The partnership between bigger, mature corporations and early-stage companies is beneficial for both. Startups gain capital to grow, and the investing company will gain many advantages too. It is these benefits I will describe below.

In 2005, YouTube began as an angel-funded enterprise working from a makeshift office in a garage. The business model was simple: the revenue of YouTube came from advertising. Now, the website and app get over 30 million visitors per day and 300 hours of video are uploaded to YouTube every minute. The annual revenue generated from YouTube is $4,000,000,000. That is 6% of Google’s ad sales revenue.

The acquirement of YouTube by Google benefitted the original startup as well as the big corporation. The YouTube founders became multimillionaires and Google’s ecosystem got an important upgrade by adding a first-class video site.

4 Reasons to Invest in a Startup

If this success story is not convincing enough, below, I will describe 4 other reasons why you might consider investing in a startup:

  1. Your organization will be the first to gain access to fresh ideas.

It really works, as Yuji Ichimura, Executive Officer at Konica Minolta, explained in an interview. “Working with the startup community provides an opportunity for us to increase our speed of development of new products and technologies to create new value and solutions for our customers.”

  1. Your business will be the first to be aware of new market trends.

Startups are known to have their ears to the ground regarding new trends, opportunities, and technologies. Considering the enormous costs of a full-blown R&D department, an investment in a startup seems like a bargain!

  1. Your organization can supplement its own proposition with the product or service of the startup.

This is exactly why the union of Google and YouTube was a match made in heaven. Likewise, Nokia, Hotmail, LinkedIn, and Yammer all have expanded the Microsoft ecosystem.

  1. Your staff will see how fast and flexible a startup can be.

What is the best way to put an end to the often slow and bureaucratic way of working in a bigger corporation? Why not offer an inspiring example? What better role model could there be than a new, innovative company? In this scenario, even a small stake in a startup can work wonders.

Next Step!

At RevelX, we take minority stakes in companies we believe in, either with our own capital, or we arrange larger stakes through our extensive network of private equity, VCs, and angel investors.

After reading this article, and if you have the means to pay for it, the chances are that you are very hungry to acquire (a stake in) a young and innovative company. Hopefully, my advice given above will be of help to you. If there are any questions that I have left unanswered, though, please feel free to contact me.