Bridge to Innovation
When a start-up tries to pitch a product or service to a big potential client, it runs the risk of receiving the Minnesota Nice treatment. (Even if that big company isn’t based in Minnesota.) The people across the table nod and smile. But in reality, it’s just that they don’t want to say no. So the start-up spends time and money coming back until it gets a clear answer.
Meanwhile, even if the newbie has something valuable to offer, the company listening may have justifiable concerns about working with an unproven entity. Will the start-up be a dependable partner? Can it deliver the product or service it says it can?
In the digital marketing world, a one-year-old consulting shop in Minneapolis called Ovative Group is playing matchmaker between emerging technology companies and larger, more established firms. Ovative vets the start-ups, which gives them credibility with big companies. Those companies, in turn, get access to innovative technologies.
“These small companies, they can often get meetings, but they really don’t know if they’re talking to the right person, and they don’t know if they’re solving the right problem,” says Kim Garretson, one of Ovative’s three partners. “All they can do is just talk about their cool features.”
Ovative’s focus on digital marketing is a result of its founders’ experience and expertise. Garretson’s background includes six years at Best Buy, two and a half of those as one of the company’s liaisons to the venture capital industry. Partner Sev Maynard is also a Best Buy veteran, a former director for digital media and mobile apps who co-led the electronics retailer’s acquisition of Napster. And Managing Partner Dale Nitschke previously spent 24 years at Target, including eight as president of Target.com.
Ovative has consulting relationships with six large companies, clients which it won’t disclose other than to say they are major national brands or retailers; only one is based in Minnesota. Ovative works with these companies to come up with strategies for e-commerce, collecting and leveraging consumer data, and one-to-one digital marketing. Ovative also recommends technologies—usually (though not solely) from its portfolio of start-up clients—that might help clients carry out those strategies.
To be represented by Ovative, a start-up has to have some funding and have a product tested and ready. Ovative’s start-ups typically offer technology designed to help retailers and brands transition from traditional to digital marketing.
Garretson meets with two or three early-stage companies per week. Ovative goes on to work with about one in 10 of these. Most come to Ovative’s partners through their connections in the venture capital industry. They’re also able to feed those sources information about the types of technology their larger clients are looking for.
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Ovative currently has 15 start-ups in its portfolio. They include two Twin Cities companies: Alvenda, a producer of e-commerce software for social media sites; and Code 42 Software, which is developing computer back-up systems for home and businesses. Others include GPShopper, a New York–based developer whose technology powers some of Best Buy’s mobile loyalty services. Start-ups pay a monthly retainer fee, plus commissions based on matches. The fee is paid in cash or equity.
Ovative’s partners say that they’re aware of the potential conflicts from being paid by both a start-up and a big-company client. But they also say that they’re transparent, and aware that their future access to large clients depends on the quality of their endorsements.
The company declined to share its numbers for its first 11 months, but Garretson says Ovative Group is profitable and its team has already grown to 12 members.