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Traditional companies turn to start-ups for competitive advantage

Top Banks, financial institutions, technology companies, retailers looking to engage with start-ups that could aid their businesses

Itika Sharma Punit  |  Bengaluru 

Large Indian companies, which are considered to be rather conservative vis-à-vis their global peers when it comes to experimenting with new technologies, are now increasingly acknowledging the innovations by technology start-ups in the country and looking to engage with them with a view to derive competitive advantage over peers.

Reflecting this trend, top officials of various banks, financial institutions, traditional technology companies, and retailers have been meeting start-ups either directly or through ecosystem players to look at ways in which they could engage with entrepreneurs in a purely client-vendor fashion, sources said.

According to sources, a ‘CXO connect program’ held on the sidelines of Nasscom Product Conclave last month here was attended by top officials of India’s largest private sector bank ICICI Bank, along with the chief information officers of HDFC Bank and Axis Bank.

The closed-door session, where start-ups showcased their products to these CXOs in an attempt to get business, was also attended by senior executives from Ratnakar Bank, Reliance Communications, Tata Communications, Birla Sunlife Insurance, Mastercard, Walmart, Infosys and Wipro.

A similar program organised by Microsoft Ventures last month was attended by senior officials of e-commerce major Flipkart, mid-sized information technology (IT) services iGate and L&T Infotech, retail major Target, along with NTT Data and Morgan Stanley among others.

“While large always took start-ups seriously, they were careful because start-ups come and go. For several start-ups, their products have not stood the test of time and they are going through inflection,” said Nasscom Product Council Chairman Ravi Gururaj, who is approached by an average three large each week asking him to connect them with start-ups that could help these traditional businesses.

“Large companies have realised that not all the innovation will come from their in-house channels, that is one of the reasons why we have been getting requests from many of them who want us to connect them with the right start-ups. The big companies are looking at engagements with start-ups for several reasons such as getting a competitive advantage, improving their offerings or deriving cost efficiencies,” Gururaj said.

Gururaj, who holds several such match-making meetings at Nasscom’s start-up warehouse in Bengaluru, says several companies have benefited from these conversations and in many cases start-ups have also derived ‘serendipitous’ advantages.

Ravi Narayan, director of Microsoft Ventures India, also frequently gets requests from large companies that wish to engage with start-ups that could aid their businesses, he said. Through the several rounds of its ‘customer access programs’ in 2014, Microsoft Ventures has seen over 40 successful deals.

“We have done six rounds of Customer Access Program this year. Through these programs, our start-ups have interacted with several of the customers and partners which have resulted in over 40 deals till date,” Narayan told Business Standard. “The most recent one was done in association with Nasscom during Think Next on November 25, 2014.”

The start-ups that presented their products to top officials of large corporate during Microsoft Venture’s recent customer access program include distributed content marketing platform Nifty Windows, mobile communications application DabKick, digital media platform DeltaX, mobile applications rental market Fairket, photography crowdsourcing website FlatPebble, and NowFloats, a website that helps in finding more customers online.

Start-ups' customer connects

Benefits for large companies
  • Faster & swifter access to innovation
  • Saves costs as start-up could do a job cheaper than an established player
  • No need to do everything in-house
What's in it for start-ups?
  • Feedback: Entrepreneurs get insights into what large corporate clients want
  • Mentoring/Investments: Once a large company is convinced about a start-up’s business it is more open to investing or mentoring
  • Serendipitous benefits: An influential CXO may put in a good word for a start-up to his peers if he sees value

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First Published: Wed, December 03 2014. 12:14 IST