Acquiring Obsession

What defines success to a small startup? Is it creating a unique and life-altering product? Or is it creating something that is just similar enough to an established corporate product so that the offers to buy come soaring in? These days, it seems that the latter may be the benchmark more often than not.

Of course, this does not apply to ALL startups; there are absolutely those out there producing new and unique creations that will change the world. When we start to look at recent trends, however, we see more and more that acquisitions are defining the space. Facebook bought WhatsApp, Instagram, Oculus, etc. Amazon bought Zappos, Audible, ThredUp, etc. This is great news for those executives who sold with a cash windfall, but according to two researchers at Kellogg, bad news for innovation.

Kellogg’s own Steven Callender and Niko Matouschek have written a new article detailing their research on startup acquisitions relating to innovation in the industry. Their research demonstrates that not only are these cash outs stifling innovation, but it’s also sparking new discussions in antitrust debates. Where this discussion takes the world of start ups is anyone’s guess, but this article is a VERY fascinating place to start. Take a few minutes to read the research and see where you land on the issue.

Investing in Equity

Kesha Cash is a trailblazer. Last fall, she and her VC firm Impact America Fund (IAF) successfully raised $55 million aimed at early-stage startups that benefit communities of color. The amount was reportedly the largest ever raised by a solo Black female general partner. In a field where people - especially women - of color are woefully underrepresented, this is a major milestone. Ms. Cash and her team, however, are less interested in milestone recognition and more interested in the moral imperative of closing the wealth gap and challenging the structural inequities that are pervasive in the business community.

Recently Stefanie Thomas, a founding member of the IAF team, spoke with Wharton’s Katherine Klein for her Dollars and Change podcast. Part of the Wharton Social Impact Initiative, the podcast highlights those at the forefront of corporate social responsibility, and is a great resource for those in leadership who would like to expand their impact on progressing corporate culture.

Thomas and Klein discuss IAF’s mission, their stories, and how social responsibility is not mutually exclusive from competitiveness and profitability. Check out the podcast and associated article, and learn a thing or two about how this “small but mighty” firm is creating opportunities for new start-ups that are making a meaningful difference.