A particular favourite of computer companies following the dot.com implosion after the millennium has been to run a competition offering sometimes-limited prize money, mentoring and marketing.
US personal computer maker Dell gave its inaugural global award for small business excellence to UK organic farming business Wiggly Wigglers for its online blog. Cisco and IBM have also started awards. IBM started its Smart Camp competitions in Ireland in October and a Global Entrepreneur programme in March.
Claudia Fan Munce, managing director of IBM Venture Capital Group started in 2000, said at the IBF Corporate Venturing and Innovation conference: "As a solutionsdriven company, IBM uses partners to deliver a third of our revenues, which is roughly $33bn."
IBM has shied away from directly taking minority stakes in third parties since 2000 but it partners more than 100 VCs, she added, and has been a prolific acquirer having closed its 90th acquisition in February.
She added: "IBM did do direct investing, but the bubble burst and shareholders forced a change because when it had gone well in 2000 it still did not move the needle. So now we allow the market to be the filter."
IBM’s Global Entrepreneur programme provides an international partnership with entrepreneurs looking to work on new technology projects. Participants gain access to free software, 40 IBM Innovation Centres, education on various industries and mentoring. Wendy Lung, a partner at IBM Venture Capital Group, said IBM’s model for corporate venturing is aligned to strategic goals.
IBM decided 10 years earlier to focus on partnerships with the venture and entrepreneurial communities, Lung said. She added the feedback on the Global Entrepreneur Program had been good as it was designed for entrepreneurs "that share our vision of a smarter planet both physical and digital" and in the first four weeks since its launch in India 200 participants had applied.
By contrast, Microsoft has aimed at a broader audience with its partnership programme after turning away from equity investments after 2000.
Dan’l Lewin, vice-president for strategic and emerging business development at Microsoft, at the same IBF conference said: "Money is fungible."
He added by email: "Microsoft’s global entrepreneurial strategy is to invest in deep partnerships with high-potential start-ups rather than investing directly, and to foster local software economies by partnering local governments and academic and industry institutions.
"Start-ups want partners that can accelerate their success and help them make money. We do this through the BizSpark programme that offers access to our software and global partner network, while providing market visibility. We know this is the right formula from the reception the programme has received; since its launch in late 2008, over 35,000 start-ups have joined.
"Finally, and most importantly, we are a platform company. No one brings together the comprehensive technologies and resources at a global level like Microsoft. Our success is based on an ecosystem of some 750,000 partners in 108 countries. Partnering is one of our core competencies. We do well when others do well."
US-listed computer equipment company Cisco has taken more of a waterfront approach by investing as well as partnering or offering competitions and last month agreed to invest $1bn in Russian entrepreneurs over the next decade through a five-part programme including corporate venturing.
The five phases will run in parallel and are designed to provide support for Russia’s Skolkovo Project, started in March last year by Russia’s president as the country’s equivalent to America’s Silicon Valley. In the first part,
Cisco said it would extend its existing $30m venture commitment to Russia-based venture capital firm Almaz Capital Partners made in 2008 with an incremental $100m. Cisco has already taken a stake last year in Ozon, a Russian online retailer, as well as Apollo Project and Parallel through the Almaz fund.
To boost entrepreneur’s business development, Cisco said it would increase the number of its networking academies across Russia to 300 from 133.
In phase two, Cisco said it would open an office in Skolkovo, just west of Moscow. Cisco will help design the Technopolis Skolkovo based on its framework used at the Cisco Globalisation Centre East in Bangalore, India. Cisco said Skolkovo would be the first of its Smart+Connected communities in Russia to boost sustainable social, economic and environmental development.
As part of phase three, Marthin De Beer, senior vicepresident at Cisco, will establish a second global headquarters for its Emerging Technologies Group engineers in Skolkovo to incubate several internal start-up business units.
Phases four and five will focus on partnerships with Russian venture capital firms, such as its I-Prize competition to be open specifically to entrepreneurial teams in Russia able to help identify and build Cisco’s next $1bn businesses. Cisco will provide $175,000 in overall prize money for the winning Russian teams in the contest, $100,000 to the winner, as part of the multi-year investment.
Cisco will also work on joint development projects, such as for smart grid, financial services, service provider models, financing, broadband implementation and social networking.
Paul Mountford, president of emerging markets at Cisco, said: "We see a clear economic benefit to Cisco, and it is our belief the I-Prize innovation competition for Russia has the potential to generate between 200 to 300 new ideas by tapping into these new sources of collective development."
Cisco has also made more than $2bn of direct and indirect venture investments, with about half in the US and the rest internationally, including in China, India, Israel, South Korea, Mexico and across Europe, including Russia.