Most successful entrepreneurs know it is not enough to assume that inventing a smart or disruptive technology alone is enough to make customers come running. Among other things, business development involves connecting with the right people in the corporate hierarchy. Yet aspiring entrepreneurs often underestimate the value, cost, and difficulty of forming strategic partnerships.
In a 2020 survey conducted by McKinsey, 75 percent of startup respondents said they consider partnerships with corporates very important. More recently, a study by Innovation Leader in conjunction with MIT Corporate Relations examined the shifting landscape of startup-corporate engagement and found that 61.7 percent of startups said getting introductions to the right person in the right company was the most challenging aspect of initiating a formal engagement with a large corporation.
This particular niche is where MIT Startup Exchange thrives. Since its inception in 2014, it has been bridging the gap for MIT-connected startups to partner with industry. The program, which has grown to include approximately 1,400 MIT-connected startups actively involved or under evaluation at any given time, brokers close to 600 private meetings yearly between MIT-connected entrepreneurs and industry, exclusively members of the MIT Industrial Liaison Program (ILP). The largest and oldest program of its kind, ILP is industry’s most comprehensive portal to the Institute, enabling corporate partners to harness MIT resources to address current challenges and anticipate future needs.
MIT Startup Exchange was formed as a finger-on-the-pulse response to an evolving business landscape. The traditional model of corporate research and development that saw corporate laboratories like AT&T’s Bell Labs driving technological innovation had all but disappeared, and big corporations were turning to startups for innovation in record numbers. It was a trend mirrored by the needs of MIT ILP member companies. According to Karl Koster, executive director of MIT Corporate Relations, “The seed for MIT Startup Exchange was planted during an MIT Corporate Relations-ILP strategic planning session — we saw increasing interest on the part of ILP member companies to gain access to MIT-connected startups.”
As corporations turned outwards for innovation, MIT Corporate Relations’ newest program paved the way for startups with ties to MIT departments, labs, and centers to engage with decision-makers from global corporations. Member companies of MIT Startup Exchange are based on licensed MIT technology or are founded by MIT faculty, staff, or alumni. Portfolio companies from MIT’s tough tech venture firm The Engine are also considered for the platform. Of the startups currently working with the program, 82 percent have an MIT graduate as a co-founder, 19 percent have an MIT faculty co-founder, and 15 percent are based on licensed MIT technology.
“MIT Startup Exchange’s bread and butter is coordinating targeted introductions, a precious commodity if you consider how much startups typically invest in corporate partnerships,” says ILP Program Director Irina Sigalovsky. “We have the ability to play a significant role in a startup’s business development.”
MIT spinouts like Tulip, a startup democratizing edge technology for front-line operations, have benefited from the highly-vetted, targeted connections made by MIT Startup Exchange. “From the beginning, the Startup Exchange and ILP provided us with valuable introductions to leading global manufacturers including BMW, Porsche, the Defond Group, and Arauco. Being part of MIT Startup Exchange gave us credibility early on to turn many of these introductions into Tulip customers,” says Natan Linder PhD ’ 17, Tulip’s co-founder and CEO. “As we continue to grow our global footprint, we're excited to continue collaborating with the Startup Exchange and ILP to bring our platform to others in the industry,” says Linder.
The program gets involved at the inflection point where a startup has a minimum viable product and is ready to engage with corporates. "We look for B2B tech startups with novel solutions to challenging business problems," explains Marcus Dahllöf, program director for MIT Startup Exchange. “The ideal time to engage with us is after you have formed your corporate entity, sorted out your IP, and have a product that a corporate can pilot.”
Working in tandem with MIT ILP, MIT Startup Exchange leverages an extensive database of several hundred corporates from 36 different countries across industries and sectors to provide targeted introductions for startups founded by experts from the MIT innovation ecosystem, such as tech pioneers Thomas Leurent MS ’01 and David Knezevic ’11, co-founders of predictive digital twin pioneer Akselos. Today, Akselos’ technology protects critical multibillion-dollar assets for some of the largest energy operators on the planet. But in 2015, when MIT Startup Exchange first brokered intros between Akselos and ILP member company Shell, the MIT spinout had fewer than 20 employees. However, it had a core product based on cutting-edge simulation algorithms developed at MIT. Akselos and Shell would sign a three-year agreement based on that initial MIT Startup Exchange-brokered meeting.
