Why do big companies buy startups?

For a large company, the best model is to let the entrepreneur take the greatest risk and once he/she sees his/her idea validated, pay the right price for acquiring it.

Why do large companies buy emerging companies when they could do it themselves from scratch?

A large company usually does not want to take more risks than necessary. Not all projects fly and it is difficult to know which one will go up.

When this level of uncertainty exists, the shares value become more volatile. Besides that, it is difficult to ensure that even if you can do it, it will be a success. See the Google social network attempt, Google+. Total failure.

What is the best model for large companies?

For a large company, the best model is to let the entrepreneur take the greatest risk and once he/she sees his/her idea validated, pay the right price for acquiring it. Many media companies do so when new niche publications emerge. For example, AOL when buying TechCrunch.

In addition, the bureaucracy that exists in a large company makes it weak in competing with smaller companies, even though they have much more capital.

What small companies do

Usually, someone sees small companies being flexible according to what users want, and they are not afraid to change models if they see it is convenient. For a corporation all that would require a lot of boards, procedures, analysis and see if it does not affect another area of the company.

That is why you have seen independent companies like Snapchat grow quickly. In fact, when a large company acquires another, it seeks to try not to impose its rules on it, and many times when it does, the company they acquired fails. So it happened with MySpace. They saw the success they had and tried to keep it when others were constantly flexible.

A deep look

If you study the big companies of today that have several brands, like Procter & Gamble, and you see the history of those brands, you will discover that the great majority were independent projects that the group acquired. In these cases, the product remains a success because there are very few changes in the market.

In any case, we could even say that a corporate development that works is more than a lucky stroke. There are not many large companies that can claim to have successfully launched their own brands.

How to become a founder?

A well-founded company should give answers to the following aspects, among others, the idea, the equipment, the market study, the business plan, the capital, and the legal framework. The most important thing is to carry own your idea, put into practice, and then make it feasible on internet. You never know when a big company can be interested in what you offer to the world, and offer you good profits for that.