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Dissecting the Corporate Innovation Studio Model with Elliott Parker, CEO of High Alpha Innovation

November 29, 2023

As studios pop up at an increasing rate, it’s becoming more common for new studios to attack a “corporate innovation” strategy. In other words, studios are interested in partnering with corporations to fund the development of their ventures.

Newsflash — like everything else in the studio world, this is WAY harder to pull off than it seems. The vast majority of new studios are not well positioned to work successfully with corporates. However, some are.

I’ve been intrigued by this dilemma for years now, seeing almost 100% of new corporate-focused studios ultimately pivot away from focusing on corporates, or failing altogether.

I’m extremely excited for today’s Q+A deep-dive with Elliott Parker, CEO of High Alpha Innovation; one of the only top-tier studios in the world to not only successfully pull off the corporate partnership model, but figure out a playbook to scale beyond one studio location. In this deep-dive, we covered a myriad of topics about working with corporates and building successful ventures.

But before we dive in, I encourage you— as always— to watch the full interview (above).

Here’s what Elliott had to say:

Q: Hello sir! Let’s start off simple; What is the difference between High Alpha and High Alpha Innovation?

Elliott Parker: High Alpha was born from a vision to merge venture funding with startup creation. We started in Indianapolis, focusing on B2B SaaS businesses. This synergy between a venture studio and a fund was unique at its inception in 2015. High Alpha Innovation, on the other hand, extends this model to corporates, scaling startup creation systematically. It's about taking what we learned and perfected in High Alpha and making it accessible to larger organizations, helping them navigate and leverage the startup ecosystem for transformative innovation.

Q: How do you find and work with corporates?

Elliott Parker: Our journey with corporates often starts with their outreach, driven by our reputation in startup creation. We typically engage with them on diverse fronts. Some corporates seek our expertise to inject innovation into their operations, while others have more defined ideas or ventures they wish to spin out. We delve into understanding their specific needs, be it solving internal challenges, enhancing customer experiences, or exploring new markets. Our approach is highly tailored – we're not just consultants; we are partners in their innovation journey.

Q: What’s the process for crafting deals with corporates?

Elliott Parker: Aligning incentives is key. Our goal is to launch startups where we hold equity, which aligns our success with the startup's success. We charge a reasonable fee for the initial groundwork – idea generation and validation – but this isn't where our primary interest lies. Post-launch, our investment is in the form of sweat equity, being co-founders who contribute to the long-term success of these ventures. It's a model that ensures our interests are continuously aligned with the startups we help create.

Q: How do you find the right founders for these ventures?

Elliott Parker: Finding the right founder is crucial and challenging. We look for individuals who are not just skilled but are the right fit for the unique dynamics of a corporate-startup partnership. Our founders typically bring rich experience and a track record of entrepreneurial success. They are attracted to our model because it offers a head start – a ready customer base, initial funding, and a robust support system from High Alpha Innovation. This significantly lowers the startup’s initial hurdles.

Q: What challenges did you face in convincing early founders to join?

Elliott Parker: Initially, our biggest challenge was the unproven nature of our model. Founders had to take a leap of faith. They were betting on our ability to provide more than just capital – a comprehensive support system that included market access, operational expertise, and strategic guidance. Over time, as our successes have become more visible, this has become less of a hurdle.

Q: What are the indicators of a potential mismatch in corporate deals?

Elliott Parker: Not all corporates are ready for the kind of innovation journey we facilitate. The key indicators we look for include strong senior leadership support, a clear strategic rationale for innovation, and a well-thought-out investment plan. Without these, the venture often struggles to gain the necessary traction and alignment within the corporate structure.

Q: What happens post-deal closure?

Elliott Parker: Once a deal is closed, the real work begins. We start with what we call a ‘sprint experiment’ – building one or two startups to test the waters. This phase is critical for understanding the dynamics of our partnership and setting the stage for future ventures. Our ultimate aim is to create a self-sustaining studio model with our corporate partners, continuously launching new and successful ventures.

Q: Is there a geographic focus for High Alpha Innovation’s startup launches?

Elliott Parker: While High Alpha had a Midwest focus, High Alpha Innovation adopts a more national approach. We believe in building startups where they have the best chance to thrive, which means being flexible about their geographic location. This approach has allowed us to tap into diverse markets and talent pools.

Q: Do you work with corporates globally?

Elliott Parker: Currently, our focus is on U.S. corporations, mainly due to bandwidth constraints. However, we are actively planning to expand our reach globally. The universal need for innovation across different industries and regions presents a vast opportunity for our model.

Q: How has your perspective on startup studios evolved over the years?

Elliott Parker: My conviction in the studio model has only grown stronger. It’s a challenging model, no doubt, but its potential for impact is immense. However, success in this space isn't straightforward. It requires a deep understanding of both the startup and corporate worlds, a robust network, and, critically, sufficient capital.

Q: How has the changing awareness of studios affected business development?

Elliott Parker: Increased awareness has been a double-edged sword. On one hand, it has made initial conversations easier. On the other, it has led to a proliferation of misconceptions about what a studio can and cannot do. We often find ourselves educating potential partners and correcting misunderstandings about the model.

Q: Can you share insights about your LPs and their profiles?

Elliott Parker: Our LPs, particularly family offices, are crucial partners. They not only provide capital but also bring in their industry expertise and networks. This has been invaluable in both shaping our startups and providing them with strategic market access. For these LPs, working with us opens doors to high-quality, unique startup deals that might otherwise be out of reach.

Q: What's next for High Alpha?

Elliott Parker: Our ambition is to scale the studio model globally and build the world's most valuable venture portfolio. We are on a path to launching more studios, creating a wider array of startups, and thereby driving significant progress and innovation across industries. For those interested in joining this journey or learning more, we invite you to connect with us on our platforms.

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