In the race toward greener technologies, blue aims to be king.
Just weeks after announcements from Autodesk that it would be taking its startup program across the Atlantic and from Veolia that its new incubator program would be looking to partner with cleantech startups around the world, IBM announced this morning its Global Entrepreneur Initiative, a program of such scale and depth that it almost seemed like Big Blue is trying to prove something.
The program takes what IBM did with its Solution Architecture for Energy and Utilities Framework (SAFE) rollout earlier this year and expands it to different industries and more startups. The SAFE program is an enterprise software made to be compatible on the one hand with any company’s smart grid application or service and on the other with any utility’s infrastructure. When it was released in September, IBM called the software the “glue” of the smart grid.
According to Drew Clark, director of strategy with IBM’s Venture Capital Group, the Global Entrepreneur Initiative takes that same idea — IBM as the infrastructure and thus the connector between new technologies and end users — and runs with it.
“The idea is not to just throw out some free software and assistance using it in the hopes that we’ll snag some startup that will accidentally hit on something we care about,” Clark says.
“This program is more of an onramp to help bridge the gap for smaller, early stage startups that have a difficult time engaging with customers. Take electric or water utilities. A small startup trying to have a meeting with the CIO of PG&E, for example, that wouldn’t happen, but we can make those connections.”
Open Door to Expertise, Connections
If that sounds like every venture capitalist’s dream come true, it’s not by accident.
Several years ago, when IBM was looking into launching its own venture fund, the venture capitalists it spoke with encouraged the company to instead create what is now the IBM Venture Capital Group, where Clark works. The division helps IBM stay on top of business and technology trends and find venture-backed companies with interesting technologies that might make good partners for the company.
While the Global Entrepreneur program does that as well, it goes further, providing startups with access to the company’s research community, as well as sales, marketing and technical skills. The program is focused primarily on early stage companies working on technologies that mesh with one of IBM’s Smarter Planet industries, which include energy and water.
Clark points out, not every startup that signs up for the program will wind up being an IBM partner:
“You have to play to win, as we say, so you have to think about how you combine your startup with IBM and the frameworks we’re supplying through this program will make that a lot easier. The second step is ensuring that your technology or service is something really special, something our customers will find appealing and useful.”
While IBM’s program, as Clark puts it, “goes way beyond just helping companies save a few bucks on software,” access to a variety of resources from various companies is proving hugely important to both cleantech startups and the companies that hope to either partner with them or, as is the case with some companies, turn them into clients. Autodesk’s Cleantech Partner Program, for example, provides software packages worth $150,000 to cleantech startups, and according to Susan Gladwin, Autodesk’s Cleantech Program manager, several of the 100 startups that have participated so far have used the company’s modeling software to streamline their products, thereby cutting costs.
Electric bike manufacturer Pi Mobility, for example, in the first three weeks that it had the software, created a digital prototype of its e-bike, was able to see that the diameter of the bike tube could be reduced by half an inch, and used that knowledge to shave $335,000 off its production costs.
By combining benefits like that with access to marketing, sales and research teams, as well as high-profile customers, IBM ensures that it will get first dibs on promising new technologies, and that’s exactly the position the company wants to be in.
“We’re all after the same thing, but I don’t see us as necessarily competing with companies like Veolia and Autodesk, both of which are to be commended for stepping up to this,” Clark says. “We’re operating in different markets, and Veolia is actually a customer of ours, so of course we want to help them find good technologies, too.
"We’re all out to find the next great innovations and to pull them through to our customers.”
Reaching Out to Startups Where They Live
In order to reach more early stage companies, IBM is also hosting a series of SmartCamps.
Hosted in various cities, the camps give early-stage companies the chance to get their ideas in front of IBM executives. The top five companies, selected after an online application process and short-list interviews of the top 20 companies, get a day-long mentoring session culminating with a pitch and Q&A session with industry experts and a cherry-picked audience of influencers and investors.
Also in the interest of reaching very early stage companies, IBM is partnering not only with venture capital firms but also with industry associations throughout the world, including the SD Forum, TiE Silicon Valley, Mass Tech Leadership Council, TiE Austin, MassInno and Dogpatch in the United States.
“To keep the deal flow going, it’s necessary for us to go out to where a lot of startups and entrepreneurs are, so partnering with organizations and consortia is important,” Clark says. “We plan to work closely with them so members of those organizations also become members of ours to get that crossover.”
Big Blue’s Universe
Once companies have been sufficiently vetted and groomed, they may well become part of IBM.
IBM acquired 63 companies last year, 35 of which were venture-backed startups, so clearly there’s potential for startups in the Global Entrepreneur program to be acquired. But Clark points out that for every company that’s acquired, there are hundreds or thousands more that find a partnership with the company, and those partnerships are valuable for both parties.
“IBM builds the infrastructure that allows all these ‘smart’ applications to run,” Clark says. “But we don’t create applications, for example, or sensors, so we need to partner with companies that do those things, and we need to be sure that we can continue to source those things, so there’s a real need for us to have a top-flight pool of innovation to draw from. That’s what underpins this whole proposition.”
As the cleantech universe continues to mature and the need for innovative green technologies increases, corporations will continue to seek out partnerships with startups. That’s good news for startups and their investors. Given that IPOs in the space are still infrequent and the road from concept to customer is long and bumpy, having a company like IBM take you down it makes the ride a whole lot smoother.
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(Photo: A buoy in Ireland’s Galway Bay uses sensors in the ocean to collect data on water quality and sea conditions. The SmartBay system, developed by IBM and the Marine Institute of Ireland, provides real-time information to scientists, commercial fishermen, environmental monitoring agencies and the general public. Credit: Marine Institute of Ireland)