Californian corporate innovation consultancy Mach49 is bolstering its presence in Europe, after seeing growing demand in the region from large companies wanting to transform and digitise in the wake of the covid pandemic.

“We are experiencing such hypergrowth, we have to build out our team in regions,” said Linda Yates, founder and chief executive. She said large companies in Europe had recently become increasingly keen to invest in startups and to build their own innovative startups in-house.

European corporate venture capital funding has, in fact, reached record levels this year, with deals involving at least one corporate investor reaching more than $10bn so far in 2021. Mach49 isn’t the only one to have noticed the potential of Europe — Sapphire Ventures, the Silicon Valley-headquartered former venture capital arm of SAP, returned to its European roots at the end of last year by opening an office in London.

In the past European corporates had lagged behind the US in their willingness to work with disruptive startups.

“European companies have historically been on the decline. The reason is simple — they’ve lost the ability to innovate at the speed needed to remain competitive.”

“European companies, big and small, have historically been on the decline. The reason is simple — they’ve lost the ability to innovate at the speed needed to remain competitive,” said Nils Beers, the cofounder and former CEO of Techleap, the Dutch government-backed tech incubator, who is joining Mach49 to head a newly set-up Amsterdam office

However, this changed dramatically during the pandemic, Yates told Sifed.

“Covid really threw a spotlight on companies that had not been engaging with digital transformation it was a wake-up call.”

Mach49 had already been working with European companies like Shell and RWE, but is now opening an Amsterdam office and increasing the size of its London operations to capitalise on increased demand.

“We are recreating the core of Mach49 across Europe,” Yates said.

In addition to opening the Amsterdam office, Mach49 is strengthening its London team with the addition of Balint Kelen, who has a background of working in innovation teams inside big corporations, from IBM to Diageo and Klarna. He joins as vice president of business development and client relationships for EMEA.

“Innovation has hit the mainstream. Five years ago companies could get away with experimenting. Now there is an emphasis on getting real results.”

“Innovation has really hit the mainstream,” said Kelen. “Five years ago companies could get away with building a lab or a campus where you experiment a little with tech. But now there is an emphasis on getting real results. Customers are asking how they bring innovation into the main business and turn it into something creating meaningful growth.”

Despite their new eagerness to work with startups, big corporates still face considerable challenges in doing so. One of the biggest is that it can take years to get a return from investing in startups and building new internal startup ventures. Yet big corporations are judged by investors and market analysts on relatively short-term quarterly growth numbers.

“It makes it hard for them to take on big innovation programmes,” acknowledges Yates. “But it can be done. It absolutely can.”