A guide from the experienced to what it takes to scout for start-ups
Publication date: 27.07.22
Reading time: 5 minutes
Innotechnics, an AI engine and a most exhaustive start-up database in Eastern Europe, is launching a series of publications to highlight the ways corporations scout for start-up teams.

Corporates look for start-ups to:

  • Boost performance;
  • Expand to new markets;
  • Secure their current foothold in the market.

Most conglomerates, including Embraer, Nestlé, General Motors, Visa, Simon Property and alike, and above all established digital-based multinationals such as Amazon, Microsoft, Google, Apple, Uber and others, have their own innovation departments that pool resources with in-house stakeholders in an effort to screen business processes for possible (or in some cases mandatory) introduction of novel tech. Once the need is confirmed and the money spigot opened, innovative solutions are identified, promising ones piloted, and the successful pilots scaled up.

Innotechnics sets an example from experience how start-up scouting may typically play out:
A sizable express package and freight delivery operator approached Innotechnics, seeking aid in pinpointing last-mile delivery solutions. The hyperlocal delivery market and solutions available in it were researched and key findings reported to help the customer get their head fully around what they really needed. An estimated 50 potential targets were long-listed. Twenty of those were then contacted and interviewed, which eventually boiled down to a short list of 11 companies fully focused on hyperlocal delivery to further work with. The customer ended up approaching each of these all on their own to identify possibilities for interaction.

Let’s take a look at the scouting tools corporates avail themselves of these days, and see what may help make a real go of the process:

1. Every corporation that embraces open innovation puts together an internal start-up database in an easy-to-use format. The frontrunners that spearhead the process, like Amazon, Google, Alibaba, Embraer, Visa and others, may each amass a DB of north of 5,000 companies. On the downside, though, the owners are typically not half as assiduous as they should be in updating their lists, hardly think of adding advanced filters to weed out junk, and tend to collect as concise a bit of data on a start-up as they deem fit.

2. Tapping search engines like Google has been generally considered the easiest and least costly method of pinpointing start-ups — notwithstanding the ensuing travails of manually sifting through a raft of refuse that comes with it. Unfortunately, analysts that are too deeply rooted in the habit of using the method get increasingly weary of rummaging through tons of irrelevant and limp start-ups, and unintentionally grow slack in their work as a result.

3. In a slightly better search methodology, one may monitor the websites of funds and accelerators, pitch sessions, hackathons, competitions, etc. But the analyst would have to sweat his guts out to make it work, as it takes relentlessly looking for new sources, updating old ones, and digging for lots of extra information about a start-up in addition to its name, website and brief description.

4. Tapping your own contact list would make hay of it, but for the inevitable finiteness of any of such lists.

5. Hackathons appear perfect when hunting for tech talent, seasoned dev teams, and product managers. But be prepared for a lengthy product development and validation, not to mention its rounding off till it’s good enough for commercial use.

6. A corporate accelerator once was a must-have for companies that worked with early-stage start-ups. Not any more. For you as a corporate, the upside of such a format may be the opportunity to identify promising start-ups and have them refashion their products to meet your needs; if you’re a start-up, it’s feedback on the product through close interaction with business customers that matters. But the format no longer gains enough traction as it takes money and time while delivering a poor-to-satisfactory cost-to-success ratio.

7. Some corporates employ unorthodox ways of working with start-up teams. They know an opportunity when they see it in new markets that have been overlooked as non-core ones, yet show huge potential, and set up spin-offs to test the waters there. A good example of a deep pocket that appears ready to join the fray anywhere is Uber. The mobility as a service provider tries its hand at anything from ride-hailing to food delivery, to various courier services and freight transportation, to bicycle and scooter rentals, and whatnot.

8. The above-mentioned format may be another upshot of a corporation’s enterprising spirit that encourages employees to generate new product ideas and play a part in their development.

9. Between themselves corporate entities, too, pool resources in their hunt for technology, and alliances of various sorts keep sprouting up across the world. Look at Technology Alberta, for one. A key objective of this ad hoc Canadian association, established to support the province of Alberta’s tech companies of all stripes and to present them to the world, is “accessing and funding continuous innovation.” Organizations like this offer tech project competitions, process a pipeline of tech solutions, and protect and build upon their regional IP.

10. Venture studios provide a platform that brings expertise, resources and infrastructure elaborate enough to generate and corroborate proof-of-concept business ideas, and take the best tech picks to an MVP level and further on to global markets. There’s a host of independent venture studios across the globe, such as Expa, founded by Garrett Camp, one of the co-founders of Uber, or Rocket Internet famous for founding and spinning out a number of start-up “clones” based upon popular tech companies that started either in the U.S. or China. But corporate venture studios are emerging as well; Google, Amazon, Uber, Alibaba and some other majors are in the lead here. While accelerators home in on external teams, mentoring them and investing moderately in exchange for a stake in a company, studios have their own multi-disciplinary teams of experts and the resources to push a number of projects at the same time. A studio offers nice enough conduits for start-up scouting — but it takes quite a while to do the job.

11. Start-up databases. It’s a pretty helpful way as information is well structured and regularly updated there, with criteria broadened or narrowed down through sophisticated sets of filters and keywords. Here’s a list of the handiest ones, to name but a few: Crunchbase, Pitchbook, Tracxn, Innotechnics, and more. Crunchbase and Pitchbook predominantly cover the western start-up and VC communities; Tracxn is focused more on Asia, tracking 1.4 million entities; and Innotechnics is an expert in Eastern Europe and the countries of the former Soviet Union, highlighting in its free database 34,000 start-ups and applying 20+ search parameters and filters.

About Innotechnics
Innotechnics specializes in tech market analysis, trend forecasting, and startup scouting. Leveraging a proprietary database of over 60,000 tech firms, we deliver insights tailored to your needs. Let's discuss how we can support your vision.