#500 CORPORATIONS

PREAMBLE Big corporations are slow, dumb dinosaurs waiting to be 'disrupted', but the reality is not so simple. Does this sound familiar? It's pretty familiar Are we missing the full picture? thinking in startup circles. I was consumed by the idea of delving into this with I don't buy it, though - here's why. a different approach. To pair an ecosystem expert with academic firepower to cut through a dataset of Since you're curious enough not to skip the the world's 500 biggest public corporations, preamble, let me reward you with some juicy analyzing what they've been doing with startups, backstory to this so-called report. what successful stories exist and eventually come up with a guide of sorts to supplement the efforts of any First off, it was never intended to be a 'report' as corporation hoping to execute their own startup much as an expose; a voyage of truth aimed at masterplan. debunking myths, and opening the door to a new conversation. My hope is that by finding and sharing these stories, it will make success less elusive and easier to Yes, the 'dinosaur' label is catchy, but it ignores the replicate. And be a small step in getting more fact that these corporations sit on more cash corporate resources into the new global engine of reserves than most venture capitalists will ever have, innovation known as startups, in ways where and can deploy assets that could cause some serious everyone wins, especially corporations themselves. disruption of their own. I mean, surely not every corporation is content to just sit on all that capital, Let this hope be yours to guide you watching the world go by? through our humble #500CORPORATIONS 'report'. Maybe there are just not enough stories of corporate Khailee Ng + startup collaborations thundering through Managing Partner Or perhaps corporations mainstream consciousness. 500 Startups who are doing all the right things simply don't want you to know about it. Funny how we hear stories of acquisitions which made the founders rich, and then the corporation eventually shut down the startup they bought-and we think "What idiots!". #500CORPORATIONS 2

BROUGHT TO YOU BY 500 500 Startups is a venture capital seed fund based in emphasizing internet marketing and customer Silicon Valley. We have invested in a wide variety of acquisition, lean startup practices and metrics, as technology startups all over the world, at the time well as distribution and marketing programs in of writing, 1400 startups in 50 countries since our multiple geographies. Our investment team includes inception in 2010. Our team of 100 people manage serial entrepreneurs, investing pioneers and seed investments across the world, and speak over operators with experience at companies such as 20 languages. We run accelerator programs in San PayPal, Google, Facebook, YouTube, Yahoo, Francisco & Silicon Valley four times per year Linkedln, Twitter, and Apple. Los Angeles Miami ---.. Mexico City ~"'ff , ..... 'People e Primary Geographies e Countries Where We've Invested #500CORPORATIONS 3

INSEAD The Business School for the World ® As one of the world's leading and largest graduate York. In Asia, INSEAD partners with School of business schools, INSEAD brings together people, Economics and Management at Tsinghua cultures and ideas to change lives and to transform University in Beijing and China Europe organisations. A global perspective and cultural International Business School (CEIBS) in diversity are reflected in all aspects of our research Shanghai. INSEAD is a founding member in the and teaching. multidisciplinary Sorbonne University created in 2012, and also partners with Funda~ao Dom Cabral With campuses in Europe (France), Asia in Brazil. (Singapore) and Abu Dhabi, INSEAD's business education and research spans three continents. Our INSEAD became a pioneer of international 148 renowned Faculty members from 40 countries business education with the graduation of the first inspire more than 1,300 degree participants MBA class on the Fontainebleau campus in Europe annually in our MBA, Executive MBA, specialised in 1960. In 2000, INSEAD opened its Asia campus master's degrees ( Master in Finance, Executive in Singapore. And in 2007 the school began an Master in Consulting and Coaching for Change) and association in the Middle East, officially opening PhD programmes. In addition, more than 9,500 the Abu Dhabi campus in 2010. executives participate in INSEAD's executive education programmes each year. Around the world and over the decades, INSEAD continues to conduct cutting edge research and to In addition to INSEAD's programmes on our three innovate across all our programmes to provide campuses, INSEAD participates in academic business leaders with the knowledge and sensitivity partnerships with the Wharton School of the to operate anywhere. These core values have University of Pennsylvania (Philadelphia & San enabled us to become truly "The Business School Francisco); the l

