Introduction
The CPG (Consumer packaged goods) sector is experiencing a profound shift driven by the need for greater convenience, the impact of the COVID-19 pandemic, and evolving consumer behaviour are calling for start-up scouting.
According to StartUs insights, critical trends within the industry in response to these factors include:
· Sustainable product innovation and packaging.
· Enhancements to the customer experience.
· The adoption of digital technologies with an active partnership with start-ups.
In business, innovation stands as the chief architect of progress. Corporations fortunate enough to forge alliances with these dynamic, disruptive start-ups bear witness to the remarkable transformative power emanating from such partnerships. These enterprising start-ups, unbound by the shackles of corporate tradition, have steadily evolved into indispensable and high-performing assets for those bold enough to collaborate.
Why this sudden need for Start-up Scouting and collaboration?
Start-up scouting has emerged as the new game-changing strategy for every CPG corporation that wants to expand its business. Gone are the days when the interaction between corporates and start-ups was limited to acquisition formalities. Corporations have reasonable financial resources and experience that would take any small company years to build. Partnering with start-ups helps corporates experiment with novel technologies, creative ideas, and new business models to stay ahead of market trends.
Start-ups have learnt to achieve more with fewer resources and have a higher risk appetite because they don’t have legacies to worry about. Due to their shorter development and innovation cycles, they quickly fail, learn, and move ahead. However, they need more experience to scale their ideas and business after the prototypes, so they look towards more prominent players.
How does Start-up Scouting work?
Identifying the right innovative start-ups that align with the company’s strategic direction before competitors grab the opportunity is a significant challenge for consumer goods players today. R&D partners like Evalueserve have developed the answer to this problem by combining innovation intelligence with start-up scouting.
It begins with identifying the company’s business domain and core business interests. What are the objectives they want to achieve through partnering with start-ups? For example, consumer goods players could look at entering new markets, enhancing product lines, improving sustainability, or testing new business theories. Clear articulation of the outcome we hope to achieve is the basis for identifying who you will work with.
With the objectives in mind, considerable market research needs to be conducted to understand the current trends and future projects, consumer needs and technological advancement in the sector of choice to scout for the right start-ups. Once a universal set of start-ups is created based on the market data, KPIs need to be set to narrow down the list.
Identifying the right KPIs to evaluate start-ups is as important as defining your objectives. KPIs used in start-up or innovation scouting may differ from traditional metrics. Many companies search for a high volume of workable ideas which they can convert into their think tank. Tracking average time-to-market is another important KPI. Looking through the lens of these KPIs, a shortlist of start-ups would emerge.
This shortlist would then be evaluated and benchmarked on cultural fit, financials, unit economics, business model viability, and technical capabilities. This side-by-side comparison will make it easy for any corporation to choose a partner for further engagement. For this need, we are actively using the Insightloupe platform.
How do you maintain a successful partnership with a start-up?
There are better approaches than going big or going home. Start-ups are delicate, and these associations require time and patience, like any relationship. The key is to start small work on some small-scale pilot projects to test the feasibility and efficacy of the start-up’s innovation. As a rule of thumb, align your expectations and goals at the very beginning so that everyone is on the same page going in. Encourage open communication and knowledge sharing between both sides as the transition tends to be rocky.
Start-ups usually think quickly and develop out-of-the-box solutions, so they adapt to strategies outside the company’s comfort zone. Corporations should be open to learning and evolving alongside the start-up. What corporates usually miss out on is support beyond just funding a start-up to test their new ideas. Mentorship and market insights that would benefit the start-up should also be on the table to aid their growth.
For consumer goods companies, partnering with start-ups is not just a trend but a strategic necessity for innovation and growth. Through effective start-up scouting and cooperation, these companies can stay ahead in a competitive market, continually adapting to new challenges and opportunities. Join us on this exciting journey of discovery and collaboration as we explore the limitless possibilities with innovative start-ups. Let’s shape the future together!
