Start-ups certainly have the entrepreneurial drive and passion to create new products and services that disrupt markets, but unfortunately often lack the relevant experience and resources to turn their innovative ideas into a reality. As such, big businesses are most likely to be fundamental to start-ups’ growth plans, with our latest report ‘Collaborate to Innovate’ revealing 70 per cent of start-ups feel corporates are essential to their success.
One of the biggest reasons behind start-ups’ desire to collaborate is that these corporates could be the ultimate customer for their product or service. By working together, they could make immediate sales opportunities that will help to build funds and credibility or obtain insights and feedback to re-tune their approach when selling to big businesses in the future.
However, with a massive 70 per cent of start-ups experiencing complicated or long internal processes working with corporates, do early-stage businesses truly understand the reality of working with larger companies, and are they prepared for the road blocks they may need to overcome?
Beginning to tame the corporate giant
It’s a nerve-wracking process to start building a relationship with a corporate and understandably a large majority (72 per cent) of the start-ups we surveyed had concerns prior to working with big businesses, with the first challenge being how to make initial contact.
Even if a business has an innovation practice, there could be multiple people with varying remits to talk to, and they are likely to be inundated with unsolicited approaches. Finding the right contact and getting that first step in the door can be achieved by finding industry-specific accelerators and dedicated networking events for corporates and start-ups to meet. It’s here that start-ups can build foundations and connections to help inspire each other.
Yet prior to this networking and instigating conversations with the corporates, start-ups should carefully research the company they are interested in pursuing a relationship with. Even if it’s talking to former or current partners, it is important to hear first hand what it is like to work with these giants. Asking questions such as ‘Has the corporate worked with a start-up before? How did it go? Were they successful?’ will help set realistic expectations.
Ensure your intentions are aligned
Although there’s no doubt that corporates are becoming increasingly focused on the need to innovate, it’s still crucial for start-ups to ensure they are completely confident in how the relationship will work for them too. It’s therefore essential both companies share common company values and that their business objectives are complementary. Anything less could be detrimental to a successful partnership.
Stressing the importance of this argument, Florian Piroth, EMEA start-ups programme manager at Intel says, ‘It’s hard for start-ups to get used to corporates, specifically with their agendas and ways of working… any cooperation with a start-up has to make sense from the beginning with a clear use case and focus.’
Tom Kneen, head of business development for Cisco’s British Innovation Gateway also agrees, adding, ‘We have no problem finding start-ups, but the challenge is finding the relevant ones that will support our business objectives and get the balance right.’
Obviously, with every relationship there are challenges, be they scaling issues, vocabulary or expectations, but having the right strategic fit with a corporate makes it easier to overcome these obstacles. By aligning intentions and objectives, startups and corporates can learn a lot from each other. The giants can learn to be more agile and lean, while the start-ups can learn more about running a stable and profitable business.
Factor in the slower pace
An experienced start-up will understand the significance of working with larger corporations but will also appreciate the difficulty involved in making these relationships work. Even the more innovative corporates can be slow, hard to read and difficult to approach. This is typically down to the bureaucracy that a large corporate experiences in the long process of decision making and approvals that can ultimately take months. This is demonstrated with almost half (48 per cent) of those who connected with corporates spent over six months trying to close a deal with them.
Understandably, this slow pace and hesitation can be frustrating for the fast-moving entrepreneur. But rather than walking away, start-ups must think about the best ways to tackle this hurdle by factoring in longer timing into their plans to ensure deadlines are not missed and expectations stay aligned.
Startups should also realise that corporates aren’t ignorant of this struggle with pace and expectations, and if mutual desire exists and an established innovation strategy is in place, then collaboration is more likely to end in success.
Look at the bigger picture
Many corporates will be looking to make exclusive relationships and deals with startups as they want an advantage over their competitors. However, such exclusivity would make it difficult for the startups to grow in other regions around the globe, in other verticals or across other channels. And, with growth being so critical for smaller businesses, they’ll need to consider if it would be worth it in the long run.
Start-ups should therefore think about their markets first and assess the different options. Will making exclusive deals with corporates add value to their business? Is there an option to offer corporates exclusivity for a limited period time? Once these questions have been answered, the start-ups will have a better understanding and outlook on the situation.
The future of collaboration
Working with large corporations isn’t going to be an easy ride because they are often slow and hard to reach. However, it’s now more crucial than ever to not only understand the challenges and identify ways of overcoming them, but also to create an environment that supports open dialogue and greater transparency in a space overshadowed by hype.
As Jorge Rivero, Innovation Director at VINCI Energies says, ‘As simple as it may look, it requires lots of courage and generosity to truly collaborate to make a difference to the status quo.’
Andy Shannon is head of Startupbootcamp Global.