CEO of Telekom Srbija Groupa provider of fixed, mobile, television and internet communications services to more than 11 million subscribers
As I mentioned before, the former revolution in the telecommunications industry has come to an end and companies must now look for new sources of innovation and ways to increase revenue while retaining and attracting subscribers. New ideas and innovation are the lifeblood of digital transformation.
With this in mind, I would like to share my view on the role of corporate venture capital in startups. After all, what better way to drive innovation than by supporting new breakthrough ventures? I firmly believe that telecom operators should look for new ways to boost their business. By doing so, they can take an active role in helping small businesses thrive.
Startups: breeding grounds of innovation
Telco operators must continue to look for problem-solving solutions that can improve people’s everyday lives. These solutions will increasingly need to address the challenges of our digital age and be globally oriented and scalable. Such solutions will also have to be disruptive. This means that telecom companies cannot only look inwards. I believe these solutions can be found externally among the vibrant, young startup communities. Indeed, I see startup communities as a new branch of our industry – a hotbed of innovation waiting to be unleashed.
A duty to invest in innovation
Startups are the seeds of revolution, but like any business, they need investment to get through their early years. In those early stages, real innovation should not be stifled by a lack of investment. More established companies have broader shoulders and a stronger financial base needed to invest in new ventures. I therefore believe that it is the duty of the industry to invest in, encourage, nurture and motivate young people to start their own business to solve the new challenges of digital transformation. This allows them to generate income and new jobs in their home region. I am not alone in this belief. Many companies are already investing in their own CVC funds.
The wider benefits of CVC funds
There are also many other broader benefits to setting up a CVC fund. First, partnering with the latest startup companies can provide a new channel to keep pace with global change and help businesses stay competitive locally and regionally. Investing in startups at an early stage and monitoring their further development also creates a positive climate for qualitative growth and development of the startup community.
In Serbia, where my company is located, we are fortunate to have a strong community of highly talented, creative and innovative young people. Providing them with funding allows local businesses to show their support and appreciation for homegrown talent. Moreover, such financing has a persistent and mutually beneficial effect. By investing in their ideas, I think these talented young people are more likely to stay in our region to run their own businesses, while also having a growing impact on our country’s economy.
Successfully starting a CVC fund
My company recently set up its own CVC fund. We also made our first investment in a new company and we look forward to helping it grow and succeed. During our CVC journey, some important lessons stand out that I want to share.
1. Keep an open mind. Establish an interview process where you ask startups to present their idea and solution, backed up with a compelling argument explaining why they need investment. This process is key; however, I’ve also found that it’s just as important to be open to new ideas. For example, the focus of my company is naturally on technological innovations, but we are not tied to that. We are always open to other ideas and sectors. If there is market potential, there is also an opportunity to invest.
2. Form expert partnerships to improve collaboration. You can benefit from the expertise of talented people in your own region who have global experience in setting up startups and corporate venture capital funds. I would encourage collaboration at all levels to gather the world-class expertise necessary to move your CVC fund forward.
3. Learn from each other. When investing in startups, make sure it’s a reciprocal process. As your relationship with the startup develops, you can expect to thrive, learn and grow alongside the startup you invest in. Have a hunger to learn more and for continuous improvement. That is why I consider it a privilege to participate in the creation and stimulation of new industries with enormous future potential.
4. Be responsible. Corporate social responsibility should be in your DNA. For example, I believe that my company has a responsibility towards society and future generations. Without a steady stream of new ideas, the 4.0 revolution will grind to a halt. There are visionaries in our society who can contribute, but may find it challenging to secure funding for their projects. Your company may be able to provide support. Investment accelerates startups to the next level and sets new standards of excellence, leading other companies to engage in similar innovative endeavors that benefit everyone.
I hope these thoughts inspire you to think about setting up a CVC fund for your own organization. The benefits for young people, industry and society as a whole are clear. Moreover, by nurturing startups, your own business will play a vital role in driving innovation and growth in your region for years to come.