Top Tips for Successful Corporate Start-up Partnerships
Over the past few years there has been a huge increase in corporates launching start-up incubators, accelerators, partnership programs and corporate venture funds, all with a view to getting more access and exposure to the tech start-up ecosystem.
And as a start-up you are almost certainly hoping to sell to, partner with or be acquired by a big corporate, so these relationships are mutually beneficial.
But they are also notoriously difficult to get right.
Corporate incubators and accelerators have a bad reputation for failing to add value either to the start-ups they work with, or the corporates they serve. All too often they are perceived simply as a PR exercise, or a last-ditch attempt to avoid being left behind by innovative new entrants to the market.
However, this needn’t be the case. Managed properly, corporate start-up partnerships can be incredibly valuable for both.
Below we’ve laid out some tips to keep in mind to help foster successful relationships:
Corporate partnership tips for Start-ups:
1. Find your advocates
Navigating a large corporate can be incredibly difficult. People’s job titles often tell you very little about what they actually do, or whether they have the authority to sign off on a project. So, getting to the right people in the first place can be a challenge.
If you can build advocates internally, they can help you navigate the org charts and make introductions to the most appropriate stakeholders. Beyond making introductions, strong advocates will also champion your start-up during internal discussions and give you honest feedback on what the purchasing cycle looks like.
Many corporates have innovation teams or partnership programs where employees are incentivised to establish relationships with third parties, so it is worth building links with these teams.
2. Be patient
The normal purchasing cycle at large companies can be very slow. Once you’ve eventually found the right stakeholders who like your product, you’ll still be up against other internal priorities to get on the roadmap. There could also be multiple levels of approvals to get the project signed off.
If there is a tight annual planning cycle your only option might be to make sure you’re included in next year’s budget, then sit tight.
Nine or ten months between initial meeting and actually doing a project is not uncommon. “Not yet” doesn’t necessarily mean “no”, so stick with it.
3. Don’t bet the house on it
An investor at Dublin Tech summit earlier this year told me “start-ups die waiting for corporates”. While you will definitely require patience, be realistic about your chances of any individual deal coming good. If possible, try to get honest feedback about timelines, and always prepare for the worst.
A change of priorities, new stakeholders getting involved or delays getting funding approved can kill your chances of getting a deal signed in an instant.
4. Be careful about taking “strategic” investment
Getting investment from a corporate accelerator or venture fund might sound like great news, but you should weigh the offer carefully and consider the downsides.
You would like to imagine that the company that offers you investment could also go on to be your first customer, but all too often that is not the case and it can lead to some awkward conversations with other potential customers.
If your investors don’t like your product enough to use it, it doesn’t send a great signal.
5. Don’t over promise
A certain amount of salesmanship is expected to help get you through the door, but in the long run you are far better off giving an honest portrayal of your product or service. As a fledgling start-up, it is likely that what you are doing is difficult, otherwise someone else would probably already be doing it.
Don’t be afraid to open up about some of the difficulties you’ve had, or challenges you expect to face. If you’re hoping to build a true partnership with a corporate, they should be able to help you through these challenges, rather than be put off by them.
At Alpha Hub we’re far more likely to engage a start-up who is honest about what they can and can’t do from the outset. It’s harder to believe a company that tells you they can solve all your problems.
Start-up partnership advice for Corporates:
1. Think about what you can give, not just what you get
Working with early stage start-ups has to be different from normal supplier relationships. View it as a potential long-term partnership from the outset and be willing to invest some time and energy to help them progress.
Thinking about where the start-up could be in a year or eighteen months’ time, and how you can help them get there will ultimately be valuable for both of you.
This extends to things like negotiating contracts. Haggling over the pennies won’t make much difference to a big corporate but could have a real impact on the start-up.
2. Include the right people from the outset
Try to bring the right stakeholders and decision makers into the conversation as soon as possible. This will help to speed up the process further down the line and will give you a much better idea whether the partnership has any chance of success.
The “right stakeholders” includes people like procurement, vendor management or finance teams who will also have a say. Running start-ups through your normal procurement and due diligence processes will likely throw up some red flags. Giving people visibility of what you are planning early on will help to smooth the path to getting a deal done.
3. Beware the corporate immune system
“Not invented here” syndrome is real. There will always be teams or individuals who are wedded to their ideas and aren’t interested in third parties who are doing things differently.
Buy-in from senior management for your start-up partnership initiatives can help to overcome this somewhat, but ultimately if you have to convince them and they’re not excited by it, you’re probably talking to the wrong people.
Finding start-ups that help address pre-agreed business challenges will likely be far more successful than trying to get traction for random start-up enquiries.
4. Be upfront about the process
As above, a slow decision-making and procurement process can have a seriously detrimental effect on start-ups. Be open with them about what needs to happen to get a deal done, how long it might take and the likelihood of it going ahead. If it is going to take six months, try to tell them that from the outset so they can plan accordingly.
Corporate Start-up partnerships – Parting thoughts
Dealing with the unprecedented rate of change of technology is undoubtedly a challenge for corporates and building relationships with start-ups is one method to help overcome it. Successful partnerships give you an opportunity to explore solutions to difficult business challenges without diverting attention away from your existing product roadmap.
By keeping in mind the tips above, you can hopefully build relationships that are beneficial for all involved.
Do you have other tips for building successful corporate start-up partnerships? We’d love to hear them in the comments.
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