QUICK SUMMARY
Co-development between corporations and startups offers a powerful approach to accelerate R&D, de-risk M&A, and drive tangible business results by leveraging external innovation. The presenters from Venture Fuel shared their 11-year experience helping large organizations commercialize innovation through structured partnerships with startups, emphasizing time-bound programs and clear success criteria. Their methodology has delivered impressive results, including $2 billion in incremental revenue for a materials science client and 45 simultaneous AI pilots across Comcast NBC Universal.
KEY QUOTES
- “Partner seems to be one that people talk to, but maybe haven’t quite figured out right yet. And we view partner as the opportunity for you to work with world-class startups and new technologies to accelerate R&D and de-risk M&A.”
- “You’ve transformed our innovation group from a cost center to an engine of growth.”
- “Be an innovator, not an evaluator. Embrace legal and procurement… if they can see the upside of this and you can tap into them and actually show them how to make it less work.”
FULL SESSION SUMMARY
Introduction to Co-Development
Fred Schonenberg, the founder of Venture Fuel, opened the session by introducing the concept of co-development between corporations and startups. He established that the company was launched 11 years ago with the mission of helping large organizations commercialize innovation through partnerships with startups. The focus is on driving tangible results rather than creating what he called a “startup petting zoo.” Fred emphasized that innovation leaders face increasing pressure to do more with less, accelerate time to market, explore new technologies, and enter adjacent markets simultaneously.
The presenters positioned co-development as a solution to these challenges, sharing impressive metrics from their client work: reduced time commitment from full-time employees, faster product development cycles, and significant revenue generation. One materials science client reportedly added over $2 billion in incremental annual revenue to their pipeline through this approach.
The Buy, Build, Partner Framework
Fred introduced a framework that positions partnership as complementary to traditional R&D (build) and M&A (buy) strategies. While most large companies excel at building and have experience with buying, partnering with startups remains an underutilized approach. The presenters positioned partnership as “connective tissue” between R&D and M&A that can accelerate internal innovation while de-risking potential acquisitions.
They addressed common barriers to effective partnerships, including “not invented here” syndrome, concerns about IP and legal issues, and rigid stage-gate processes that can kill innovation. The presenters suggested that these challenges can be overcome by making legal, compliance, and governance teams allies in the process and by innovating the innovation process itself.
Co-Development Methodology
Pritam Bhattarai shared Venture Fuel’s methodology for co-development, which begins with strategy. He emphasized that many companies make the mistake of approaching startups only after they’ve already defined a specific solution, which limits the potential for discovering adjacent opportunities. Instead, they recommend starting with broader strategic goals.
The methodology includes:
- Strategic Alignment: Beginning with business objectives rather than predefined solutions
- Broad Sourcing: Looking beyond obvious sources and geographies to find startups
- Exploring Creative Adjacencies: Seeking solutions from completely different industries that can be applied to the client’s challenges
Pritam shared an example of a commercial construction company that wanted to reduce labor and weather-related disruptions. By looking beyond traditional construction solutions, they found an underwater coral company whose technology could be adapted to make construction materials rain-ready, with favorable IP terms since the startup was from a different industry.
Structured Evaluation and Implementation
The presenters emphasized the importance of structured evaluation processes, including:
- Vetting opportunities based on future potential rather than current state
- Using concrete due diligence metrics tailored to each client’s needs
- Time-bound collaboration (typically 12 weeks) to create urgency and focus
- Clear success criteria that align business relevance with technical feasibility
- Project management to overcome friction between teams
Commercialization and Scale
The speakers stressed that the ultimate goal is commercialization, not just running pilots. They noted that many startup-corporate collaborations fail because they aren’t geared toward a specific commercial outcome. Their approach ensures clarity about the end goal from the beginning, whether that’s a joint development agreement, licensing arrangement, supplier agreement, investment, or acquisition.
Case Studies
The presenters shared two case studies:
- Materials Science Company: Over two years, they evaluated 500+ materials startups, ran multiple co-development projects, and completed 25 experiments in three months (a process that would typically take 18-24 months internally). This resulted in over $2 billion in incremental revenue pipeline.
- Comcast NBC Universal: Their AI accelerator program evaluated 3,000+ generative AI startups over 24 months, resulting in 45 simultaneous pilots across different business units, from legal to content creation to theme parks.