EXECUTIVE SUMMARY Almost all industries have been challenged by startups. Not only can technology companies be disrupted by a small team of engineers in a garage, nowadays it's happening to banks, car makers, logistics companies, FMCG and more. Yet corporations seem to be adapting slowly, or so it would seem. This report explores the extent to which that is true, and uncovers ways corpo-rations can engage startups. 500 Startups and INSEAD partnered to get some answers by investigating the world's biggest public companies and their practices in terms of what we call Corporate Startup Engagement (CSE). WHO THE REPORT IS FOR: • Corporations exploring ways to engage with startups • Corporations looking to benchmark their practices • Individuals working in corporations who want to get buy in from colleagues to embark on a CSE program WHAT IT ISN'T FOR: • How to setup an accelerator or a corporate venture arm for your corporation, every corporation has different attitudes and objectives • A prescriptive guide • Printing out many copies. Feel free to share the PD~ let's save some trees! THE SWISS ARMY KNIFE OF CORPORATE STARTUP ENGAGEMENT (CSE) There's a pattern of 8 clear ways to engage with startups. We call it the Swiss Army l

DIFFERENT OBJECTIVES REQUIRE DIFFERENT STARTUP ENGAGEMENT Innovation Culture Platform Events • • • Support Services • • • • • Startup Programs • • • • • Co-working Space • • • • • Accelerators & Incubators • • • • • Spin-offs • • • • • Investments • • • • • Mergers & Acquisitions • • • • • • Most recommended • Recommended Least recommended FIVE RECOMMENDATIONSASYOU DEEPENYOUR ENGAGEMENTWITH STARTUPS I Talk to a pool of startups about their needs as part of your design process. It's easy to assume 1hey would love this' when the bar for competitive of- ferings is getting higher. 2 There are many different ways to engage with startups. The key is to keep in mind your objec- for expected re- tives, resources and time frame sults at all times. 3 You can start small, choosing one channel of en- gagement at a time and iterate fast based on the results and buy-in. However if you don't shoot for big enough wins from the get go, there may not be enough to show to get you more resources. INSEAD #500CORPORATIONS 7

10 FACTS THAT REVEAL HOW THE WORLD'S BIGGEST PUBLIC CORPORATIONS ARE NOT AS CLUELESSASYOUTHINK Traditional Venture Cap-The majority (61.7%) ital is no longer the only of the Unicorns men- way to raise money for tioned by the startups. DocuSign Wal I-Street journal raised in the same round under The Billion Dollar (Series E) exclusively Startups Club have from the following cor- raised from at least one porations: SalesForce, corporate (not including Google, Recruit, Mitsui investment firms and & Co, BBVA, NTT banks). Dacoma, Telstra and M l

11 NOTABLE EXAMPLES OF CORPORATE STARTUP ENGAGEMENT (CSE) Johnson & Johnson has a co­ Sprint, RIGA, l

PART 1 1. FORCES OF CHANGE (YOU'RE SCREWED IFYOU DON'T) a. "It's the fast fish which eats the slow fish" "In the new word, it is not the big fish which eats the small fish, it's the fast fish which eats the slow fish." - Klaus Schwab, founder and executive chairman of World Economic Forum. Several examples in the last few years illustrate the shorter time taken to build a large company. In terms of valuation five years after launch, Face- book's valuation was 15B USD (2004-2009). Over the same 5 years, Uber's valuation reached 40B USD (2009-2014). A second example is the time required from inception to reach lB USD in reve- nue, Dell took 9 years (1984-1993), Office Depot took 5 years (1986-1991), and Groupon took only 2 1. In shor( the small fast fish can (2008-2010) quickly become a big fish and eat you! b. "If you don't create the things that will kill your company, someone else will." When Apple launched the i Phone, it made the deci- sion to cannibalize its iPod sales. As Facebool<'s Little Red Book records: "If you don't create the things that will kill Facebool

PART 1 2. "WIN-WIN OUTCOMES" Startups and corporations can interact in a complex web of relations. Both benefit from each other. Credibility Branding & PR Distribution ( Suppliers Funding 2.1 From Startup to Corporation Startups can contribute to corporations by offering: Speed of operation Given the shorter period of time to reach break-even due to capital limitation, startups need to operate faster than large corporations to survive. Moreover, a condensed decision chain and methodologies like the lean startup approach (inspired by Toyota Lean Management) support a faster iteration. The need for speed is best summed up by a quote of Mark Parke~ CEO of Nike: "One of my my fears is being this big, slow, constipated, bureaucratic company that's happy with its success". Working with startups can inspire a corporation to execute faster. INSEAD #500CORPORATIONS 12

PART 1 3. SHORT-TERM AND LONG-TERM VALUE DRIVERS (YOU CANWIN BIG) Volkswagen, Samsung, Intel, Microsoft, Roche, No- vartis, Johnson & Johnson, Google and Merck are among the 10 biggest R&D spenders worldwide and all of them are already working with startups. On one hand, R&D and M&A are great ways to create value for corporations. On the other, working with startups helps mitigate the risks and reduces the time to market compared to the R&D and it comes at a lower cost compared to M&A. R&D Corporate Startup Engagement (CSE) M&A INSEAD #500CORPORATIONS 14

PART2 CORPORATE STARTUP ENGAGEMENT (CSE) Mergers & Acquisitions Acquisition of Startups Investment M icrocredit Loans Debt Limited Partner Venture Capital Fund Private Equity Spin-offs Independent Businesses with assets from the parent company Accelerators & Incubators INSEAD #500CORPORATIONS 16

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PART2 SUPPORT SERVICES Support services are generally corporate internal resources and capabilities offered to startups. Through support services, corporations are looking to provide - whenever possible - an unfair advantage to the startup. SUPPORT SERVICES EXAMPLES Legal Y Combinator and 500 Startups (neither are Forbes Global 500) are offering free legal document tem- plates for startups, respectively Safe and 500 KISS. Accounting l

PART2 Customer Access IBM and Microsoft have programs for customer access, respectively Meet new clients and CAP (Cus- tomer Access Program). Coca-Cola added Spotify branding to cans, allowing Spotify to reach massive customer base of Coca-Cola. American Airlines through Innovators shares the stories of startups and small businesses to customers while Turkish Airlines (not a Forbes Global 500) allows startups to pitch to business class passengers during ftights. ~" brings you G, Spotify· Source: Coca-Cola Supplier Access Orange and BMW (via the accelerator BMW Start- up Garage) are providing access to their suppliers. Distributor Access Coca-Cola has more than 24 million customer out- lets around the world and has partnerships with the biggest regional and global retailers. Community Qualcomm (via the Robotics Accelerator) offers an access to Techstars' network of over 3,000 success- ful entrepreneurs, investors, mentors, and corporate partners. INSEAD #500CORPORATIONS 19

PART2 Source: Samsung Accelerator Source: Credit Agricole I Le Village Source: dtac Accelerate SPIN-OFFS Source: Bayer /The Colaborator SPIN-OFF EXAMPLE ACCELERATORS & INCUBATORS Intel was a spin-out of Fairchild, Cisco Systems has Accelerators & Incubators provide opportunities for invested in and then bought several of them such as: corporations to support a small group of startups Insieme Networks. And IAC to spin-off several iden- during a relatively short period of time (most of the tities including Match.com, Tinder and OkCupid.com. time between three and six months). Typically, cor- porations offer founding help, space and mentoring INVESTMENT in exchange for equity. The first such program was launched 10 years ago by Y Combinator. Corporate The main goal of an investment is to own a stake in accelerators represent a perilous strategy due to a fast growing-startup for strategic or financial rea- high cost and a very small sample of startups to work sons. A financial investment is often done with the with. goal of a financial return whereas a strategic invest- ment is done most of the time for a supplier, custom- ACCELERATOR & INCUBATOR EXAMPLES er or competitor with the main purpose of integra- tion down the road. A strategic investment could also Accenture, Telenor, Mastercard, Volkswagen and be done from the perspective of diversification. Such Samsung have an accelerator, respectively: Fintech investments can be done through a variety of vehi- Innovation Lab, dtac Accelerate, Start Path, cles including: Volkswagen ERL Technology Accelerator and Samsung Accelerator. INSEAD ------,-- The Business School #500CORPORATIONS 20 for the World *

PART2 INVESTMENT EXAMPLES Microcredit Visa (with l

PART2 2. CORPORATE STARTUP ENGAGEMENT FRAMEWORK (WHAT PEOPLE CAN DO) a. From Low to High Involvement Each way to engage with startups requires a different involvement level in terms of time spent per startup: HIGH INVOLVEMENT Merger & 8 I Support 8 Acquisition Services 7 6 Investment 7 2 Startup 5 Program 4 3 Spin-off 6 3 Events 2 1 Accelerator I 5 4 Co-Working Incubator Space LOW INVOLVEMENT Platform companies like Microsoft or AWS that are looking to build an entire ecosystem around them have been offering Support Services and Startup Programs to engage with startups. These bring them a wide reach and deep range of startups at minimum cost. b. Low Cost versus High Cost Support services are definitely the more scalable way to engage with startups at very low cost as they leverage existing, and sometimes unused assets. HIGH COST 8 7 6 5 4 3 2 1 LOW COST INSEAD #500CORPORATIONS 22

PART2 c. Risi< Averse versus Risi< Seeking Each solutions covers a range of risks which need to match the culture of the corporation and it objectives re- garding how it wants to engage with startups and the expected benefits in terms of results. RISK SEEKING Investment 8 I Events 8 7 6 Merger & 7 2 Support 5 Acquisition Services 4 3 Accelerator I 6 3 Startup 2 Incubator Program 1 Spin-off 5 4 Co-Working RISK Space AVERSE b. Short Term versus Long Term Strategy Each strategy will require a different time frame to be successful. There is strong correlation between the stage of the startup, the cost of an investment or acquisition, and the time needed to evaluate the return. LONGTERM 8 7 6 5 4 3 2 1 SHORT TERM INSEAD #500CORPORATIONS 23

PART3 1. CORPORATE PROFILES 1.1 Overview of Forbes Global 500 A majority of the corporations are engaging with startups, 262 companies out of the 500 world's big- gest public companies (our research is based on the 500 world's biggest public companies according to the Forbes Global 2000 ranking) are working with startups in one way or another. That's 52.4%. For this report we focus our research on seven dif- ferent channels to engage startups: -Technical Support - Business Support - Startup Programs - Co-working space 150 100 so 0 INSEAD #500CORPORATIONS 25

PART3 There is a strong correlation between the rank of Corporate Venture Capital is the main channel by the corporation and the engagement with startups. which corporations engage with startups. It's used Indeed, the first 100 companies are working with by up to 73.5% for the 68 companies in the top 100 startups twice as intensely (68% versus 32%) as that conduct at least one activity with startups. the last 100 companies of the Forbes Global 500. There's a gradual decline as ranking decreases. RANKING ENGAGEMENT RATE* 001-100 68% 101-200 57% 201-300 56% 301-400 49% 401-500 32% *Engagement rate: corporations engaging startups through at least one channel CORPORATE STARTUP ENGAGEMENT BY CHANNELS AND RANKS 50.0 37.5 25.0 12.5 0 INSEAD

PART3 1.2 Overview by Industry If you are interested to learn more about your industrx feel free to reach out directly to us. We focus on industries where at least 10 companies are engaging with startups. Some industries are more focused on one chan- nel, such as the corporate ven- ture arm for the pharmaceuticals industry, whereas the telecom- munication services industry has been using a wide range of chan- nels to engage with startups. Hereunder the top 5: 94.1 % Pharmaceuticals 16 out of 17 85.2% Telecommunications Services 23 out of 27 68.8% Regional Banks 33 out of 48 64.5% Major Banks 20 out of 31 58.8% Diversified Insurance 10 out of 17 INSEAD

PART3 REGIONAL BANKS 48 companies and 24 countries represented in Forbes Global 500 (11 of them are from China). 5 examples of companies en- gaging with startups: Mitsubi- shi UFJ Financial/ !tau Uni- banco Holding/ UBS/ BB- VA-Banco Bilbao Vizcaya/ State Bank of India. Startup programs are the most widely used way for regional banks to engage with startups, (19 out of 48), followed by cor­ porate venture capital and startup competitions for 12 of them. INSEAD

PART3 Three other interesting industries: 100% Semiconductors 7 out of 7 100% Computer services 7 out of 7 87.5% Beverages 7 out of 8 - - - - - - - - I I I I SEMICONDUCTORS 7 companies and 4 countries represented in the Forbes Global 500 (4 of them are from the USA). 5 examples of companies en- gaging with startups: Samsung Intel/ Qualcomm/ Electronics/ Taiwan Semiconductor and SI< Hynix. Al I of them have a corporate venture arm, 3 of them have & incubators and accelerators two are organizing startup competitions. Semiconductors companies are using 1.86 dif- ferent channels to reach out to startups. INSEAD

PART3 1.2 Overview by Country If you are interested to learn more about your countrx feel free to reach out directly to us. We focus on countries where at least 10 corporations are engag- ing with startups. France is the country where almost every cor- poration on the Forbes Global 500 is engaging with startups, using on average 1.7 different channels to do it. The top 5 countries are mostly European: 92.0% France 23 out of 25 71.4% Germany 15 out of 21 71.4% Switzerland 10 out of 14 56.8% Japan 25 out of 44 53.3% United Kingdom 16 out of 30 INSEAD #500CORPORATIONS 30

PART3 SWITZERLAND 14 companies and 12 indus- tries represented in the Forbes Global 500. 5 examples of companies en- gaging with startups: Nestle 1 U BS ABB Syngenta Swiss- 1 1 1 com. Startup competitions and cor- porate venture capital with five corporations are the most used solutions to engage with start- ups1 followed by Startup Programs offered by four cor- porations. INSEAD

