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Big business and governments need to 'step up' and support startups as customers

One venture capitalist explains why Apple is still exciting – but your bank never will be.

Index Ventures' Saul Klein
Index Ventures' Saul Klein
Image: Web Summit

BIG BUSINESSES LIKE banks have the power to be “game-changers” for startups, but they lack the talent at the top to be technology leaders.

Saul Klein from Index Ventures, a Europe- and US-based venture capital firm which has backed some 140 companies in 38 countries, said big, established firms were spending a lot of money on technology – but little of that was flowing to innovative new businesses.

Instead it was being left to the new corporate giants like Apple and Google to be the frontrunners while large companies outside the technology sector trailed behind.

“One of the things I think we’ve seen in Silicon Valley is that big established companies are often early customers for startups and they’re early adopters of technology and startup technology, not late adopters of technology,” he said.

Enough investors, not enough customers

Klein, who was in Dublin for the Web Summit today, said there was arguably already enough venture capital floating around in both the US and Europe, but what would really help startups would be more scope to sell their products.

“If big companies and governments step up and become early adopters of new technologies, quite frankly it will be good for them … and it would really help the startup economy a lot more than more venture capital,” he said.

What there isn’t enough of is big companies stepping up and saying ‘hey I’ll try this, because even if I spent 5% of my IT budget it would be game changing for startups’.”

Sportsfile (Web Summit) Saul Klein at today's Web Summit Source: Web Summit

Klein said that unfortunately there was little sign of innovation from most big companies, which was why a product like Apple Pay could create a “frenzy” unlike anything a bank’s financial services would ever generate.

“When was the last time you felt your bank was doing a better job of delivering you a tech service than Google or Facebook or Amazon or Twitter?,” he said.

I think part of it is cultural. When you think about the (small) number of people sitting around the board table or the exec team who actually have an inside track of what new technology can do … there’s just no talent at the highest levels.”

READ: Richard Bruton wants thousands more startups and he might hand out tax breaks to get them >

READ: Irish startups can ride the wave of a ‘real tech boom’ >

About the author:

Peter Bodkin  / Editor, Fora

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