Among one of the top concerns of today’s small businesses is improper treatment by the hands of their large corporate buyers. Issues like late payments from corporations to their small supplier are leading to rising tensions and strained relationships between SMEs and the giants.
But a revamped plan from Coca-Cola, one of the largest companies in the world, reveals why top companies may not only want to strengthen their business relationships with their small suppliers, but are in a position to benefit from supporting startups from the beginning.
Striking Up A Relationship From The Beginning
Like many of the world’s leading corporations, Coca-Cola – recently ranked by Interbrand as the most valuable brand in the world until it was surpassed in 2013 by – has significant sway over its suppliers, which are often dependent on their corporate buyers to stay in business.
But research shows how crucial it is for companies to establish positive working relationships with their suppliers. A recent study, the North American Automotive Supplier Working relations Index, highlighted the positive correlation between positive supplier relationships in the car making market with higher revenue.
Coca-Cola’s Coca Cola Founders platform takes this relationship one step further by not only supporting the SMEs that fuel its business, but by helping create them.
In a recent interview with Business Insider, Coca-Cola VP of Innovation and Entrepreneurship David Butler said that the program is Coco-Cola’s way of acknowledging the need to for innovation. The platform proposes its “billion-dollar challenge” for startups to solve, and those chosen to participate are the ones with the brightest ideas to solve problems for Coca-Cola – and those Coca-Cola believes has a chance to become a unicorn.
It’s a win-win, where innovators get financial backing, and Coca-Cola starts off a positive relationship with someone who wants to help the company stay on top.
One of the startups chosen for the platform is Wonolo, which acts as an on-demand temp agency. The company addresses the issue that even when Coca-Cola partnered businesses have its products in stock, there is often a lack in the workforce to actually move those products. While Wonolo evolved to solve a Coca-Cola specific problem, which emerged when Wonolo founders rode around with Coke delivery trucks and maintenance repairmen, Wonolo’s business model is versatile for many businesses.
Wonolo is now its own business with Coca-Cola owning a share; reports said Coca-Cola generally retains a 20 percent stake in the new businesses. Last week the company announced a $2.2 million funding round led by several venture capitalists, with Coca-Cola supplying a $1 million note, with more to come.
Its Past And Future
Coca Cola Founders was not an immediate success, reports said. The concept was launched several years ago, but the first version, the company said, began with a group of executives meeting in boardrooms to brainstorm new startup ideas. According to Butler, the initiative failed because “the room was filled with managers, not explorers.”
The next stage saw Coca-Cola bringing on entrepreneurs into the company’s workforce as problem-solvers. The issue with this, however, was that these entrepreneurs were not motivated enough to innovate because the startup equity was still going to Coca-Cola, not the entrepreneur’s own seed-stage idea.
Coca-Cola revealed only days ago that its revamped program, the Coca Cola Founders Platform, is now in full swing. The initiative truly began late last year, reports said, and with its official launch, Coca-Cola simultaneously announced 10 startups already getting support from the conglomerate.
According to Butler, the program isn’t technically a startup accelerator like Y Combinators or 500 Startups. While Coca Cola Founders provides startup capital and a support network, the company’s retaining stake in the startup means their partnership is forged right at the beginning with the intention of staying put even when the startup goes solo.
According to reports, Coca-Cola does not have a limit on how much funding it will give to these startups, or how many startups it will accept into the program. Moving forward, Butler said that the most important goal for Coca-Cola is to strike partnerships with entrepreneurs who are willing to solve Coca-Cola problems in innovative ways, even if they don’t have elements like branding in place.
Instead, what’s most important for Coca-Cola is that these entrepreneurs can solve the problems and issues the company can’t solve on its own. It’s a strong statement that reveals how even the youngest of companies, or even entrepreneurs with only an idea, are highly valuable to the world’s largest corporations.