Key Takeaways
The session concluded with three main takeaways:
- Build bridges to innovators: Innovation is moving too fast to do everything internally; partnering with startups allows companies to “start on third base” in the innovation process.
- Be an innovator, not an evaluator: Make legal, procurement, and other support functions allies by showing them the upside and streamlining processes (like using standardized participation agreements).
- Innovate your process: Time-bound programs (e.g., 12 weeks) create focus and urgency for both corporate teams and startups, leading to better outcomes.
KEY TAKEAWAYS
- Partner as the third pillar: Beyond the traditional “build or buy” approach, partnering with startups can accelerate R&D and de-risk M&A while delivering tangible business results.
- Look beyond obvious sources: Exploring adjacent industries can yield breakthrough innovations with favorable IP terms since startups from different sectors are often more open to licensing arrangements.
- Time-bound collaboration works: Setting clear 12-week timeframes creates urgency and focus, making it easier for corporate teams to commit and for startups to see a clear decision point.
- Co-development requires structure: Success depends on clear scoping, defined success criteria, dedicated project management, and alignment on commercial outcomes.
- Transform from cost center to growth engine: Effective startup partnerships can change how senior leadership views innovation teams, shifting perception from “sunk cost” to “engine of growth.”
- Make governance functions allies: Rather than seeing legal, procurement, and compliance as obstacles, engage them early and show them how standardized processes can reduce their workload.
- Start with strategy, not solutions: Begin with business objectives rather than predefined solutions to discover unexpected opportunities from adjacent industries.
DELIVERY ON EVENT FOCUS: Aligning Innovation with Business Strategy
The session directly addressed the event focus by emphasizing that co-development must begin with clear strategic alignment. The presenters stressed that innovation efforts should be tied to concrete business outcomes and revenue opportunities. Their approach ensures that startup collaborations aren’t just about exploring interesting technologies but are designed to deliver on specific business goals with measurable success criteria.
The case studies demonstrated how this alignment works in practice, showing how materials science innovations led to $2 billion in incremental revenue and how AI implementations across Comcast NBC Universal were tied to specific business unit needs. The presenters emphasized that evaluation criteria should be tailored to each client’s strategic priorities, ensuring that innovation efforts directly support business strategy.
DELIVERY ON EVENT THEME: Harvesting Innovation and Sowing the Seeds of Future Growth
The co-development approach presented embodies the event theme by providing a structured method to both harvest near-term innovations and plant seeds for future growth. The presenters showed how their time-bound programs deliver quick wins (harvesting) while building relationships and capabilities that support longer-term innovation (sowing).
Their case studies illustrated both aspects: the materials science example showed how co-development accelerated experiments from 18-24 months to just 3 months (harvesting), while the Comcast AI accelerator demonstrated how exploring 3,000+ startups created a pipeline of opportunities across the business (sowing seeds). The presenters’ emphasis on moving beyond “innovation theater” to tangible results directly supports the harvesting theme, while their focus on building ecosystem relationships supports future growth.
ACTION ITEMS FOR INNOVATION EXPERTS & CORPORATE CHANGEMAKERS
- Audit your innovation sourcing strategy
- Expand beyond traditional sources and geographies
- Look to adjacent industries for unexpected solutions
- Consider using specialized partners to expand your reach
- Redesign your startup engagement process
- Create time-bound programs (e.g., 12-week sprints) with clear decision points
- Develop standardized participation agreements covering IP and NDAs
- Establish dedicated project management to overcome team friction
- Align with governance functions
- Engage legal, procurement, and compliance teams early
- Show them the business upside of startup partnerships
- Create standardized processes that reduce their workload
- Reframe evaluation criteria
- Assess startups based on future potential, not just current capabilities
- Create concrete due diligence metrics tied to business outcomes
- Prepare startups to present to senior leadership in business terms, not just technical ones
- Focus on commercialization pathways
- Define potential commercial outcomes upfront (JDA, licensing, supplier agreement, investment, acquisition)
- Ensure pilots have clear success criteria tied to business impact
- Avoid endless piloting by establishing decision points for scaling
- Build internal capability
- Train teams to work effectively with startups
- Create processes that can accommodate external innovation
- Develop metrics that demonstrate the value of partnership to senior leadership
- Start with strategy, not solutions
- Begin co-development efforts with business objectives rather than predefined solutions
- Create scoping documents that focus on problems worth solving
- Ensure alignment on what success looks like before starting technical work