Based on Article 22 and Article 27 of the Law on Innovation Activity ("Official Gazette of the Republic of Macedonia" No. 79/13, 137/13, 41/14, 44/15, 6/16, 53/16, 190/16 and 64/18), the Managing Board of the Fund for Innovations and Technology Development, at the session held on 22.02.2021, adopted the following

''CORPORATE INNOVATION PROGRAM''

 

This program shall determine the basic characteristics and purposes for allocating funds and technical support to newly established companies (start-ups) in order to improve the realization and placement of their products and services through their cooperation with companies that have a significant presence and influence in the market (corporate sector).  

   1. Purpose of the Corporate Innovation Program

The purpose of the program is to promote innovation and competitiveness in all types of companies by encouraging cooperation, investment and establishing partnerships between the corporate sector, on the one hand, and start-ups on the other.

   2. Expected benefits of the program

   2.1. Benefits for the start-ups

This program shall give start-ups access to:

  • Financial and technical support in the final stages of development of their innovative product/service;
  • Support in the placement of products/services and the possibility of scaling;
  • Support in improving the quality of the product/service through certification, accreditation and other processes that add value to the final solution;
  • Income growth and independence from external sources of capital;
  • Support in creating a brand identity and market approach;
  • Support for improving its work process;
  • Support for the acquisition of certain skills;
  • Indirect learning and transfer of know-how and knowledge through mentoring.

  2.2. Benefits for the corporate sector

The program shall enable companies that have a significant presence and influence in the market to gain direct access to innovative solutions that shall contribute to improving their operations, better placement of products and services and conquering new markets. Thus, the corporate sector shall take a direct and active part in the development of the start-up ecosystem and the innovative economy as a whole. At the same time, companies in this sector shall be able to position themselves as socially responsible companies.

The benefits can be in several areas depending on the goals that companies in the corporate sector want to achieve through cooperation with start-ups, such as:

  • Introducing an entrepreneurial spirit in the corporate culture

Working with start-ups allows you to create an entrepreneurial mind set among employees who become exposed to start-ups with a developed entrepreneurial culture, which in parallel focus on solution development, business model, and market approach (lean approach) and which offer a fresh way of thinking. In addition, start-ups help corporate sector companies raise awareness of future trends and the potential of new technologies.

  • Involvement of existing big brands

Working with start-ups not only rejuvenates the thinking of corporate sector representatives from within, it further modifies the external perception of corporate brands among their customers, partners and future employees.

  • Solving business problems

The development of new innovative solutions and products by start-ups is often much faster and less risky for the core business of companies than the corporate sector. Start-ups bring with them new technologies, business models and talents.

  • Expanding into future new markets

Start-ups can be an important channel for expanding business operations into new markets. They also possess the necessary skills and flexibility to compete in emerging sectors and industries.

  2.2. Impact on society

Cooperation between the corporate sector and start-ups is crucial to fostering a culture of innovation in the country. This cooperation is expected to contribute to:

  • Building partnerships and transferring knowledge from the corporate sector to the start-ups and vice versa, by including innovations in the portfolio of products and services of companies in the corporate sector;
  • Increased participation of the corporate sector in the development of the start-up ecosystem;
  • Increasing the level of sustainability of start-up businesses in the market;
  • Building an innovative economy, and
  • Encouraging social responsibility.

Although the benefits are manifold for both parties involved, this type of cooperation carries with it a number of challenges and risks of potential failure. The success of the cooperation, and thus the realization of the benefits, depends above all on how much each involved party is ready to learn what are the interests, as well as the expectations, motivation, culture and work ethic of the other party. The success of the cooperation is based on the fact that both parties identify the most appropriate models of cooperation that suit their situation, and thus clearly define their roles and responsibilities in the process.

   3. Models of cooperation

Depending on the purposes, the cooperation between the companies from the corporate sector and the start-ups can be realized through different models, such as:

Models of cooperation

Purposes

 

Introducing an entrepreneurial spirit

Innovating big brands

Solving business problems

Expanding into future new markets

One-time events (competitions and hackathons)

    

Resource sharing (free tools, workspace)

    

Business development support (incubators, accelerators)

    

Building partnership (joint development, supply chains)

    

Инвестирање Corporate venturing

    

Acquisitions (of the team or the entire start-up business)

    

The cooperation framework indicates how successful the usual models of cooperation with start-ups are in achieving the key objectives of the companies from the corporate sector in terms of cooperation with start-ups. The level of dimming of the fields indicates the level of suitability of each model in meeting the key objectives.

    3.1. One-time events

These types of events can be good starting points to foster internal changes in the culture of the corporate sector companies by exposing employees to the entrepreneurial mindset of start-ups, ensuring the introduction of new business trends and technologies, and improving perception of the corporate brand among users. This type of collaboration indirectly contributes to building long-term business relationships and also requires very careful consideration of the needs of the start-ups themselves in order to ensure their participation. Specific events may include, but are not limited to:

Organizing challenges competitions that focus on a specific issue and encourage innovators to find new solutions to the presented problem faced by the corporate sector. The topics of the challenge can be from any area, such as: digital marketing strategy, rebranding of existing product line, etc.

Organizing hackathons this type of event is a more focused form of competition and is quite popular. At these events, coders and creative minds (either as individuals or organized in teams) gather for a period of intense, focused development around a specific goal, such as solving a specific technical problem or developing a specific piece of code that will be part of a larger software solution.

