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Droga5 invests in startup scheme as it looks to tap into different ways of thinking about tech

Sudeep Gohil

Sudeep Gohil

Droga5 has invested funds into startup incubator Startmate as it looks to tap into new creative and technological expertise and “shake the agency out of its comfort zone”.

CEO Sudeep Gohil is also putting his own money into the scheme, which aims to turn “nerds into CEOs” by offering investment and mentoring for a select number of businesses each year.

While Droga has been allowed to invest in a bid to help “sharpen” the communications for the companies Gohil told Mumbrella the agency was also gaining access to a different way of thinking.

He also said unlike some recent campaigns the agency’s use of technology would be used to solve business problems for clients, rather than as hooks for marketing campaigns.

“What we found in working with them was we started to talk about technology ideas and digital in a way we weren’t doing previously,” he said. “Most of the work most agencies do around digital space is communications based. as we started to talk to these guys we realised they talked about digital from an innovation perspective.

“We don’t know what we don’t know. Agencies have a muscle memory that comes from things they have done in the past. Surrounding ourselves with people who don’t know anything about advertising and communication is a good way of getting the agency out of its comfort zone.”

Gohil said the collaboration with the startups had already started to feed into the agency’s thinking, pointing to a rewards app it is currently working on for client Tiger Beer which will span South East Asia.

“The problem was how we get people to redeem points, this is a client that spans 25 countries and all the different currencies they have,” he said. “From conversations with a startup we realised we could use a crypto currency to create a closed loop financial system. It changed the agency in the way we found the solution.”

Asked whether agencies had started using technology as a hook for marketing campaigns rather than real-world business solutions for clients Gohil admitted that was an emerging trend.

“Take M&C [Saatchi] for example,” he said. “They’re doing a lot of really innovative stuff in the tech space. But if I was being critical of it I would say it’s really campaign ideas with tech at the core, albeit good and successful campaigns.

“What we really want to try and do is focus our technology on the entrepreneurial and business solutions side of things, to take business learnings and feed them into campaign work we’re doing rather than the other way around.

“It’s better if we can solve a business problem with a  genuine technology idea.”

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He said having access to the startups in the program would give the agency insights into how they can help clients solve their issues or future proof their businesses from emerging threats.

flirteyGohil cited the example of drone delivery service Flirtey as one which could have a major impact on courier companies, adding: “That was being funded by Startmate two years ago when people thought it was crazy, and now they’ve done deals in the US. But you could now go to a company like DHL and have a really interesting conversation with them about that.”

He admitted there was some debate about whether Droga5 should be allowed to put capital into the scheme, which is currently funded by entrepreneurs who also act as mentors for the businesses selected.

He added: “They don’t need the money and there was debate as to whether they should have a corporation, albeit with a small ‘c’, in this scheme. But as an agency we can help them build the brands. While they are excellent at technology and business this is the bit they struggle with and don’t understand.”

Gohil would not be drawn on how much the agency was investing, but said it was a “sliding scale”, adding he was also investing separately himself.

He admitted it was tough for agencies to discover and work with startups, who often struggle to see the value they can bring to them.

Under the terms of the deal Droga5 now has a say in which applicant startups will get funding, with the level of investment being lifted to $150,000.

The Startmate mentor network includes some of Australia’s most successful founders including Mike Cannon-Brookes and Scott Farquhar of Atlassian, and Bardia Housman who sold  Business Catalyst to Adobe.

Applications for Startmate 2016 are now open and close on September 30. For more details click here.

Alex Hayes

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