Jacob Dutton breaks down the financial structure for corporate innovation: three separate money pots for building, running, and launching. Seed funding covers the first two as a minimum commitment, then Series A through D rounds unlock based on venture-capital metrics like customer acquisition and revenue, not profit.
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This is my favorite GIF of the day, I think. I wonder how many of you on a daily basis find that you're fighting for the budget that you need to be able to do your job. Now, I would say that this is without a doubt the number one spanner in the corporate innovation engine works that I see. Now, I would say that there are 3 pots of money that you need to account for when you're building this corporate innovation engine, and we call it kind of building, running, and launching, ultimately. A really important note on this, your budget for building the engine and running your activities all the way up, I would say, to Scale Accelerator should come in the form of seed funding for the innovation engine. So this is the bare minimum commitment from the company, and it's your budget to manage. Yeah, there's no point having the budget to build the engine but none to run it. Otherwise, you're going to get to a place where none of your ideas reach escape velocity. So that's what your budget should look like, and it should fund a number of sprints, a number of missions, a number of accelerators. Then what you should have is a pre-agreed amount of money available, although, you know, you maybe don't have it just yet, but you know that it's available, that you can raise various rounds against. You know, a Series A round to take a validated idea into a scale accelerator, a Series B, C, and D, and so on, to launch beyond an MVP, All of which are approved by your innovation engine board and kind of granted by them. So you should be able to do the number crunching to know what your seed and series funding looks like, and to be really clear on the metrics that are required of you to unlock that series funding and to justify the seed funding that you've got in the corporate innovation engine as well. The only other thing that I would say is that The metrics that you measure yourself against need to be aligned with this small bets, fail fast VC mindset. We're not looking for profit to be a metric in your serious funding decisions because it's way too early, right? We have scorecards to help you do this, but your metrics really, when you're raising serious funding, should be around customer acquisition and revenue, right? Really traction-based metrics, not profit metrics. You're building startups here, not, not running the core. So that's component 9. You've got to agree on a base budget to keep the innovation entity running and an agreed-upon funding amount to identify, evaluate, scale ideas at the right volume throughout the year.
