Why Big Brands Are Funding Small Tech Startups

Cornerstone Editors

StickiBoard began as a small two-person startup company in San Francisco creating a shared, digital "dashboard" that could be accessed from anywhere. After launching successfully as part of Samsung NEXT Start—an incubator that provides startups with resources to improve and grow—StickiBoard and Samsung NEXT established a partnership with Samsung's Digital Appliances.

Now, every Samsung refrigerator comes with the StickiBoard product: Families are able to create notes, tasks or calendar notifications right on their fridge and update those notes with the smartphone application.

The Rise of the Incubators

Companies like StickiBoard are just one example when it comes to success stories from incubators similar to the Samsung NEXT Start.

To keep up with the pace of innovation, many major corporations like Samsung, AOL, Volkswagen and Johnson & Johnson are funding spaces for small startups to grow, encouraging fresh ideas and invigorating talent from the inside out. Cornerstone is no stranger to the idea of incubators: We launched our own Innovation Fund in 2013, supporting next-generation cloud-based startups focused on helping people realize their potential.

Image credit: Cornerstone

At Cornerstone, the Accelerator is part of our commitment to support the growth and development of the Los Angeles tech industry. For other corporations, the driving force behind funding small teams with big ideas ranges from testing groundbreaking technology to supporting innovation in healthcare and more.

We recently visited the leaders of Samsung NEXT Start in San Francisco and Johnson & Johnson's JLABS in South San Francisco to discuss the growing incubator trend, the importance of bringing fresh, innovative talent into the corporate workspace and the future of corporate accelerators.

Samsung Funds Pioneers on the Tech Frontier

Samsung NEXT Start is just one part of the company's innovation efforts. NEXT Start is part of Samsung NEXT, launched in 2013 and formerly known as Global Innovation Center, which focuses on partnering with tech innovators to build great ideas into products, grow products into thriving businesses and scale businesses that leverage and transform the Samsung ecosystem.

Samsung's main incubators are located in San Francisco, New York City and Tel Aviv, and the corporation funds startups with a "frontier tech" focus, says John Rodkin, managing director of Samsung NEXT Start in San Francisco. These startups are interested in creating software related to groundbreaking technologies like virtual reality, augmented reality, the Internet of Things, connected cars, machine learning and more.

Image credit: Samsung

Most startups officially partner with Samsung as soon as they're invited into the incubator space. After joining, businesses are provided with marketing, legal, HR and design resources, as well as a physical space to work in. (The accelerator also hosts networking events and hackathons.)

While Samsung accepts outside applicants, a surprising number of incubator members come from within the company, says Rodkin. They have the knowledge needed to develop a unique, forward-thinking idea.

Even with all of the successful projects that have come out of Samsung NEXT, Rodkin predicts the incubator trend isn't something that will work for every company. He believes only corporations that can provide startups with the best resources and support—even after they've "graduated"—will be successful in the long run.

"Not [everyone] will know how to handle the market when it starts to go down. You'll see fewer accelerators and the ones that persist will be the ones that have the scale and resources of a company like Samsung—that historically have invested just as much during downturns as upturns," says Rodkin.

Johnson & Johnson Funds Patient-Focused Pharma

In contrast to Samsung's investment model, Johnson & Johnson's JLABS—created in 2012—prides itself on a "no-strings attached" model. Startups pay a monthly fee to rent out space in their labs, use state-of-the-art equipment and get advice from Johnson & Johnson employees or experts, but Johnson & Johnson does not immediately make an investment in the company.

JLABS' 30,000 square foot building also provides startups with meeting spaces, lab spaces, personal and communal medical equipment and programs to promote leadership and networking. The incubator focuses specifically on helping startups with a focus in pharmaceuticals, but the products serve a broad range of disciplines, including oncology and immunology. JLABS prides itself on a collaborative environment, where it's not uncommon to see many people from various startups talking over their projects together at lunch or even collaborating.

Image credit: JLABS

"When you think about a lot of the things that companies need, it really becomes cost effective for them to come here," says Jim Viola, Johnson & Johnson innovation and activation specialist. "We try to create a capital-efficient environment, so we'd rather you spend your money on researchers and manpower than have to spend it on equipment."

He says the incubator does welcome partnerships down the road if it's a fit. They have business relationships with roughly 20 percent of the startups that have come through the JLABS program.

"It's really about building relationships and making sure that we're helping companies. And not all these companies will be in the Johnson & Johnson portfolio," says Viola. "As long as they can get solutions to patients, that's what matters."

At the entrance of JLABS is the Johnson & Johnson mission statement or "credo," challenging them to put the needs of the people they serve first. Company leaders believe that if they do their job right, their stockholders will get a fair return in the end—and that's exactly the kind of leadership JLABS wants to instill in its incubator graduates.

For Johnson & Johnson, these startups are the future of work, and these incubators spaces will only continue to grow—but that starts with finding, supporting and prioritizing the right people.

Photo: Twenty20

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