Our world really needs large corporates with the right motives.
Corporate partnerships are one of the best ways for early-stage founders to build their business. Doing business with a corporate can mean stable revenue, investment, access to customers, distribution, product feedback, the list goes on. Equal value is created for the corporate (more on this in a minute).
And the best way to launch a successful partnership is by coming in with the right motives.
Why? Well, there are more ways to get the relationship wrong than right. Each side of the table is wholly different from the other. As two examples of this, startups embrace risk while seeking revenue. Corporates minimize risk to protect their revenue. Startups have to ensure they’re not burning too much cash. Corporates have to ensure their extra cash isn’t sitting idle.
Why Corporates Work With Startups
If you have “innovation,” “strategy,” or “development” in your title, this should sound familiar. Corporates typically engage with startups to get:
- Faster product development
- Early insight into emerging technologies
- New culture and ways of working
- Access to top talent
- Financial returns
This list comes directly from a group of European corporates that are working with startups, surveyed by McKinsey (highly recommend reading this thoughtful piece!). It’s a microcosm of the global startup ecosystem, and consistent with GAN Partners.
Where the Friction Comes From
A friend recently shared the idea that “Frustration = Expectations – Reality.” We get upset when the world doesn’t look like we expect it to. When it comes to corporate-startup engagement, there’s a pretty high level of frustration — only 27% of startups are satisfied with their partners.
So where’s the disconnect? If there are so many good reasons to work together, and we already know entrepreneurs and the enterprise are very different, why all this friction?
A lack of commitment, simply put.
Just like any personal relationship, corporate-startup success is born from an authentic, two-way relationship where both sides have the best intentions and fight to create the outcomes their other half is looking for. Commitment to your counterpart is key because when the engagement gets tough and your cultures clash, it’s the difference between calling it quits, or pushing through.
How much does commitment matter, exactly?
When C-level attention was committed on both sides, startup satisfaction levels shoot up to 86%. That’s a whole 59% more. It really is the best way to close the “Expectations — Reality” gap.
Another Step Towards the Perfect Partnership
Another friend, Tina, who leads Swisscom’s Innovation Outposts, shared that they begin every startup engagement with an LOI (Letter of Intent). Before they start any work, they write out two pages that describe exactly where they hope to take every startup relationship for the long-term.
Before you engage another startup, try this. Ask yourself, “Why this startup?” What will they bring you that you don’t already have, or can’t find elsewhere? Define what it is you want out of the partnership — and see if your team, executives, and sponsors agree. Is everyone on the same page?
And get specific. I mean really, really specific. Turn a distant mirage of the future into a crystal-clear picture. What will life look like for you and your customers in one year if you’re successful?
The mindset of “I’ll just kick the tires,” “Everyone else is meeting with them,” or, “I’ll get this started and then hand them off to…” (intentional or not) are surefire ways to kill a relationship (and waste your own time, frankly) so go back to the start. “Why this startup?”
To sum it up, commitment creates successful corporate-startup relationships, and commitment is motivated by a clear picture of what the world can become through your next partnership.
More on building successful corporate-startup partnerships can be found in GAN’s field guide for doing business with startups the right way: