Bringing the innovative startup culture to a larger, established company has been a popular tactic for some years. Attempts have, however, had varying degrees of success. Coca-Cola, for example, recently dropped its startup incubator program, suggesting that it is much harder than it looks to build relationships so that both parties get what they hoped for.
One company that has been evolving a startup program for more than three years is R/GA, the digital agency group. It has run several programs and invested in almost 50 startups across verticals including marketing tech and the Internet of Things (IoT). The company recently caught headlines when Snap Inc. said it was backing a venture program, however, this arrangement pertains to an existing marketing tech program, launched in New York last year.
Now, IPG-owned R/GA is taking its ever-evolving model to Europe, and kicking off with an IoT Venture Studio in London, in partnership with U.K. public body, InnovateUK. Ten startups have been selected for the program, which launches on February 6.
R/GA IoT UK Venture Studio managing director, Matt Webb, who recently joined to lead the U.K. operation, says that even just a year ago the list of successful applicants would have looked very different. "If you were doing this 12 months ago, they would all have been very techy companies and we’d be saying, 'IoT, it’s coming and we’ve got the tech companies that are going to make it possible' but it would have been super-abstract," he says. But now, Webb says, IoT is here and the startups on the program are all actually using IoT to accelerate and do business in a lighter and more agile way, across a range of sectors.
Webb says, "For example, we have one company that is doing retail analytics on people who come into stores, using AI and cameras, which are off-the-shelf hardware. Another is working in food waste in kitchens. Is it an IoT company? Well, you might not say that. They’re in the hospitality business, but they are using IoT to bring software, the network, and web services to do something that’s in the real world."
Webb states that R/GA’s startup programs are a serious endeavor and not for "PR and gloss." There are clear objectives to each program, which are aimed at benefiting the agency’s core business. "A lot of the conversations I am having are really shaping a different kind of client relationship than other agencies are having at the moment," he says. "It is putting us on the front foot in terms of being able to open up conversations and introductions to new clients in a very tangible way."
Selecting IoT as a theme for the new program is a direct result of those objectives. "The agency point of view is always about how to help companies connect either with consumers or other businesses and IoT is about that connection," Webb explains. "Up until now, manufacturers talked to their retailers and distributors, but not directly to consumers. When those things get connected, suddenly these manufacturers are having direct contact with users and have to think about how to manage that continuous experience. I can’t think of anyone better than a digital agency to help build that out."
R/GA global COO and managing partner of R/GA Ventures, Stephen Plumlee, agrees that the agency’s startup activity is not a typical accelerator program geared to build portfolios of very early stage companies and take positions on them as investors. "That’s not what we’re doing," Plumlee says. "We’re doing it for strategic reasons for ourselves and partners and the startups themselves. We’re focused on engagement more than we are on helping a pre-seed company get their first fundraising going."
Plumlee also says that the substance of R/GA’s venture is atypical for a startup program. "We focus on business development, partnership possibilities, matchmaking with clients and others in our network and then we apply this idea that we call 'creative capital.' Each startup will get input from a bespoke team to work with them on specific priorities to get them to the stage they can engage with corporate partners."
Startups are not primarily selected for their potential to be of use to specific agency clients, or even have an obvious link to R/GA’s core business, however. "We don't think, 'Oh, we are going to make a match between X company and Y client,'" Plumlee says. "We approach it thematically and, within a theme, we try to choose companies across verticals. We do think about a couple of things beyond normal investing criteria—can we, R/GA, actually do something for them, work with them and make a difference, and do we think there’s a match with either verticals that correspond to the client base or specific clients?"
Furthermore, it is also an obvious plus that agency personnel get to work closely with the startups across themed verticals with which they need to be familiar. But it’s more than just skilling up and being well informed about leading edge innovation that is on offer. Executive director business transformation at R/GA London, Rick Williams, says that the programs go some way to attracting and retaining staff that might otherwise be looking at heading for Google, Facebook et al. "Just being able to provide the opportunity for as many people as possible to get involved is really good," he says and adding how rewarding his own experience of working with the program’s earlier startups has been.
The strategy must be working for the agency because there is going to be a lot more of it. Plumlee says there will be at least six more programs coming this year. "We’re evolving the model of how a program like this should work, every program element, from stage of company, to what the curriculum is. We’re even doing virtual programs so the venue where the program is hosted doesn’t matter too much," he says.
The venue for the London program does matter though, it is being set up in R/GA’s swanky new office building in Shoreditch, the heart of London’s tech entrepreneur scene and general hipster paradise. But an important new office is not the only reason London was chosen for the latest Venture Studio. Webb lists London’s advantages, "There’s a great agency scene, so we know how to work together. We know how to do marketing really well here, so we know how to make things appealing to customers. London has an incredibly strong design scene, look at colleges like Goldsmiths, Royal College of Art, and Central St Martins, so there’s really strong industrial design," he says and also points out that Cambridge, home of chip pioneers ARM, and a center of development for wireless communications, is 45 minutes from London, in just the same way that Silicon Valley is 45 minutes from San Francisco.
Williams says that giving R/GA’s program a London flavor is exciting. "There’s such a big difference in the two scenes both in maturity and in expertise. And, things that float boats for U.S investors are not always the same things that do it for European investors," he says. "We’re looking forward to showing the U.S what we’ve got."
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