Open innovation model growing amid ‘hiccups’ in venture capital

The ecosystem of partnerships between startups and companies using the open innovation model has become increasingly important in Brazil and Latin America in general amid the slowdown in venture capital funding and private equity investments.

That is the opinion of Bruno Rondani, founder and CEO of Brazilian platform 100 Open Startups.

“If it doesn’t innovate, venture capital will continue to be cyclical. We will live with hiccups, from bubble to bubble. We saw the dotcom bubble, the mobile bubble, and now there is this pandemic bubble with digital transformation and technology in general,” Rondani told BNamericas.

100 Open Startups is a corporate-startup engagement platform created and maintained by more than 100 leading global organizations, which together assess and rank startups worldwide for business generation. It claims to be the largest of its kind in Brazil.

Rondani's view is that venture capital generally and technology in particular have become excessively addicted to the pricing and valuation of investees, which generates peaks and troughs in investments.

This helps explain the so-called winter of startups where funding dried up, which Rondani believes was largely limited to big single investments and major funding rounds.

Open innovation, in turn, has emerged with a horizontal model of corporate-startup partnerships without necessarily involving equity or having to go through investment funds.

“The innovation ecosystem no longer depends on the decision of three or four wealthy executives sitting at a table with financial and administration degrees. Fortunately, we already see other venture capital profiles emerging around multi-corporate, multi-sector funds and B2B startup funds,” said Rondani.

The Ranking 100 Open Startups is an annual publication used by large institutions and investors as a guide to monitor the most attractive startups and scale-ups for the corporate market, in addition to highlighting corporations, ecosystem agents, investors and executives who have the most relationships with startups.

Since its inception in 2016, the platform has involved more than 32,000 startups and 7,000 corporations, with over 100,000 registered open innovation relationships, according to 100 Open Startups.

The players enrolled include accelerators, angel investors and ecosystems such as Distrito, Itaú’s Cubo, Endeavor, Connect Bogotá, AgTech Garage, Finep, and Amcham Brasil, in addition to Brazilian development agency ABDI and local software association ABES.