A recent survey conducted by the Korea International Trade Association (KITA) has revealed that open innovation with startups is expected to expand or be maintained by 91% of Fortune Global 500 corporates, despite the recent slowdown in the global economy.
The survey, which was conducted from January 9 to February 8, 2023, gathered responses from 102 Fortune Global 500 corporates’ employees (director, manager, etc.) involved in innovation, corporate venture capital, and R&D from various sectors, such as finance, energy, pharmaceuticals, travel, food, semiconductors, automotive, and enterprise software. Some of the notable names among the respondents include Google, Intel, LG, Sony, Deutsche Telekom, SK Hynix, HP, Hyundai, HSBC, Pfizer, Chevron, Posco, Nestle, and CJ.
The survey results also showed that the most preferred startup growth stage for collaboration is Series A/B. Respondents preferred startups that are somewhat ready for market advance over startups at the seed funding stage.
Additionally, the majority of respondents (55%) believe that Korean startups have competitiveness in innovative technology but lack innovative business models (5%) and readiness for global market entry (4%).
Source: KITA (Korea International Trade Association)
When discovering foreign startups to collaborate with, 37% of the respondents rely on referrals from venture capitalists, accelerators, and supporting organizations, while 22% participate in related events such as exhibitions, demo days, and networking. Surprisingly, only 10% found the operation of overseas offices, such as branches or R&D centers, helpful in discovering new startups, and almost none (1%) use web search to discover foreign startups to collaborate.
The survey also revealed that large global corporates handle more than 10 startup proof-of-concept (PoC) cases per year, with 25% handling more than 50 cases. When carrying out a PoC with a startup, the alignment and synergy with the corporate’s strategies are considered the most important (35%), followed by the superiority of the products and services of the startup (26%).
Most commonly used methods for carrying out a PoC with a foreign startup are pilot use and feedback sharing (24%), customized testing through addition/change of features, etc. (17%), provision of resources for testing, such as the corporate’s internal data, etc. (16%), and comparative performance tests using similar products (14%).
Regarding Korean startups, 57% of the respondents think that Korean startups should have a higher level of readiness for global market entry, including market research, foreign press, exhibition participation, etc., to enable more PoC cooperation.
Finally, 84% of the respondents believe that joint PoC will be more prevalent between startups and corporates as a new way of collaboration model, with the need for complementing the shortcomings of startups (e.g., suitability) with collaborating with other startups in and outside of Korea.
Overall, the survey results suggest that Fortune Global 500 corporates will continue to seek open innovation with startups, and Korean startups need to focus on enhancing their innovative business models and readiness for global market entry to foster more collaboration.
Source: KITA (Korea International Trade Association)
[Credit: Mr. PhilJae Park, Director/ Startup Global Scaleup Team / KITA]
