Corporate Research and Venture Capital Can Learn from Each Other

Abstract

OVERVIEW:After carefully evaluating a variety of mechanisms to leverage the world-class venture capital (VC) firms in the vicinity of Hewlett-Packard's Silicon Valley headquarters, Hewlett-Packard Labs and the venture capital firm Foundation Capital entered into a strategic relationship. This relationship focused on the unique needs of a large corporate research organization, and was not intended to replace or substitute for on-going relationships between HP's business organizations and the venture capital community. The relationship has enabled both firms to understand more clearly the fundamental differences in their two different innovation models, and it is suggested that other large central research labs could benefit from a similar relationship. HP Labs, for instance, has become more selective about investments in promising new technologies, and has been able to propose more focused market entry strategies for several of its new technologies. There are also ways to achieve such benefits without actually establishing a formal relationship.