companies that are working in specific and relevant fields. As Bartlett has pointed out, the corporates have matured and now better know what they are looking for in their partnerships.
Later stage funding remains a gaping problem for the Europeans, an issue that needs solving if the ecosystem will have a chance to compete with the Valley.
In the long run, the attractiveness of lucrative exits and massive customer bases on offer from the corporates should be very appealing for these startups, making this merging of the two economies mutually beneficial for all those involved.