Driving Corporate Innovation
September 24, 2024
Why corporate venturing is the foundation for growth
Corporate venturing is increasingly recognized as an alternative to organic growth or mergers and acquisitions, especially in today’s fast-changing technological landscape. It allows companies to drive innovation, access emerging technologies, and diversify their portfolios by leveraging the agility and creativity of startups. This approach enables organizations to explore new markets and disruptive ideas without being constrained by their existing structures, helping them remain competitive and future-proof their operations.
We sat down with Leo Lax, Executive Managing Director at L-SPARK, to discuss his take on corporate venturing and to learn more about L-SPARK Select, a program aimed to unlock growth and corporate innovation via a curated ecosystem. We trust you will find the insights Leo shared helpful.
Leo, to start, could you please provide us with a short overview of L-SPARK?
Of course! L-SPARK is Canada’s leading B2B SaaS Accelerator. Driven by an unwavering dedication to innovation and entrepreneurship, L-SPARK was born to provide aspiring founders with the resources and support necessary to thrive in today’s competitive market. L-SPARK is also driving innovation with its corporate accelerators, pairing multi-national organizations with startups to create fruitful collaborations. Of note is our program, L-SPARK Select.
What sparked the idea of L-SPARK Select?
The idea was sparked by the AI wave we’re seeing worldwide – the surge and rapid advancements in artificial intelligence technology that are transforming industries, economies, and everyday life.
L-SPARK Select is based on the concept of the ‘Newbridge Affiliate Program’. To provide you with a bit of background, in the late 90s the telecom industry was undergoing a wave of major growth. Newbridge networks was riding that growth and was challenged to keep up. In response to this growth challenge Newbridge set up the ‘Newbridge Affiliate Program’, which became arguably the most successful corporate venturing program in Canada, ever. During the initial 5 years of implementation, Newbridge established an ecosystem of 25 companies. The companies not only supported the revenue growth but also returned over 15X return on investment.
Today, we face a new wave of disruption and opportunity in the industry, driven by the explosion and adoption of AI in all aspects of our personal and business lives. To meet this challenge. We suggest applying the corporate venturing approach, and specifically, the Newbridge model of corporate venturing, to the AI domain. By creating a targeted venture-backed ecosystem of innovative companies that have embraced AI in their core, we can achieve benefits such as accessing cutting-edge AI technologies and solutions, tapping into new markets and customer segments, attracting, and retaining top AI talent and expertise, mitigating the risks and costs of traditional expansion methods, and fostering a culture of innovation and agility in our companies.
In short, the goal of L-SPARK Select is to enable organizations to boost their competitiveness and R&D agility with a custom-curated corporate innovation ecosystem to drive next-gen technologies. We look forward to officially launching L-SPARK Select at our October 15th event in Toronto.
Just as we did at Newbridge, I believe this is an excellent opportunity to now initiate that same growth capability in Canada through L-SPARK. — Terry Matthews
Why now?
For one, when it comes to AI, the time to act is now. CVC allows companies to strategically align with AI-driven startups, fostering innovation and accelerating product development. Additionally, it provides established firms with early insights into disruptive technologies, helping them stay competitive and adaptable in a rapidly evolving market. This collaboration benefits both corporations and startups, creating a symbiotic relationship for growth and innovation.
To add to this, I’d like to quote from ‘The state of corporate venture capital in Canada’ – a report by Deloitte Ventures and BDC Capital: “Although Canada’s CVC sector is gaining momentum, there’s still considerable room for more participation, especially in comparison with the activity seen in the United States. Only 6% of public Canadian companies generating over $1 billion in annual revenue actively take part in direct VC investment, compared to about 40% of their US counterparts.”
Being faced with the huge AI wave of disruption, we believe that CVC initiatives provide the least risk and highest opportunities to organizations worldwide compared to alternatives.
Why? What are the benefits of driving growth the L-SPARK Select ecosystem way?
Unlike organic growth or mergers and acquisitions, driving growth the ecosystem way responds to urgent technological advances and opportunities by providing direct access to emerging technologies to create a competitive advantage for participating players.
Organic growth presents the challenge of draining resources from current priorities to develop future products, disrupting the ‘status quo’ and potentially reducing profits. M&A on the other hand can be challenging for organizations when it comes to disrupting their core business, dealing with operational and management integration, not to mention the need to ‘overpay’ in a competitive segment, which the AI space certainly is.
What is the difference between traditional Corporate Ventures and L-SPARK Select?
The L-SPARK Select program’s prime objective is to first leverage corporate venturing to build an ecosystem of companies that fits the strategic/key objectives of the corporation with a secondary objective of financial return, while the traditional CVC is primarily focused on financial return with a secondary objective of complementary strategic support. In addition, our accelerator process focuses on meeting the strategic objectives with active mentoring, and outcome driven implementations. With L-SPARK Select, we aim to create strategic partnerships that boost competitive advantage and drive growth.
To wrap things up, what is the October 15th event all about?
On October 15th, we are hosting an invite-only fireside chat between Kevin Ford, CEO of Calian Group and myself, with insights from Talia Abramowitz, Managing Partner at Deloitte Ventures, on the state of Corporate Venturing in Canada.
We will share insights on what it takes to foster innovation, drive growth, and push boundaries in a competitive landscape. If you are a CEO or C-level champion, interested in driving growth the ecosystem way, this is an event not to be missed.
Visit the L-SPARK website for more details on L-SPARK Select or to be invited to future events.
Wesley Clover invests in a range of technology companies, and they bring impressive innovation to markets and clients around the globe. I/O is our way of sharing some of the best insights. I trust you will enjoy them.
Terry Matthews, Chairman