IBM – or the International Business Machines Corporation to give it its full but lesser-known name – is a globally recognised brand. More than 100 years after its inception, the technology and consulting firm still remains highly relevant and at the cutting edge of innovation; quite a feat in a rapidly evolving market. It has been able to maintain this position because the company recognises that the key to remaining relevant is change.
One recent change has been to the geographic breadth of IBM's search for new talent and start-ups. The company has started extending its focus beyond the US's tech hubs in Silicon Valley and Armonk, New York – where IBM itself is headquartered – to emerging markets.
“In emerging markets it is not about catching up [with developed countries], but leapfrogging and finding their own way of innovating,” says Claudia Fan Munce, managing director of IBM Venture Capital Group and vice-president of IBM’s corporate strategy. “Entrepreneurship is becoming global. Ten years ago we could not say that."
According to Ms Munce, the new high-tech hotspots are in places such as Israel, Vietnam, Malaysia, Chile, and central and eastern Europe. With an influx of venture capital in more recent years, Africa is also starting to look promising, with countries including Nigeria, Kenya and South Africa all showing the potential to be the next emerging tech hotspot. Ms Munce is in no doubt, however, that the most exciting destination for interesting start-ups at the moment is Brazil, especially the country's two largest cities: São Paolo and Rio de Janeiro.
“Historically, Brazil has not been known as a hub of entrepreneurial innovation," says Ms Munce. "With the changes in the country’s economy, including [the development of] infrastructure, there is a new generation of entrepreneurs interested in innovation."
Giving high-tech high vis
IBM's Venture Capital Group is monitoring up-and-coming tech clusters in more than 30 countries. To cherry-pick the best ideas it organises SmartCamp, a two-day competition held in various locations around the world where start-ups compete for IBM's attention. Uncharacteristically, it is not money that the winner receives but IBM's expertise and connections in venture capital and technology.
“We are not Morgan Stanley. We specialise in technology and we are not a financial investor. Companies that come to us do not need capital from us but connections and visibility and we partner with them to give them that,” says Ms Munce. Since the SmartCamp programme was launched in 2006, IBM has worked with more than 1500 start-ups and participants have generated more than $65m in external funding.
The list of locations where SmartCamp events were held in 2012 highlights IBM’s focus on emerging markets. As well as the US and western Europe, events were organised in São Paulo, Mexico City, Tel Aviv and Cape Town. IBM's presence in such places makes it something of a trailblazer in markets that are still more frequently associated with outsourcing than innovation.
Benefiting from its pioneering approach, IBM itself snaps up the most promising companies. “We are also one of the top acquirers and to date we have bought more than 60 of the start-ups that we used to mentor,” says Ms Munce. She says that IBM’s innovative “money-free” approach brings tangible financial results. “[IBM Venture Capital Group] obviously has an amazing revenue stream. We are not a charity and our activities bring profits,” she says.