     3.2. Resource sharing

Sharing resources with start-ups can be an effective and economical way to build an innovative brand by corporate sector companies. However, it is important to note that this model of collaboration, especially the supply of free tools, indirectly contributes to building long-term business relationships with start-ups. Again, it is crucial to research and test why start-ups would use those free resources and to ensure that those resources meet the requirements of entrepreneurs. The types of resources that corporate sector companies can share include the following:

Free tools Many corporate sector companies offer 'soft' support to start-ups in the form of free or cheaper access to their services, tools and products - or to their organizational knowledge. Many of them choose to make their products available to start-ups through third parties, such as digital platforms or accelerator programs.

Co-working spaces - Physical workspaces are another common form of resource provision, but it should be borne in mind that they require a larger amount of funding. Start-ups can use free of charge, or sometimes rent, desks, meeting rooms, internet and so on. It is about offering a flexible business environment with rental conditions, adapted to very dynamic start-ups that are constantly growing.

   3.3. Business development support

Corporate sector companies also work with various forms of business development support programs, especially incubators and accelerators, which help start-ups grow at an early stage and prepare them for investment, market entry, rapid growth and scaling. These programs can be powerful tools for fostering cultural change and internal learning in the organization by hiring staff as mentors or advisors.

Business development support programs should be developed in accordance with the needs of start-ups, while bearing in mind that the main focus is not directed only to the growth of companies in the corporate sector.

  3.4. Building a partnership

Strategic business partnerships can take various forms and by their nature can range from short-term type with cooperation with the start-up for a specific engagement, to long-term type by building long-term business cooperation with the start-up. From a start-up perspective, the following programs are particularly attractive:

Joint product development may involve joint research and development of products or services that solve a business problem of the company itself or their customers. These solutions are jointly identified, specified, developed and then piloted. The success of joint development usually depends on clear guidelines from the corporate sector, a pre-defined budget and a clear time frame within which it should be decided whether to terminate the partnership or continue the cooperation after the implementation of the pilot project.

Involvement of start-ups in the supply chain start-ups procurement can contribute to significant benefits for the corporate sector in the form of access to cutting-edge technologies and new business models. The inclusion of start-ups in the supply chain allows companies in the corporate sector to quickly find new approaches to specific business problems as well as seize new opportunities. It is important to note that such partnerships require a collaborative mindset and a comprehensive review of internal procurement processes by the corporate sector companies. From the start-ups, the validation of acquiring a large company as a customer can often be a turning point in the overall operation of the start-up, i.e. whether the start-up will grow rapidly and move into a scaling phase or remain in the early stages of development.

  3.5. Investing

Direct investing in start-ups, also known as corporate venturing, can be a useful way to access new markets and opportunities for growth and development through financial support for interesting start-ups, by engaging less capital and much faster compared to implementing research and development using the internal resources of the corporate sector.

Corporate sector companies can invest in start-ups directly by setting up venture capital funds within their companies or indirectly by supporting and investing in existing venture capital funds with a similar investment strategy as theirs.

3.6. Acquisitions

If the company from the corporate sector decides to enter into direct investment in start-ups, a logical extension of activities in that area would include the acquisition of start-ups, which can be a quick way to acquire complementary technology or specific knowledge and skills to solve a certain business problem, as well as entering new markets. For a start-up that already has external investors, business angels or venture capital funds, selling the start-up to a corporate strategic partner is the main way for external investors to exit the start-up and get a return on their investment.

The company from the corporate sector may decide to acquire the start-up team and absorb it in its own corporate structure or to acquire the business completely with the intention of appropriating the technology and assets that the start-up has acquired so far.

  4. Manners of implementing the program

The program shall be implemented on the basis of initiative and in partnership with companies from the corporate sector.

In order to achieve the partnership, it is necessary for the company to submit to the Fund a proposal-concept (form ) for partnership or cooperation with the Fund, the purpose of which shall be to develop corporate innovation in accordance with the proposed models of cooperation .

  • Financial and technical support for start-ups to improve the realization and placement of their products and services, and
  • Opportunity for networking and establishing collaborations and partnerships

Financial support for start-ups includes:

  • Financing activities related to product development and its placement on the market;
  • Support in improving the quality of the product/service through certification, accreditation and other processes that add value to the final solution;
  • Support in creating a brand identity and market approach;
  • Market testing of the product and creation of pilot lines.

            Technical assistance shall include consulting sessions and mentoring to acquire certain business skills and abilities, especially in the area of placing products and/or services on the market.

The Fund shall also provide an opportunity for networking and establishing cooperation between start-ups and representatives of the corporate sector through the organization of networking events.

  5. Procedure for selection of companies from the corporate sector as partners of the Fund

The program on the basis of which the interested companies from the corporate sector will be able to submit a proposal-concept, shall be published on the website of the Fund for Innovation and Technology Development.

The Fund shall establish a Commission for review of the submitted proposal-concepts, which shall be composed of at least 3 (three) members.

The approval of the proposal-concepts shall be done according to the following criteria:

  • Alignment of the proposal-concept with the purposes of the Corporate Innovation Program and the proposed models of cooperation;
  • Quality of the proposed concept;
  • Range of support offered for start-ups;
  • Reference list of implemented projects intended for direct or indirect support of start-ups/start-up ecosystem and innovation development, and
  • Annual income of the company.

Within the approval of project-concepts proposed by partners in the corporate sector, the Fund shall reserve the right to request further elaboration of the concept, to determine additional criteria, as well as to request submission of additional documentation by them.

Companies whose proposal-concepts have been approved shall conclude a corporate innovation agreement with the Fund.

          The corporate innovation agreement shall be implemented in accordance with the rules and procedures set by the Fund.