“MIT Startup Exchange and ILP have been an extremely effective way for Akselos to engage with key customers and partners who come to MIT with an appetite for innovation,” says Knezevic. He continues, “Some of the largest ILP members have unlocked new innovation curves with Akselos that will enable them to increase return on equity in their legacy market and enter new strategic markets while helping Akselos to broaden its customer base.”
To help promote networking and partnerships between startups and corporate executives, MIT Startup Exchange also hosts a robust schedule of events, workshops, and showcases. Registered members have the opportunity to speak at one of the 20-plus events held around the world. In a non-pandemic year, capacity crowds are not uncommon for workshops focused on technology areas that run the gamut from aerospace and robotics to cancer and energy. “On a good day, a startup can walk away from one of our events with up to a dozen high-quality leads,” says Dahllöf.
The 2018 MIT Research and Development Conference focused on emerging disruptive technologies across fields, including artificial intelligence, life science, new materials, and novel design technology. It brought together 400 corporate executives to hear from 10 MIT-connected startups, including MIT Startup Exchange member Silverthread, the leading software economics startup. Following the event, Dan Sturtevant PhD ’13, co-founder and CEO of Silverthread, remarked, “This was probably the most productive conference we’ve been to because large companies were there with the explicit mission of developing partnerships.”
The 2018 Startup Exchange Silicon Valley Showcase at GE Ventures featured presentations from MIT-connected startups, including Aria Pharmaceuticals (formerly twoXAR) and Catalia Health. “People from ILP member companies were there to get business done and were very open to working with MIT startups, which is a great setup going into a meeting,” says Catalia Health’s founder and CEO Cory Kidd PhD ’07.
And in the face of the coronavirus pandemic, MIT Startup Exchange has not only survived, but flourished. The 2020 pivot to virtual events yielded a significant jump in both corporate attendance and the number of startup presentations to corporates. By the time Corporate Relations had closed the books on the 2021 fiscal year, MIT Startup Exchange had hosted 13 startup-focused events featuring 235 startups presenting to 1,284 ILP corporate member attendees. Virtual events are inherently more accessible than in-person events, but the sustained uptick in numbers is, among other things, a testament to the program’s adaptability.
In uncertain times, MIT Startup Exchange continued to foster community and build relationships while stepping up knowledge transfer. As economies ground to a halt, it brought together corporates and startups innovating in areas like disease monitoring and contact tracing, the supply chain, and the implementation of big data to define digital identity for Covid-related purposes and beyond.
Corporates and startup members embraced the digital model with confidence, in no small part due to trust in the Institute. Since receiving its first charter in 1861, MIT has been accelerating and amplifying societal and industrial progress, encouraging an interlocking system of the scientific and the practical that lends itself to innovation and collaboration with industry. It’s a tradition of innovation, recently exemplified by the emergence of messenger RNA vaccines. Nobel Laureate Phillip Sharp, now an Institute Professor, conducted groundbreaking research at MIT's Center for Cancer Research during the 1970s that revealed the potential of mRNA. In the 1980s, Robert Langer, now the David H. Koch Institute Professor, pioneered new means to deliver medicines, including mRNA. Langer would go on to co-found Moderna with fellow MIT alumnus Noubar Afeyan PhD ’87 and others.
Today, MIT-connected startups continue the tradition. Consider MIT spinout and early MIT Startup Exchange member Witricity licensing its novel wireless-charging technology to heavy industry manufacturer IHI, the leading supplier of aerospace engines and vehicle turbochargers as well as resource, energy, and environmental products. Or Nara Logics, a startup with deep MIT roots, working with Procter & Gamble to help fulfill the multinational’s quest to harness the potential of data-driven marketing powered by cutting-edge artificial intelligence. These are among the success stories that bear the hallmark of collaborations promoted by MIT Startup Exchange: the fusion of high-caliber talent and cutting-edge technology provided by an MIT-connected startup with a top-quality corporation seeking an injection of innovation and entrepreneurial spirit.
In a world impacted by climate change, public health crises, and geopolitical shifts that reverberate out to the business landscape, the need to innovate is especially acute. MIT Startup Exchange is a unique convening force, a place where entrepreneurs, global corporations, and academia coalesce to create powerful synergies that change the world.