I spent an interesting couple of days last week finding out about how IBM works with entrepreneurial businesses. IBM isn't a name that one usually associates with start-ups, but in fact this most blue-chip of companies has been keen to build links with emerging technology businesses for some time.
I've always thought of IBM as having a pretty open culture, but nevertheless its sheer size and the nature of what it does - sell big solutions to big companies - means it's difficult to keep in touch with the sort of innovations which almost invariably come out of start-ups.
I met Deborah Magid, a partner in IBM's Venture Capital Group partner who is responsible for building links with emerging software companies (her colleagues focus on other areas of technology). She told me about the sorts of companies IBM is looking to reach out to, and how it does it.
Watch the interview with IBM's Deborah Magid
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The winner (Worldsensing) and finalists at IBM SmartCamp London |
As these companies grow and develop over time, IBM may bring them into customer projects or even acquire them if their technology is a good fit. It's good for IBM, enabling it to take innovative ideas to its customers and to build a pipeline for future acquisitions.
What's in it for emerging technology companies? For these businesses, there has always existed a danger of being suffocated by the loving embrace of a much larger partner. The irony is that at the time, signing a partnership agreement with a big company (an HP or an Ericsson, say) always seems like a fantastic marker of success. In reality, such agreements may easily consume all of a start-up's sparse resources and prevent it from investing in more worthwhile avenues whilst failing to deliver sales.
So the arms-length approach IBM is taking is almost certainly the right one, bringing in a range of other partners (including Amazon and Imperial College in the UK) and providing informal mentoring, introductions to investors and other useful contacts, and of course IBM's SmartCamp competition series.
I attended the SmartCamp London session where we heard pitches from five young technology companies. They are targeting a number of areas with strong future promise, and which should be very interesting to IBM's government, banking and utility customers: sensor networks, smart home, law enforcement analytics, patient records, and mobile finance. IBM had assembled an impressive array of mentors to give feedback on their performance in private and public, encompassing everything from valuation to market-building, international expansion and brand.
Both passion and PhDs were very much in evidence amongst the entrepreneurs, but on the whole their sales and marketing strategies were patchy or altogether absent. This is pretty common for tech startups, which often begin their life in a university setting and tend to lack senior-level commercial expertise. At this stage, advice from experienced business mentors is therefore critical. It will be interesting to trace their progress over the next few years, to see if they can turn their ideas into viable, revenue-generating businesses capable of being acquired by an IBM!
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