All By Myself?
In the world of business, it’s all about developing key relationships. Put simply, as Anis Uzzaman, General Partner & CEO at Pegasus Tech Ventures, advises, don’t go it alone. Proceed with speed yet be cautious. Working together, and pooling resources and reducing the risk, might work better for all involved.
“Startups are in a unique position because their businesses were created based on innovative ideas. They are unencumbered by a bureaucratic corporate environment and are focused on offering their unique product or service to the customers who value it most,” says Uzzaman in the Forbes column, “Why Startup-Corporate Partnerships Can Result In Mutual Success.” However, entrepreneurs can still partner with corporations that can invest and offer them the expertise and connections that they need to break into new markets.
Meanwhile, corporations often struggle to be innovative as they seek out new ideas and technology. To invest in and meet the needs of the startup for resources and personnel, “Corporate partners can offer their expertise and let the startups know what works. They can partner from a technology standpoint, advise startups about hiring and give access to their customer base,” says Uzzaman. Both ultimately can strengthen each other’s skill sets and learn from each other—and reap the rewards from the mutual investment when the innovation pays off.
Adventures in Venturing
The movement for startups and corporate venturing is becoming more of a trend in organizations, according to Chris Varley, Principal of Goodyear Ventures, The Goodyear Tire & Rubber Company, in a conversation on “Innovation Ventures” with All Things Innovation’s Seth Adler. “Big companies develop bureaucracy because they need it. What happens though is a lot of rigidity creeps in, and that can kill innovation. So, smart companies start looking at how we can keep the bureaucracy that we need to function as a large organization – but find better, faster, cheaper ways to get new ideas in-house and in the market,” says Varley.
In “Perspectives On Corporate Venturing,” we examined some of the advantages that startups and corporate partnerships can benefit from. During a Start-up Partnership Roundtable, the community looked back at past partnerships and lessons learned from failures and successes. Varley and Scot Wingo, CEO, Spiffy, sparked the conversation focused on blending faster/cheaper and bigger/better within a structure that works for each entity. The overall goal: To ensure that each partnership is viewed as a unique collaboration while infusing each combined initiative with overall established wisdom.
Finding the Right Fit
At their best, startup/corporation collaborations merge the distinct advantages of both worlds: the resources and reach of established corporations with the nimbleness, innovation and speed of startups. But what about understanding how these startup partnerships work in practice?
Bundl, a venture partner strategy specialist, in its blog, “11 Key Steps for Successful Corporate-Startup Collaboration,” looked at key steps to help spot, attract and engage with startups that align with your company’s long-term growth goals and vision:
- Step 1. Define your value spaces: Before embarking on a corporate-startup collaboration, it’s essential to identify and define the value spaces that your collaborations aim to address. This will set the stage for a more focused and effective collaboration.
- Step 2. Define your return on investment (ROI) goals: Understanding the specific ROI you aim to achieve will simplify the process of setting concrete goals and targets later. Moreover, it will enable you to more effectively identify suitable startups for collaboration – those with the potential to help you attain your desired ROI.
- Step 3. Define what you expect from startup partners: Startups can bring a variety of benefits to the table and knowing the type of benefits to look for will boost the chances of a successful collaboration.
- Step 4. Define the range of the engagement: To optimize the effectiveness of your corporate-startup collaboration, it’s essential to determine the scope of the engagement. This involves deciding how close or far the collaboration should extend from your current markets and offerings. In general, collaborations can be categorized into three types of innovation: core, adjacent, and radical.
- