In today’s competitive world, MNCs and start-ups share a symbiotic relationship. As India’s economic climate becomes favourable for start-up business ventures, multi-national companies have emerged as the messiah for the newbies.
There is ample evidence that the birth rate of new companies has grown by leaps and bounds. Sensing this growth potential, MNCs like IBM, Microsoft, SAP, Qualcomm and Google among others have stepped in to provide solutions and low cost tools to SMEs that have just started out. This step has also helped SMEs introduce their own products and upgrades into a fast-changing technology environment, making it a win-win situation for both.
On the other hand, Large MNCs are relying on Indian start-ups for making an entry into the Indian market or for carving out new niches in the pre-existing markets, and for expanding their reach to include newer markets. IBM has launched the Global Entrepreneur Programme, which brings together entrepreneurs, venture capitalists, academic leaders and experienced mentors who could add value to start-ups.
IBM is also looking for opportunities to invest in start-ups in the fields of utilities, energy, healthcare and telecommunications using analytics, cloud computing and mobile technology. This is only just one example of how MNCs and start-ups can join forces.
The synergy between MNCs and start-up ventures plays out at various levels:
• Software Support: Tech MNCs like Google can help tech start-ups by making them work directly with free and open-source software. Newer tools and offerings by these technology giants can help start-ups launch online offerings in a very cost-effective manner. Products such as Google App Engine, Maps APIS, OpenSocial, Google Friend Connect are positioned to help start-ups launch online offerings.
Access to licensed software free of cost is also helpful for start-ups. Around 1000 Indian start-ups have joined Microsoft’s BizSpark program that allows them to access licensed software free of cost. For instance, QuickBooks Online, developed by us, has revolutionized the way small businesses manage their finances efficiently and thereby helping them spend more time in other growth-driven activities.
• Affiliation: Young technology companies can gain global visibility if acquired by or affiliated to MNCs. Qualcomm recently acquired two major products of Mango Technologies. Ojas Venture Partners which had invested less than USD one million in Mango in 2006, exited the firm at a 75 percent return after the purchase by Qualcomm.
A lot of these Global Giants are also leveraging their association with Indian start-ups to export innovation to global markets. The added advantage is that unlike an MNC, a start-up could introduce its own novel technology with an agility that MNCs will find difficult to match.
• Overall Tech Support: MNCs with their business and technology expertise can help start-ups improve the overall tech ecosystem in the country. India’s business environment is replete with examples of how MNCs are patronizing start-ups.
Microsoft is eyeing start-ups in the areas of mobile computing, social media, cloud computing, and Big Data technologies and is providing them with access to its Windows Azure technology worth USD 60000.
Enterprise software maker SAP launched its Private Equity (PE) Advisory Council that coordinates with various PE Portfolio companies that have implemented SAP solutions.
Qualcomm Ventures plans to invest USD five million in start-ups. IBM offers selected companies a three-month mentorship program to engage with investors and participate in global events. Small business start-ups are adding value to multinational companies by providing them a platform to popularise their solutions and helping them reach the end-user.
Some small businesses take on the role of communication advisors to these large enterprises, helping them consolidate their position in the country. This synergy can also drive technology innovation. India is fast becoming a hub for global innovation.
The government has started showing an interest in technology and has kick-started technology-driven initiatives for overall growth. This association between start-ups and MNCs can contribute to technology innovation and script a new growth story.