How can a tech startup get money and support, no strings attached, from the Fortune Global 500 and other large enterprises?

The Fortune 500 corporations are stressed about where they can get growth and how to plug into the innovative and nimble entrepreneurial ecosystem. The chasm between the typical Fortune 500 company and a startup is typically too vast for a standard partnership. So the large company needs to build the equivalent of a standard API to handle the significant number of startups with which any given large company can work.

The most common ways in which large enterprises are working with the startup community at scale are through:

1. Corporate VC
2. Contests
3. Free benefits geared to startups
4. Accelerator programs. 

1) Corporate Venture Capital

Most VCs (including Versatile VC) collect money from independent limited partners in order to form their fund. Some corporations emulate this model by creating their own wholly-owned VC entities, typically with one LP: the corporate balance sheet. The advantage of taking capital from these players is that they become your internal allies at the firm. However, you have to be very careful about such investors restricting your ability to exit to a competitor, as well as the potential that they may create something competitive with your product. Some traditional VCs are highly averse to working with corporate VCs. 

For a list of relevant VCs, both corporate and independent, see Fundraising Hacks: What type of capital should you raise?

2) Contests

The second tactic we’ve seen the Fortune 500 use is contests. This is a cheap way to attract a range of startups to work on problems the company can’t solve in-house. It’s the same logic as the X Prize Foundation. A $250,000 prize is meaningful for most startups, but it’s far less than what it takes to run a formal R&D team inside a company. Some examples: 

• AWS offers AWS Activate, which includes AWS credits, AWS support plan credits, and training. Amazon hosts an annual startup challenge for companies using Amazon Web Services (AWS). Attendees “get hands-on experience, insight, tips and tricks from AWS experts on how to architect [their] applications, optimize [their] costs and deploy quickly to the AWS cloud.” Winners receive a $50,000 credit for AWS paid services, another $50,000 in cash, and AWS mentoring and support.
• Cisco Global Problem Solver Challenge looks to support business ideas and early-stage entrepreneurs that use technology for social impact worldwide. There is more than $1,000,000 in prize money to help accelerate these technology solutions.
• Estée Lauder Elevate Innovation has a series of challenges for startups with solutions at the intersection of beauty and technology. Startups submit their pitches, go through a pressure test, and a finalist demo to win funding and partnership with Estée Lauder.
• Johnson and Johnson Quickfire Challenges has a series of targeted challenges to identify, support, and accelerate the best ideas in healthcare with grant funding of up to $100,000.
• The Visa Everywhere Initiative invites fintechs and startups to submit their solutions to compete in challenges surrounding topics such as digital payments and commerce solutions. Highly performing submissions receive validation, exposure, and monetary prizes.

For a longer list, see Startup contests.

3) Freebies

The most common tactic we’ve seen from large corporations is providing a package of benefits for startups in order to build relationships with early-stage companies. This promotes the company’s core services to new customers and hopefully locks them in as permanent customers.

• Google provides a directory of resources for startups (both from Google and elsewhere) through its platform Google for Entrepreneurs. On the platform, you can find tools, education on best practices, and communities.
• AWS offers AWS Activate, which includes AWS credits, AWS support plan credits, and training.
• Microsoft for Startups offers access to $120,000 in cloud technology tools, other developer tools, technical support, and business enablement to B2B startups looking to scale their companies. In addition, they offer business training and a network of over 2,000 partners to connect members with incubators, investors, advisors, government agencies, and other resources.
• NVIDIA Inception provides support to startups in the form of marketing support, cloud credits, training through NVIDIA’s Deep Learning Institute, and more. Startups must be in the fields of AI, data science, or HPC.
• Oracle for Startups offers some free cloud tools as well as free credits for their other cloud services, followed by a 70% cloud discount for two years. In addition, the startups in the program receive mentorship, market connections, and more. There are no restrictions on industry or technology areas. The only requirement is that the company be a startup.

4) Accelerators

The accelerator model has produced some notable companies, and some of the Fortune 500 also want to get in the game. We track on our site all of the no-money, no-equity free accelerators.

Startups should certainly research these opportunities, and take advantage of the resources of the large companies. Hopefully, the Fortune 500 will buy from, invest in, and perhaps eventually acquire them.