Is giant’s influence a good thing for start-up businesses?

There have been many startup businesses who are receiving support from giant companies, including Alphabet, Apple, Tencent; meanwhile, these giant companies also seem interested in investing in interesting startups, for example, one of Alphabet’s subsidiaries is GV, formerly Google Ventures, which provide early stage funding for technology companies. Is such financial help a good thing for startup businesses as well as the entire market?

On one hand, it is good for the startups who receive financial support from those giants, as all companies are better off with more funding. Secondly, when giants are interested in startups, the success rate is higher since they are more likely to win funding from the giants and hopefully become a giant in the future. This will give more incentives to people with innovative ideas and enthusiasm to start up their enterprise, since the cost is lower. Thirdly, giants do not only supply funding, they can also supply different kinds of resources, including technology as well as supply chain and more access to funding. This can make startups much easier to succeed. On the other hand, such influence can be a disrupt of the ordinary market order. Firstly, these giants will fund those startups which have the potential to beat them in the future. Instead they are more likely to use their enormous resources to copy a similar model and destroy the startups. So those startups which can really threat the market power of the existing giants will not receive the support from the giants and these startups are the really needed ones. Secondly, giants are only interested in investing in the startups which they are interested in. However, the startups which the giants are not interested in can also be innovative and game changing; even because they are not noticed by the giants yet, they are more game changing, but facing unfair competition. Thirdly, once the startups are invested in by the giants, they are no longer independent, they may have to rely on the support of the giants, since they get their accesses to many key resources through the giants. This will only make the giants gain more market power even if the startups succeed.

To conclude, once giants start to influence the startup businesses, it can certainly reduce the cost of start up some specific businesses; however, it will not help to improve the market competition significantly.