When a large company works with a startup, magic can happen. It can drastically help corporate companies innovate while giving startups much-needed cash and game-changing references. At the same time, there’s a lot to navigate and understand before ever taking that first step into a Fortune 500 company’s large, beautiful doors and it can be a muddled journey—at times either intimidating or downright confusing, and sometimes both.
Which is why I asked a few leaders on corporate innovation teams at GAN Partners—those specifically tasked with and excited about working with startups—one simple and (purposefully) very broad question:
What advice would you give startups when it comes to preparing to work with a larger company?
Here’s what they said—
Advice Straight from Corporates
Open dialogue leading to an understanding of each other’s priorities and challenges sets the stage for relationships that overcome cultural differences between corporations and startups. And, partnerships built on strong relationships provide a foundation for future growth. So I would suggest this:
- Don’t be afraid to ask questions about the contract and review process steps and timing. You need this information to make business decisions on where to focus your time. If you get vague answers, your contact probably doesn’t know, so be prepared for a lengthy process.
- Minimize surprises by gaining an understanding of the corporation’s technology and enhancement plans. Build a relationship with their technology team because your solution will need to align with their technology strategy.
- Agree on what success looks like. Jointly set and review partnership goals and metrics to monitor the health of the relationship over time.
Do your homework to best understand what focus areas a company is looking to partner together on with startups. Build relationships by asking for feedback on your product, keeping them informed and, once you’re really ready, ask them to do a proof of concept. Here are some additional pointers:
- Be specific in how you can help the company to grow their business or save money.
- Be patient. Partnerships with larger companies take time.
- Measure and report your success stories in real time, any traction, customers, and cost savings, and give your partners the tools to tell your success story to their peers.
Fast and furious? Slow down to strategically navigate partnering with a large organization. As entrepreneurs, you’re accustomed to moving fast. After all, time isn’t just money. In fact, speed can be the real difference between mere survival and outsized success. It’s no surprise then that most startups prefer the “fast and transactional” approach when it comes to working with larger organizations. (Who wouldn’t want to cut through all the bureaucracy to close a partnership deal?) But this doesn’t always work.
My advice is threefold:
- First, invest the time upfront to understand the large organization—their cultural ethos, organizational flows of capital and power, distribution channels, etc. For example, a social enterprise seeking teaming opportunities for public sector funds should not only know how the RFP game is played but come to the table with specific ones in mind to pursue together.
- Second, zoom in on the strategic relationships that will help target the right business unit or team. This is where many startup CEOs, running fast and furious, will waste lots of precious cycles engaging the wrong folks.
- And, third, now that you really understand the potential partner and the right people to engage, be clear and cogent about the value proposition your firm brings—as it relates to the needs of the partner, not what you stated in your generic pitch deck. Remember, the partner is often assessing your firm as a potential downstream acquisition/investment. So as you enter the relationship, be mindful that the partner may also be your strategic exit!
Gordon Foods & Relish Works
I think we, both startups and corporates, are easily distracted by the newest, shiniest innovation and have a tendency to chase our idea before developing a real conviction about the problem. What excites me most in early conversations with a startup is not their enthusiasm for their product/offering but whether they bring a unique and differentiated insight about the problem they are trying to solve or the user that they are solving for. Offering real-life anecdotes of people they’ve spoken with puts skin on the problem and provides meaningful context around the inevitable (and frankly more boring) quantitative statistics or market size information, lending very real credibility to both the founder and their solution.
The best corporate partners are ones who are strategically and philosophically aligned with you. Do your homework to avoid running in an unproductive direction. Build real relationships so you can get the real feedback that is vital for you to focus and grow your business.
Working with large organizations can be difficult, for many reasons, but a lot of times it comes down to an alignment of goals and a lack of clear communication on those goals from day one. It is so important when you have early discussions with “the big fish” that they understand exactly what you are looking for. Sometimes it is as simple as a letter of intent, sometimes it is as complicated as a multi-year commercial partnership. Remember that what success looks like to you might be completely different than what it looks like to them. To be clear, I don’t mean kicking down the door with a list of demands. Rather, when you get to the point where you are talking next steps, be very descriptive in exactly what will help you and your business the most. Likewise, do your best to pinpoint the exact solution you are looking to solve for these big partners. This helps make sure you are very aligned with their exact goals. It also helps make sure you and your business seem less like you are trying to force your tech into a solution it might not be designed for—that’s what consultants are for. And finally, specificity and transparency breed success.