Corporations usually have large amounts of resources at hand such as capital and talent. That is one of their main advantages over other forms of businesses that they meet compete against. Many corporations also have a well-established market share.

The big size of corporations is both a pro and a con. It is a con because corporations are slow to innovate. Their extensive and bureaucratic management often takes a long time to adapt to new changes and make decisions. In the fast-changing environment we live in today this can really hamper a corporation’s growth potential. It can also leave a big business vulnerable to competitors who innovate new products or processes.

A good metaphor for a corporation is that it is like a massive cargo ship. It carries a lot of goods, but it moves very slowly. Startups are the small boats. They do not carry much cargo or people, but they move much faster. These small ships can also change direction much faster than their counterparts.

All of this leads to one thing. Corporations often struggle with innovation. Startups are experts at innovating new things such as products, software, and services. The corporation has the money, expertise, and connections to get a product rolling. Startups often lack the funding, expertise, and networks to really get a product going.
By teaming up, both the corporation and the startup can benefit from one another.

Corporations can use a wide variety of strategies to cooperate or embed themselves in a startup. They can actively scout for startups, inventors or researchers at universities to help them with innovation. Another tactic is to use hackathons or brainstorm sessions from across the company to try and come up with new ideas. Innovation can come from within the company.

A more direct way of working with startups is through corporate accelerators and incubators. A corporate accelerator program provides training and investment to a new business or idea. In exchange for providing this, the corporation may get a share of equity in the new business. Incubators are a more hands-off approach where the corporation may try to help commercialize a new idea or venture.