Case Study

Open Innovation

The Situation

Sto is a $1b mid-cap construction player looking
to tap into growth markets in next-generation building materials..

As with many mid-cap and small-cap companies, Sto dedicates the majority of its internal resources towards delivering for its fast-growing customer base. Advanced R&D is always important for long-term success, but it can be challenging to redirect investment from ongoing operations. Sto sought an order-of-magnitude improvement on state-of-the-art building materials, and the new venture community delivered.


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Entrepreneurs

Successful entrepreneurs have creative ideas and valuable technology, but may not have builtcommercial traction

ProblemSpace

ProblemSpace is an open innovation platform where entrepreneurs can learn the challenges of potential customers and secure their first commercial commitments

Legacy-sector Companies

Legacy-sector companies have moonshot ideas and intractable problems, but have trouble working with startups

ProblemSpace Process

  • Corporate defines the problem and metrics for success
  • Ventures submit proposals to ProblemSpace in confidence
  • ProblemSpace selects candidates to interview (under NDA)
  • ProblemSpace evaluates proposals an earlier-stage concept and makes recommendation
  • Corporate selection committee finalists (under NDA) and selects winner

ProblemSpace Prizes Include

Contingent purchase order which can be used for funding

Corporate investment in the venture

Fellowship to pursue an earlier stage concept

ProblemSpace Approach

Over 400 startups applied to address Sto’s Building Materials Challenge powered by ProblemSpace.ProblemSpace (an ADL Ventures company) worked with Sto to design requirements for an
open innovation challenge. Four challenges were issued in a targeted call to the relevant entrepreneurial ecosystem.
The ProblemSpace team evaluated all 400 proposals. With ongoing engagement and
consultation with Sto, ProblemSpace managed
the downselection process to identify the ventures that most effectively met Sto’s criteria.

Results

Following the final presentations and review with Sto’s Board of
Directors, Liatris Inc. – a building materials startup co-founded by
Frank Yang – was selected as a winner of the Open Innovation
Challenge, along with two other winners. The forthcoming
investment from Sto will allow Liatris to add experienced technical personnel and pay for initial product development while leveraging Sto’s market knowledge, technical resources, and market access.

Frank Yang of Liatris describes the process as a win: “the
ProblemSpace process has resulted in a direct market interface for us and has enabled more meaningful conversations with co-investors.”

Tyson Kindstrom, VP of Marketing at Sto, was also pleased with the outcome. “The initial round of this challenge yielded great response well beyond our expectations,” said Kindstrom. “The framework ADL provided to create a wide prospect funnel then quickly navigate toward final selections was essential in streamlining the process for Sto’s management. All three projects can benefit our core business as well as open up new growth areas. Without ProblemSpace we would have been unsure of the differentiation and fit, and hard-pressed to execute.”