If corporations can’t beat startups, why not join them?

The business landscape of today is more competitive and cut-throat than ever. Thanks to the exponential growth of technology, industry and company disruption is always lurking around the corner for those who do not shift with the times. Case in point? The fact that an evolving market has forced half of the companies on the Fortune 500 since 2000 to go bankrupt, sell, or close.

Not convinced? Consider the average company lifespan on the S&P 500 list. This number in 1965 was 33 years. This shortened to 20 years by 1990, and is expected to reach 14 years by 2026. Corporations are worried - and they should be. 

Smaller, nimble, daring companies are more often finding rapid success in these incomparable times. Startups leverage technology to their advantage and continue to challenge some of the biggest industries and companies in the world. Startup “unicorns” - companies with valuations of more than $1 billion - currently number more than 550 worldwide and that number is only predicted to climb.

It is in this context where corporations are beginning to rethink their relationship with startups. If they cannot beat them, why not join them? Cooperation between startup and corporation is only gaining traction as the fight for market share becomes more intense. Corporations, who fear being too slow to see coming change and too cumbersome to move when needed, are teaming with startups to allay this existential threat.

There are plenty of projects which show success in collaboration rather than competition. Facebook’s accelerator allows the startup to experiment with ideas and the corporate to pick up on those projects which work. This is a win-win for both parties: the startup attains industry contacts and concept validation while the corporate monitors how smaller companies operate and acquire those who succeed.

This is only happening more in fintech. January’s $5.3 billion acquisition of Plaid by Visa demonstrates large companies are looking to expand their offerings, and contend with fast-growing digital competition.

Startup-corporation cooperation does come with its own successes and challenges. For example, The Innovation Leader Report helps to illustrate how some of the top-performing organizations in the world engage with startups. The 2019 report demonstrates that collaboration instead of competition can enact positive change. After the experience of mentoring startups, nearly 80 percent of corporate mentors said that they will work differently in the future and with more agility.