Why are Big Brands Investing in Entrepreneurs?
A connected world is a collaborative one and established brands are beginning to take note of the value that entrepreneurs, start-ups and small businesses can offer. Today, almost anyone with a good idea and a strategy for taking it to market can have a major impact on the business world. Consider Mark Zuckerberg, who founded Facebook when he was just 23, or Evan Spiegel, who co-founded Snapchat at the age of 25. Big brands would love to be part of stories like these and they’re all on the lookout for the next big thing. They’ve also realised that these ideas and people aren’t necessarily sitting in their boardrooms.
As the African proverb says, “If you want to go fast, go alone. If you want to go far, go together”. Almost every major brand in the world features a mentorship programme, an incubator, an accelerator or a funding initiative. While those in charge are aware that it’s good to give back and help others, big business owners see the benefit for their own companies too.
By investing in entrepreneurs with relevant ideas, established companies can create new revenue streams. The corporate world is not necessarily a world where months can be spent developing risky but brilliant new concepts. Employees are too busy running the business as it is and need to look outward for game changers or out of the box thinking.
Facebook acquires new businesses on a regular basis. When Zuckerberg bought WhatsApp for U$19 billion, skeptics raised their eyebrows. But the messaging platform is one of the fastest-growing companies in the world. Business Insider.com’s Henry Blodget explains: “WhatsApp’s growth is gobbling up user messaging and connection time that once could have belonged to Facebook. Buying WhatsApp allows Facebook to both own the next Facebook and prevent the next Facebook from eating Facebook’s lunch.”
The tech world is not the only industry where big brands are helping smaller businesses. Kering is the umbrella company for a range of fashion brands including Gucci, Stella McCartney and Alexander McQueen. At a time when the company was looking for sustainable innovation, they were approached by a start-up called Plug and Play, a business that now helps Kering roll out disruptive projects across all its fashion brands.
Red Bull has taken investing and corporate social responsibility to another level with The Amaphiko Academy. Launched in South Africa and already operating in several other countries, the energy drink brand provides time, training and tools to entrepreneurs who make a difference in their communities. ZuluGal Retro, for example, uses art and fashion to lower the unemployment rate among disabled youth in KwaZulu-Natal. People who have little chance of getting a regular job, now have an opportunity to make money by creating their own products to sell.
While gaining an edge over the competition and investing in innovation is important to big brands, entrepreneurs also have a lot to gain. When an established brand is backing an unknown SME, the relevant market is more likely to pay attention. Entrepreneurs with solid ideas, tight budgets and excellent pitching skills can get funding from thriving brands. Knowledge, experience, resources and the right contacts are among several other benefits start-ups can enjoy when they partner with established companies.