Chapter 11

Invest When You Can't Acquire

So you've identified a startup that's aligned with your enterprise's innovation thesis, and it has all the requisite elements to make an impact: a solid team with outstanding vision, excellent technical capabilities, a flair for execution, and a product that has been developed to the brink of fitting hand-in-glove with paying customers.

Just one hitch. The damn founders don't want to sell. Maybe they're confident that they're just about to break through to a receptive market, and the investment community is piling on. Maybe they've put so much of themselves personally into their startup that they can't imagine fitting into a foreign corporate structure. Maybe they don't trust a big company with their baby.

Or maybe you don't want to buy. You see immense potential value, but it's too early. The product is underdeveloped or the target market is fiercely contested. You want to share in its prospects, but you're not ready to purchase outright.

At this point, the third enterprise innovation strategy comes into play: Invest when you can't acquire. Face it, the next Facebook is not going to let an enterprise buy it wholesale. But it may be happy to take your money, and the investment can bring significant advantages in terms of both return and partnership down the line. Meanwhile, a creative, aggressive startup that hasn't yet found its feet can make good use of the funding and surrender a bigger slice of the pie. And you'll be in a perfect position ...

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