Business network concept. Business meeting. Marketing.
Industry 4.0 continues to drive tremendous value as we are seeing large industrial enterprises adopt and deploy technologies to position themselves as strong competitors within their respective industry sectors. The convergence of growth across the key elements associated with automation includes the availability of faster networks (i.e., 5G), more computing power with quantum capabilities, edge computing options, advanced cybersecurity software, and incentives for reducing environmental impact and carbon footprints. With the emergence of these industrial innovations, there is more support for AI and machine learning, low-latency productivity, quality applications, as well as protecting what industries connect.
Industrial enterprises are more ready than ever to change and compete to secure their future.
Traditionally, the industrial sector has been conservative, and industrial giants have generated pleasing steady returns for investors in public and private markets. However, while innovation is happening within these large global enterprises, the corporate venture arms of the world’s most successful industrial companies are more actively pursuing start-ups and small to medium-size businesses. The new generation of inventors is increasingly serving as “live laboratories” as they address old problems in new ways.
In some cases, fearless and agile start-ups constitute a serious threat for some massive industrials. In other cases, they bring new life into old product offerings. For example, embedding sensors and actuators into specialized equipment can enable manufacturers to offer new ongoing services at the time of equipment purchase or lease-back, make remote field service possible, reduce the cost for “truck rolls” if equipment breaks down, and speed up mean time to repair.
The potential to gain competitive advantages while driving corporate value in the context of Industry 4.0, has landed corporate venture professionals in a dynamic and exciting time. Corporate Venture Capitalists (CVCs) have the unique ability to not only fund industrial innovation but also embed technologies into their products and service offerings while reducing risks on both sides of the spectrum. With the right investments or acquisitions, CVCs can transform a small start-up into new corporate development and technology DNA. Depending on the scenario, it could generate almost immediate returns.
Alternatively, small companies – especially in the industrial innovation field, are too often impaired by the challenges associated with financing.
Pairing larger firms that have an aggressive investment position and are looking to achieve capital gains, with agile start-ups that have the most disruptive technologies, and are not bogged down by internal forces, brings advantages to every stage of new projects.
The largest and most successful industrials have long-standing customers, highly developed distribution systems, and important business and tech ecosystem networks. They also have the operational and administrative depth to accelerate, launch, and grow the ideas and platforms created by upstarts.
Compared to financing by venture capitalists, financing from “strategics” can make all the difference in the lifespan of smaller start-up companies. Here are a few reasons why.
For starters, advancements in technology are powering up smarter supply chains, more efficient manufacturing environments, and improved products and services for end-customers. They are not only transforming what industrial giants produce and how they produce it – but also future business models.
Automation in the automotive industry has changed everything – from the design and prototyping of new vehicles to testing, manufacturing, customization, electric power, battery storage, autonomous or assisted driving, and connected services.
Furthermore, innovations in fundamental automotive manufacturing technologies have led to lower production costs, higher performance sensing and data processing, improved worker safety, and accelerated time to market as the connectivity capabilities within an Industry 4.0 framework bring together the entire enterprise, along with supply chain and logistic ecosystems.
Lastly, innovation on the production lines in automotive plants brings real-time visibility and control to manufacturers, providing a massive amount of data that can be converted into business intelligence and lead to a level of continuous improvement that is unlike what the industry has ever seen before.
Why should an automotive CVC invest in supporting technologies like IoT and Industrial IoT, and buy these technologies outright, even when they are not directly or traditionally related? The answer is simple. Converging software, compute and connectivity allows manufacturers and marketers to embrace new revenue streams from software, analytics, and services that are designed to deliver value to end-customers over a lifetime, compared to “price X units” economics.
These trends and more are making a huge difference in how industrial giants execute strategic roadmaps and acquisitions. The “smart money” CVCs bring to the table comes with opportunities to transform not only their business but the entire industry’s future.
The Very Definition Of Industrial Technology Is Changing
Optimisation of business and industrial process workflow and automation. Development of sofware for … [+] automatization managment.
Industrial technology companies used to be thought of as more mechanical than strategic.
Today, the leading industrial technology innovators are increasingly defined by the benefits their solutions enable including actionable intelligence, business insights, more precise automation, more connected hardware, and software platforms that generate data that can directly improve top and bottom lines.