PART3 Two other interesting countries: 45.5% USA 80 out of 176 23.8% China 11 out of 47 USA 176 companies and 55 indus- tries represented in the Forbes Global 500. 5 examples of companies en- gaging with startups: Johnson & Johnson, Procter & Gamble, Google, Boeing, Dow Chemi- cal. Despite the biggest cohort of companies, the percentage of corporations engaging with startups is below the average (52.4%) for the USA. The most used channel is the corpo- rate venture capital for 53 companies, followed by startup competitions and accelerators & incubators with 26 and 16 companies respectively. INSEAD

PART3 1.4 Overview by Engagements If you are interested to learn more about your indus- trYt feel free to reach out directly to us. 1.4.1 -Technical Support: With employees Amazon, with the AWS Pop-up Lofts in the USA, is offering technical support without an appointment, as well as a technical workshop and one-day hack- athon. IBM is providing face to face technical enablement and support via office hours. They are also offering training sessions in over 40 centers worldwide. With experts Google has built a platform to unite over 250 ex- perts, from Technology to Marketing as well as UX/UI and Product Strategy. 1.4.2 - Coworking Spaces: Each company from the Forbes Global 500 that offers a coworking space is also engaging startups via several other channels. For example, all of them have a venture arm and two have an accelerator

PART3 Nepal, Pakistan, Poland, Romania, Russia, Spain, Switzerland, Tanzania, Thailand, Trinidad and Tobago, Tunisia, Turkey, USA, Vietnam, Singapore, and Slovenia. NORTH • AMERICA • • • • •• AFRICA sou• • • AMErl ~J • AUSTRALle • • • Source: Microsoft 1.4.3 Business Support This category includes marketing support, sales sup- port, finance support or consulting. It's a great way for employees with high-level expertise to mentor startups and to open their networks. Online content: Royal Dutch Shell, HSBC Holdings, HP and RBS are offering on line resources to support startups, re- spectively: Business Library, SMElearning, HP LIFE Learning initiative for entrepreneurs, The Business Start-Up Course. Mentoring by mentors: Google and DBS group have built a platform to allow entrepreneurs to meet mentors, on Google Experts and DBS BusinessClass respectively. Mentoring by employees: Unileve~ LVM H (Christian Dior) and Woolworths are offering programs for startups to be mentored by their employees, respectively: The Unilever INSEAD #500CORPORATIONS 34

PART3 Banco do Brasil are offering the following startup programs, respectively, Google for Entrepreneurs, Activate, IBM Global Entrepreneur Program, Startup Package for new business, Our Plus Pack- age and Empreendedor Individual. Targeting a specific demographic Itau Unibanco Holding and Garanti Bank are tar- geting women through their respective entrepre- neur programs. Maybank with the New Entrepre- neur Fund is offering startup loan to wholly-owned Bumiputra ( Malay ethnic group) enterprises. 1.4.5 Accelerators Intrapreneurs and Entrepreneurs An interesting model has been launched by Airbus Group with Biz Lab, where entrepreneurs and intra- preneurs (employees) are working under the same roof. Mixing intrapreneurs with entrepreneurs is one way to have an impact on culture and to gener- ate more internal innovations and spin-offs. A pan-international network of accelerators Telecommunications companies like Deutsche Tele- kom, Orange, Telefonica and Telstra are building pan-international networks of accelerators across the world. Wayra from Telefonica is offering the ac- celerator program in 11 countries, mostly hispano- phone: Argentina, Brasil, Chile, Colombia, Mexico, Peru, Venezuela, Germany, Ireland, Spain and United l

PART3 In Hong l

PART3 Among corporations, Business Schools and as- sociations Cartier ( Richemont) has launched the Cartier Women's Initiative Awards in partnership with the Women's Forum, Mcl

