Smarter Thinking

What Buyers Want: IBM Venture Capital Group

21st August 2019

Corporate-Scaleup partnerships bring benefits on both sides. In their most recent Global Capital Confidence Barometer, EY reported that 59% of executives expect to make an acquisition within the next year. Their motivations for acquiring range from accessing new markets to bringing new customers on board to gaining intellectual property. High-growth technology scale-ups can add fresh innovation into the mix when they partner with corporate firms. But the value the corporate represents for the smaller company cannot be underestimated, providing a catalyst for exponential growth and a whole host of market opportunities.

Many big corporations are interested in early-stage start-ups, but major US technology corporates are increasingly looking to engage with more mature, scaling businesses who can offer both innovation and well-established internal processes to build on. Microsoft originally worked with early-stage start-ups when they set up their first accelerators, but now tend to seek out scale-up talent to nurture instead.

How IBM work with start-ups and scale-ups

IBM see value in both start-up and scale-up talent and have initiated their fair share of corporate-scaleup partnerships. The enterprise has acquired over 60 companies since 2010 specialising in everything from information security to cognitive computing.

As Director of Software Strategy at IBM Venture Capital Group, Deborah Magid is the primary liaison with the venture community for IBM’s software business. Deborah has global responsibilities within her position and is an expert in identifying emerging markets, geographies and technologies, including AI, IoT, Cyber Security, Analytics, Big Data and the Cloud.

This focus on innovation has seen Deborah become Chairman of the Board of SVForum, the Silicon Valley emerging technology network, and join the Advisory Board of White Bull, serving the European entrepreneurial and venture communities.

We spoke with Deborah about corporate-scaleup partnerships, how these relationships work best and what corporate buyers value most in high-growth technology companies.

On a day-to-day basis, what does your role involve at IBM?

I work in our venture capital business on the software side, supporting our business units and nurturing our relationships with venture capitalists and other organisations in the technology ecosystem.

The types of organisation we work with include investment advisory firms like FirstCapital, government innovation departments, universities and start-ups themselves.

What do start-ups need to bear in mind when looking to partner with a corporate?

It’s tricky for companies to partner with large corporations. Large businesses have lots to do; they’re seeing clients and they’re developing new products themselves.

At IBM, we have a big research institute with many laboratories around the world, so start-ups have to have a good fit. They have to have a great solution that fits with what we are developing andthat we think our customers would love to have.

Start-ups have to have a sense of what is going on in the market, why they are innovative, why they are important and why they are interested in partnering with us.

How does a company like IBM meet technology start-ups?

IBM meet tech companies through the venture capitalists who invest in them or through investment advisory firms like FirstCapital, as well as through university tech transfer programs.

We go to places where start-ups hang out. If they give a good pitch at a pitch session, I’ll go up and give them my card. We usually don’t meet start-ups randomly. We use this network that we’ve built up in order to meet companies who look really promising.

How can start-ups best prepare for a meeting with IBM?

Start-ups need to think about what they want in a partner. It’s their business, so it has to be their strategy.

Often, I’ll meet with them to brainstorm about how our businesses could fit together but they have to have a sense of how it could work. They can’t go in cold, not knowing anything about IBM or what customers are doing in their market. They have to know their market. If they can do that, it’s easier for us to imagine how we might go to market together.

What makes a start-up innovative?

The most innovative companies that we see these days are innovative because they address timing and cost, and they make it easy for people to use their technology.

A lot of the innovative companies we see have really great tech, but they also provide great customer experiences. Their technology is very engaging and easy to use.

FirstCapital have a reputation for premium results. Supported by our global network, market insight and experienced team, we deliver win-win deals from our offices in London, Silicon Valley and Dublin. For more information on how we help our technology scale-up clients find the right buyer for their business, read about our previous deals.