Are startups a way to avoid taking risks for large corporates?

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We all know right now. Entrepreneurship is a mission where the only real mitigating effect is applying a consistent strategy.

But let’s consider the whole thing from another perspective.

The drawbacks of working at any startup projects, are mainly related to short term risks. It’s clear, everybody says, an entrepreneur’s job is to innovate and disrupt. The startupper is there to explore, to fail if necessary, whereas large corporate fear risk: they are there, ready to jump on the bandwagon if things are going to work.

Large corporates have a huge infrastructure, and an extreme complicated organizational profile.

They protect an history and the reputation of their brand (and therefore their value), where these categories represent nothing special for startups, because they are just focused on future,

They have too much to lose and their response time is long. Moreover, we may say that they can play a much more important role in assisting the second and third phase of development of a successful company. Once something has been proven out in fact they can acquire one of these companies offering investments, creating a new powerful business unit into their structure, providing know how, huge chances of economies of scale and scope and so on.

But at the other side large companies are constantly taking less risk, keeping cash on hands. That quantity of cash is unparalleled in history. As well as the incredible number of startups created in recent years. Are the two things connected?

Somehow, it seems so.  Uncertainty, the feeling we are about to see the next big thing on market/technology (but nobody knows what exactly it might be), the load of taxes and financial regulations, may be all good justifications. But still, that strange impression is there.

It looks like some of these large companies behave as senior citizens, that need to safely invest their savings, progressively losing touch with adopting some aggressive strategy. That means, slowing rhythms believing less in growth and more in status quo, and mitigating risks. At the other side, somebody say they just keep cash to be ready to fight with competitors in order to grab on the market the best startups, behaving towards them as football teams do when they bid for some new promising players.

So, from one side, startups became for someone more a more a way to avoid risks, to transfer that load to somebody else and at the same time, sometimes an inappropriate way of outsourcing their R & D and other processes.  From the other side, the risk is overestimating startups value (already extremely difficult to evaluate) and over-allocating financial resources in order to acquire them.

Could this lead to a system cahacterised by too many financial distortions and inequalities?

In other words, large companies should take their risks too, if not directly on business at least in investing much more on global training, cultural development and welfare of young generations and in business infrastructures.  In the end taking some risk is a mission for them too. Entrepreneurship without risks has no reason to exist.

Sharing risks between small and large companies and between generations is extremely important for a real sustainable growth.

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Moreover, risk need definitely to be shared, not entirely delegated.

For instance entrepreneurial risk cannot be all left in the hands of new generations of entrepreneurs, having, by the way, more and more difficulties in getting/paying for the right education and for their student debts.

 

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