Co-innovation: How tech startups can partner with a big corporate
Alex McCracken, MD at Silicon Valley Bank, explains how technology startups can embrace the opportunity of partnering with a large corporate business.
Relationships between startups and corporates are becoming increasingly important for investment, partnering and business development.
Done right, these partnerships can mean big rewards and benefits for both parties. Startups can reap the benefits of scale, distribution and financial resources that corporates can bring, and such partnerships can add credibility too. Corporates can innovate more quickly and cheaply by partnering with startups.
Corporate Venture Capital (CVC) is now an important element of the funding available to startups. According to Venture Beat there are more than 1,000 CVC operations globally.
Figures from Dealroom show that corporates invested around €6.2bn into European companies in 2017, equivalent to 32% of total European VC funding.
So, what is the best approach to partnering with large corporations? If you’re looking to get your solution adopted, these tips could help you fit your business into a corporate framework.
How to engage
- Prioritise and Focus – Don’t chase every opportunity; decide which companies you want to work with and why. For all the benefits corporate relationships can yield, there’s also the risk of being swallowed up with the work it takes to service a big business. It’s vital to be clear about your objectives from the start. Ask questions to confirm whether they are the right partner for you and explore any deal breakers early.
- Target the right person – Cultivate a relationship with the most suitable person in your target organisation. This will cut down the number of conversations you need to have. Although targeting budget holders immediately can be seen as a shortcut, finding an internal champion user first who is a key influencer of the budget holder can be preferable as the internal champion can decide whether there really is a case for the corporate to adopt your solution and how to best to approach the appropriate budget holder.
- Approach the right way – Since corporates are large and take time to make decisions, start initial conversations around a trial for your solution over a defined period in one business unit as a quick way of getting deployment. By all means mention how your solution could be rolled out more widely, but offering a quick trial to get internal champions will be a more realistic starting point to begin a relationship as it is lower risk for the corporate. Startups need to demonstrate they work within the framework of the internal policies and processes the business has in place. Corporations want to adopt new solutions but they are not capable of changing their internal processes in a short space of time, so startups should present their solutions in a phased way.
- Be clear on objectives, and IP – Good communication is key in any partnership, so understand the objectives, or boundaries, of both parties from the outset. Confirming expectations will help avoid issues later and enhance your outcomes. It is vital to clarify who will own any IP emerging from any joint development work.
- Be realistic about timings – Despite the slower pace which corporates move being well known, the (even slower) reality can still come as a surprise. Adjusting to “corporate speed” can prove challenging. Understanding the cycles, timelines and decision-making processes of your corporate partner can help to ensure realistic timeframes and outcomes.
- Foster trust – Ensure you don’t make unrealistic promises on timings or capabilities. Consistently demonstrating your ability to deliver will hugely help your progress with the business.
- Network – the global contacts that corporates have are a key benefit, and if you are partnering well, corporates will open these contacts up to you over time. If you feel your partner company could introduce you to further contacts, do ask them if they would help introduce you. However, don’t abuse this and don’t use your partner’s name without advance permission, as this will not be well received.
- Consider your image – while informal attire and communication is commonplace in startups, it can be viewed as unprofessional in many large corporations. It falls to you to adapt to any differences, so consider how you wish to be received and tailor your presentation accordingly.