In early 2021, High Alpha Innovation partnered with Koch Industries‘ innovation team to collaboratively build a startup in the supply chain space. This project ultimately produced a new external company, solved costly internal business challenges, and provided significant return to unlock future innovation.
In this case study, I’ll explain the driving forces behind Koch and High Alpha Innovation’s decision to build together, as well as the processes and strategies we used to make it happen. And because this example highlights the value of the venture studio model so tangibly, I’ll share why we believe that building external ventures is a worthwhile – and repeatable – endeavor for innovation leaders at big companies tasked with solving complicated problems.
As a multinational conglomerate, Koch Industries is a world-leading manufacturer of material parts and components – and the company has touchpoints along thousands of different supply chains on any given day. In early 2020, COVID-related supply chain disruptions affected nearly every industry. At a company like Koch, understanding whether parts were going to arrive on time (and if not, what alternatives might exist) was crucial to operational success. Product category leaders at Koch sought to work faster and have better visibility in dealing with these unforeseen challenges. Koch’s innovation accelerator, Advance Concepts, engaged our team at High Alpha Innovation to identify supply chain startup opportunities; by leveraging our combined perspectives, we aspired not only to solve immediate challenges, but also fill a gap in the market relevant beyond Koch.
After spending several weeks exploring the problem space, talking with supply chain leaders, and validating concepts with potential customers, Advance Concepts and High Alpha Innovation established conviction to enter Sprint Week, our forcing function for launching new startups. Over 3.5 days, a carefully curated team of High Alpha Innovation and Koch employees, external entrepreneurs, and supply chain experts created a go-to-market plan, culminating in a VC-style pitch to executive leaders at Koch. Our goal during Sprint Week is to come to a go or no-go decision; we build the right amount of confidence to understand which businesses are worth launching in the market and which are not.
In this particular Sprint Week, we pitched the launch of amplio, a cloud-based platform that – with the help of an interconnected data network – helps supply chain leaders understand and diagnose disruptions before they happen, enabling them to respond quickly and effectively. After reviewing the team’s intensive go-to-market plan, opportunity space, and price modeling, leaders at Koch were bought into the concept, aligning incentives and making an initial pre-seed launch investment that enabled amplio to become a reality – all in a fraction of the time it would have taken to build the company internally.
Our goal during Sprint Week is to come to a go or no-go decision; we build the right amount of confidence to understand which businesses are worth launching in the market and which are not.
After trademarks and incorporation documents were completed for amplio, the High Alpha Innovation team worked with Koch to access world-class entrepreneurial talent and incentivize them through equity to move quickly in coming aboard. In May 2021, Trey Closson joined amplio as Co-Founder and CEO. A first-time startup founder, Trey came to the project with deep supply chain expertise as leader of the international logistics capability at Georgia-Pacific, a Koch subsidiary company. In addition, the team sourced technical talent from outside Koch: Taha Zinifi, amplio’s Chief Product Officer, who hit the ground running building the company’s product infrastructure. From there, the Acceleration team at High Alpha Innovation focused on bringing amplio to market: it finalized legal documents, set up back-office functions like accounting and HR, built an initial pricing strategy, and worked with the founding team to refine a fundraising pitch for future investment rounds.
In addition to serving as amplio’s pre-seed investor, Koch was also first in line to execute a proof of concept with the founding team and address its critical business challenge head-on. Since then, a Koch subsidiary company manufacturing electronic and fiber-optic systems has converted to a paying customer, alongside several other supply chain leaders in adjacent industries. And in early 2022 – less than 12 months after incorporation – amplio raised a significant seed fundraising round, providing financial return to Koch that will enable future innovation opportunities.
External startups created with corporations access innovation that would be hard to do internally, and much faster, at lower cost, while providing financial return.
To me, amplio represents the tremendous value that can be created and captured in building new ventures. External startups created with corporations access innovation that would be hard to do internally, and much faster, at lower cost, while providing financial return. For corporations that have not launched external ventures before, or for those struggling to do so independently, our team at High Alpha Innovation can work with senior leaders to ensure there is adequate leadership support, a strategic rationale for building, and ready pathways to capital. If you’re interested in learning more, don’t hesitate to reach out and see how we can build together.
Elliott Parker is the CEO of High Alpha Innovation. High Alpha Innovation is an InnoLead strategic partner, and one of the supporters of our initiative exploring Venture Studios & Venture Builders.