PART3 - JX Holdings, Inc., - Kirin Holdings Company, Limited, - Meiji Yasuda Life Insurance Company, - Mitsubishi Chemical Corporation, - Mitsubishi Corporation, - Mitsubishi Electric Corporation, - Mitsubishi Estate Company, Ltd., - Mitsubishi Gas Chemical Company, Inc., - Mitsubishi Heavy, Industries, Ltd., - Mitsubishi Logistics Corporation - Mitsubishi Materials Corporation, - Mitsubishi UFJ Lease & Finance Company, Ltd., - Mitsubishi UFJ Securities Holdings Co.,Ltd., - Mitsubishi UFJ Trust and Banking Corporation, - Nikon Corporation, - SM BC Nikko Securities Inc., -The Mitsubishi UFJ Factors Limited, Sanshin Company, Ltd., -Tokio Marine & Nichido Fire Insurance Company, Ltd. Fund managed by a third party Electranova Capital is independently managed by ldinvest Partners, a European mid-market private equity manager. Allianz Group and BpiFrance are the financial sponsors alongside EDF. The fund manager of STC Ventures, the venture arm of Saudi Telecom Company, is Iris Capital Man- agement. Joint venture with a third party Ooredoo, Millicom International Cellular and MTN have formed a partnership with Rocket Internet: - Asia Internet Holding is a joint venture between Rocket Internet and Ooredoo to build and fund e-commerce companies in Asia, - Africa Internet Holding is a joint venture between Rocket Internet, MTN and Millicom INSEAD #500CORPORATIONS 38

PART3 Covering different regions via different funds Softbank, has 2 funds: - Softbank Capital has been closed recently to focus on later stage investments, - Softbank Ventures Korea to invest in South Korea, - SoftBank China & India Holdings to invest in China and India, a fund with a focus on Indo- nesia (SB ISAT Fund), and one fund with a focus on Philippines (Kaikaku fund). Covering from early stage to late stage Novo, has 4 funds: - Exploratory pre-seed program, a stimulus fund established to accelerate commercializa- tion of biomedical research findings and deve- lopment of novel technologies within the life sciences, - Novo Seed, to invest in early-stage life science companies, - Novo Ventures, to do follow-up investments of Novo Seed portfolio companies and to invest in new companies, - Novo Large Investments, late-stage invest ment activities are targeted at well-establ- lished life science companies that have posi- tive cash ftow, strongly positioned products and attractive prospects. Tata, has 5 funds: -Tata Capital Innovations Fund, seeks to invest in early/growth stage companies. Deal sizes USD 4-10 million, -Tata Capital Special Situations Fund -Trust, invests in medium size companies. Deal sizes more than USD 10 million, -Tata Capital Growth Fund, focuses on growth and expansion stages. Deal sizes USD 15-25 million, -Tata Opportunities Fund, a stage and sector agnostic fund. Deals size USD 50-200 million, -Tata Capital Healthcare Fund, focuses on INSEAD #500CORPORATIONS 39

PART3 2. SPOTLIGHT -HOW DO CORPORATIONS ENGAGE WITH STARTUPS? 2.1 Technology Spotlight (Microsoft) Created in: 1975 Headcount: 117,354 Net Income: 12.19B USO Headquarters: Net Revenue: 93.58B USO R&D investment: 12.58 USO As one of the original technology platform compa- nies, Microsoft's success is tied to their partners and ISVs (Independent Software Vendors) that build software leveraging Microsoft's technology. This is why it's strategic for them to build a third-party ap- plication ecosystem by engaging with students, de- velopers and startups. To work with this broad com- munity, Microsoft has a dedicated division called Developer Experience

PART3 Microsoft. To be eligible, a startup (a new technolo- gy company or an independent software vendor) must be in business for less than five years and with less than IM USD in annual revenue. The key bene- fits of the programs are: 1) an access to free soft- ware and tools such as Visual Studio, Office 365 or Azure cloud services ( U SD 750 per month of free credit), 2) a community of startups and technical advisors, 3) support from Microsoft and BizSpark Network Partners. On top of the BizSpark program, Microsoft has launched BizSpark Plus, which offers up to 120,000 USD of Azure credits to qualified startups involved with over 200 of the world's top accelerators. Since the inception of BizSpark, more than 100,000 startups have become part of the pro- gram and 41,186 of them in 151 countries are cur- rently listed by Microsoft. The majority of them are based in six countries, USA (12,444), United l

