Corporate venturing is on the rise, increasingly used by corporations in place of or alongside their own R&D to develop leading positions in fundamental enabling technologies. It is all about resource management, speed and focus. Corporations cannot always dedicate what is needed to develop specific, disruptive technologies from early stage, so strategic partnerships with smaller, focused companies that do just that is a really effective alternative. For companies like FlexEnable, with strong core technology and intellectual property (IP), strategic partnerships with corporations offer significant market access.
I have been involved in the corporate venturing process on both sides. Having spent nearly a decade working at executive board and chief executive level in a large multinational and having also led smaller, focused venture-backed companies, I am a firm believer in the benefits for both sides. I can see how corporate venturing has already given our small, venture-backed company truly global scale opportunities to apply our technology platform for flexible electronics. In turn, this has given our larger corporate partners fast access to our rich portfolio of IP and expertise just as requirements from markets for wearables, new mobile devices and flexible sensors for the internet of things are exploding.
However, the opportunities from corporate venturing come with challenges. Two of these are the application of new technologies to new markets, and the management of enabling technologies for specific or multiple existing markets.
Corporations are often more skilled at applying new technologies from external partners to their existing markets, but they may struggle to do so for entirely new markets. In our case, we have met this challenge by developing demonstrators and reference platforms for new applications, thereby enabling our corporate partners rapidly to evaluate exploding markets where they do not yet have a strong presence.
On the other hand, smaller, venture-backed companies may only have the resources to apply the enabling technology they have developed to specific markets. In this case, it is the turn of the corporation to help unlock opportunities beyond those already developed by the smaller partner. In our case again, our flexible electronics platform, based on circuits on plastic substrates, has recently been pulled into the medical sector by large partners who see the potential of the horizontal, enabling technology in their applications.
These challenges are met by both sides finding and making a match with the right partner in a process that links enabling technology potential to existing as well as new market needs.
It is no coincidence that the growth in corporate venturing is occurring when venture capital investment into hardware and electronics is on the rise, after a decade of relatively flat levels of funding. This is driven in part by mega trends such as the internet of things, bringing hardware and software to more aspects of our lives, and wearables, where the current generation of hardware constrains what is possible in an exciting new market. Corporate investors are sometimes better placed than financial investors to bring new hardware technologies to market quickly and efficiently.
We have developed a customer base and pipeline based on an industrially proven platform of products and services for truly flexible electronics. With engineering labs and rapid prototype line in Cambridge, UK, FlexEnable is positioned as a startup based on the full technology and IP portfolio of Plastic Logic, from which we spun out. Flexible electronics technology unlocks myriad possibilities for electronics, including flexible displays so thin that they that can wrap around a pencil, sensors and sensor arrays that can conform to parts of the human body or finger print sensors inside credit cards.
In February this year, FlexEnable and Merck – one of our corporate partners – revealed a plastic liquid crystal display (LCD) completely free of glass, using instead organic transistors on a plastic sheet, this offers multiple benefits. Plastic LCDs have the potential of making products ten times thinner, more than ten times lighter and much cheaper than conventional glass-based displays – all while delivering differentiating product benefits of being shatterproof and even conformal.
For me, this is a textbook example of a small company, with unique and enabling technology, working with the global market strength of a major corporation to deliver a solution with profound implications for a $100bn market. That is what corporate venturing is about.