Corporate companies love to cooperate with startups, definitely in healthcare. It helps them to steer their business into new directions and mitigate slow development.
And the nature of this cooperation can be very different: from technology partnerships to startup competitions, their own cv fund and all that lies in between. So, as corporate venturing in healthcare is getting more and more popular, it doesn’t have to be the only way to collaborate.
CV entrepreneurship is hot
Omar Mohout and Dado Van Peteghem explain Corporate venturing (CV) in their must-have book as follows: “CV is about setting up structural collaborations with external parties to drive mutual growth. Typically, CV entrepreneurship is not only about project cooperation but also adds external investment to it: corporate venture capital (CVC)”.
According to a CB Insights report, corporate venturing capital in Europe has almost doubled from 259 deals representing 2.6 billion euros in 2015 to 468 deals representing 4.9 billion euros in 2018.
CVC this way has become a major financing source for startups in all industries: in 2018, it accounted for already 22% of all investment in European startups and 2019 has started even better.
CVC now takes a second place after ‘traditional’ investment funds, and before crowdfunding and angel investment. (Source: Dealroom)
Health is a top corporate venturing industry
Already in 2016, corporate venture capital was involved in 14% of all European healthcare deals. Health was the number 2 industry for European corporate VC investment in 2017 (Source: Mohout and Van Peteghem 2018).
Since then, it has only grown with North American startups attracting 41%, Asian startups 38% and European ones 17% of the healthcare CV-capital in 2018.
But companies also invest in healthcare without having their own corporate fund. The majority of the corporate companies still do so directly from their balance sheets.
And although corporate venturing might give the impression of being exclusive to large and deep pocket companies, smaller companies and SMEs are definitely active business partners as well.
One of the most attractive parts of corporate venturing for healthcare startups is its investment flexibility: corporate companies may invest in start-ups from an early stage up to merger and acquisition (M&A). And every step in the venturing process has its own opportunities.
But there’s more to cooperation than corporate venturing alone
And corporate companies (big and small) do have a tradition to collaborate with startups in different ways; often at the same time.
The Dutch startup analysts of Golden Egg Check made an interesting exercise on that point. They analysed annual reports of 98 listed companies in the Netherlands to see how they collaborate with startups.
They found that almost half (47% to be precise) of Dutch listed companies collaborate with startups. 60% of them do so in different ways at the same time.
Open innovation collaboration with startups seemed to be the most popular activity, for example by using startup technology or by developping a new business model together.
Second and third in line were the in-house innovation programs (or corporate startup teams) and cooperations with universities.
Healthcare shows to be a leading vertical for this kind of corporate-startup collaborations.
Related to corporate venturing, Golden Egg Check found that also Dutch companies still prefer to invest directly in startups instead of holding their own CVC-fund.
Most companies in the healthcare business ecosystem use cooperation to innovate. The need to transform products and business models is quite high.
Healthcare companies use internal corporate startups and, to a growing extent, also corporate venturing capital to innovate.
Corporate companies love to cooperate with healthcare startups (cv venturing) and even invest in them (cvc), but they still do so mostly in an informal way.
For startups in healthcare looking for corporate collaboration, it’s important to see this perspective. Choose the type of collaboration(s) you feel most comfortable with. The one is no better than the other.
In the ebook ‘Basics to start in health’ you can find much more information on healthcare financing and corporate venturing capital.
* If you want to take a deep dive into the most important CVC-funds in healthcare, read CVC in healthcare: 10 international corporate venturing funds.
** disclaimer: dashplus is a business advisor to MemoryHome.