PART3 2.2 Telecom Spotlight (Orange) Created in: 1988 Headcount: 156,000 Net Income: 1.068 USO Headquarters: France Net Revenue: 44.948 USO R&D investment: 0.848 USO Orange, one of the largest telecom operator, is ac- tively engaging with startups to develop innovative solutions quickly, close to the needs of the customers and in real time. Today, the main challenge for Orange is the weaken- ing of the economic model by the over-the-top ser- vices (OTT), the decline of the average revenue per user (ARPU) and the new competitors like GAFA (Google, Apple, Facebook, Amazon) which are en- tering the market by offering connectivity via bal- loon-powered internet access (Google) or via so- lar-powered Internet drones (Facebook). By engaging with startups as early as possible, Orange gains time to detect tomorrow's trends, to inoculate these innovations and practices into the DNA of Orange. Two of the main success stories have been through the participation in a music plat- form Deezer where it is a minority shareholde~ and owning 100% of Dailymotion, a video platform. A music platform such as Deezer with the premium service is one of the tools used by telecom compa- nies to reduce the churn rate and to increase the ARPU. 1. ENGAGING THE STUDENTS COMMUNITY Oran e Tunisia Develo ers' Pro ram supports young talents who develop their own mobile appli- cations. Three years after the launch, 2,800 students have been trained and 50 applications have been created. INSEAD #500CORPORATIONS 42

PART3 Ecomobilit Ventures is a fund launched by the al- liance of Orange, SNCF, Air Liquide, Michelin and Total to invest in sustainable mobility, with a focus on four key areas: transportation services, innova- tive information technologies, connected vehicles and mobility solutions, as well as intelligent infra- structures. Ecomobility Ventures has EUR 30M under management. Robolution Ca ital is dedicated to robotics with EUR 80M under management. This fund is man- Source: Hello Tomorrow Challenge aged by Orkos Capital SAS and has, as limited part- ners, several corporations and institutions such as Orange, AG2R LA MONDIALE, EDF, Thales, the 5. ENGAGING IN SOCIAL ENTREPRENEUR- European Investment Bank, Bpifrance, and individ- SHIP ual investors. The Oran Innovacom launched in 1988 invests in early stage Africa rewards entrepreneurs who offer products startups in applied digital technology in four areas: and services that respond to local needs in various telecommunications, smart energy and smart fields such as health, agriculture, education, energy, homes, health and well-being, transport and smart industry or commerce. cities. Innovacom is an independent capital risk company funded by corporations including Orange, 6. ENGAGING IN EMERGING MARKETS Alcatel-Lucent, Groupe Seb and Soitec. Data for Develo ment challen e in Ivory Coast in 3. ENGAGING VIA PARTNERSHIPS 2012 and Senegal in 2014, are the challenges to contribute to development and improve the living In emerging countries, Orange has created partner- conditions of the local populations. ships with local accelerators: CTIC incubator in Dakar, Senegal, Ebene incubator on the island of 7. ENGAGING VIA EMPLOYEES Mauritius and CIPM EN incubator in Niamey, Niger. Orange is supporting employees with the business In France, Orange is a partner of several innovative creation assistance scheme. Since the launch of the spaces like NUMA Paris, Nantes and Rennes Digi- spin-off scheme, 70+ companies have been founded tal Canteens. creating more than 350 jobs. Success stories in- clude startups like Semsoft and Predisys. 4. ENGAGING VIA SPONSORSHIP Orange is one of the main sponsors of Hello Startup (radio show), Hello Tomorrow Challenge (startup competition) and Futur en Seine digital festival. INSEAD ------,-- The Business School #500CORPORATIONS 43 for the World *

PART3 23 Bank Spotlight (DBS) Created in: 1968 Headcount: 21,000 Net Income: 2.898 USO Headquarters: Singapore Net Revenue: 6.878 USO R&D investment: DBS's innovation efforts today are anchored around three big ideas: an increased focus on digitization to further enhance efficiency, making the customer ex- perience more interactive and intuitive, analytics and the use of Big Data, both structured and un- structured. To address the increasing pace of change and dis- ruption facing the banking industry, DBS knows that it needs the entire bank to embrace innovation. This implies a culture transformation and engaging start- ups in creating a more robust FinTech ecosystem. The focus of DBS is to evolve the culture, not neces- sarily to obtain a product of a startup. In order to drive a more innovative and digital mind- set, DBS supplemented its talent development pro- gramme with three-day hacking challenges, where staff are paired with startups to build mobile solu- tions addressing banking challenges. In 2015, around 800 employees were exposed to startups through various programmes including hackathons and accelerators. DBS is also experimenting with ways to improve its customer journey, such as reduc- ing inconveniences such as card retention at its AT Ms. To engage with startups, over the last four years, DBS has launched the following programs: INSEAD #500CORPORATIONS 44

PART3 is accessible to DBS Venture Debt Financing startups backed by DBS partner venture capitalists. Today, startups in Singapore primarily rely on ven- ture capital to fund their operations. By offering a dedicated venture debt solution to tech start-ups which are at the growth stage of their business life cycles, DBS is making available an alternative source of capital for these firms to tap into, with little or no dilution of their equity. Tech start-ups can use DBS venture debt for working capital, fixed assets acquisition and even project financing. DBS BusinessClass a mobile app launched for SM Es in late 2014. Through DBS BusinessClass, entrepreneurs can consult and connect with indus- try experts, investors and fellow entrepreneurs. DBS BusinessClass members can also access news and articles on topics pertinent to starting and run- ning their businesses and attend exclusive network- ing events. Source: DBS BusinessClass 2. VIA PARTNERSHIP Mico Loan DBS has a partnership with SPRING Singapore (governmental agency) to provide an easier access to funding for local SM Es. DBS is one of the local sponsors of Startu boot- in Singapore, a leading European camp Fintech accelerator focused on financial innovation, which has graduated its first batch of 10 startups in Singa- pore on July 2015. 30 dedicated DBS staff provid- ed mentorship to the startups throughout the pro- gram. INSEAD #500CORPORATIONS 45

PART4 1. Corporate Startup Engagement should evolve in 3 phases (LPO) STEPS DESCRIPTION 500 INITIATIVES Learn Research, Events Accelerato~ Demo Day, Geeks on a Plane Partner Support Services, Startup Programs, Co-Working Accelerator Spaces, Spin-offs, Accelerators & Incubators Own Investments, PreMoney, Venture Capital Mergers & Acquisitions Unlocked, Invest, M&A ---- 2. Different objectives require different startup engagement INSEAD #500CORPORATIONS 47

PART4 3. Five recommendations as you deepen your engagement with Statups Ta lk to a pool of startups about their needs as par t Whatever you choos e to do, be prepared to work 4 I at the speed of startups. Don't keep them waiting of your design process. It' s easy to assume 1hey would love this' when the bar or competitive of­ on you. You don't want the engagement to back­ ferings is getting higher. ire. There are many different ways to engage with Select the right pa rtners to share the knowledge 2 5 startups. The key is to keep in mind your objec­ and minimize risks. Doing it alone can be scary . Feel fr ee to reach out to us if you want recom­ tives, resources and time frame or expected re­ mendations. sults at all times. You can start small, choosing one channel of en­ 3 gagement at a time iterate and fast based on the results and buy-in. However if you don't shoot or enough big wins the from get go, there may not be enough to show to get you more resources. 4. Recommended Readings HBR BCG Corp orate Venturing Corp orate Venture Capital Av oid the Risk , Miss the Rewards Mc Kinsey Demystifying the hackathon Bloomberg The inside story of how - and why - Goldman Sachs TechCrunch became a tech-investing powerh ouse Corp orate Accelerators Are An Oxymoron Business Insider Why Cisco Has Showered These Three Men With Billions Of Dollars CB Insights Corp orate Venture Capital Te rm Sheet Survey CB Insights Inside the Minds of Corporate Venture Capitalists Global Corporate Venturing The World of Corporate Venturing 2015 INSEAD � The Business School #SOOCORPORATIONS 48 World� the for

About the Authors Arnaud Bonzom is Director of Corporate Innovation at 500 Startups. You can contact him by email at [email protected]. g Serguei Netessine is the Timken Chaired Professor of Global Technology and Innovation at INSEAD and the Research Director of the INSEAD-Wharton alliance. You can contact him by email at [email protected]. Please direct questions and comments about this report via email to: [email protected]. Acl

Research Methodology Our research is based on the 500 world's biggest public companies according to the Forbes Global 2000 ranking and on interviews with industry participants. This sample includes companies in 37 countries and 69 industries. For each of the 500 world's biggest public companies, we have screened their corporate website, the latest pub- lication of their annual report and we run searches by using keywords in Google to identify their engagement with the startup ecosystem. With the information collected, we have built a comprehensive database which is for our report. the basis INSEAD #500CORPORATIONS 50

LEGAL DISCLAIMER THIS REPORT IS PROVIDED FOR INFORMATION PURPOSES ONLY AND UNDER NO CIRCUMSTAN- CES SHOULD THE CONTENTS OF THIS PRESENTATION OR ANY PRIOR OR SUBSEQUENT COMM U- NICATION FROM 500 STARTUPS, INSEAD OR ANY OF THEIR REPRESENTATIVES BE CONSTRUED AS LEGAL, TAX OR INVESTMENT ADVICE. THIS PRESENTATION DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF INTEREST TO PURCHASE ANY SECURITIES OR INVEST- MENT ADVISORY SERVICES FROM ANY 500 STARTUPS ENTITY. INSEAD #500CORPORATIONS 51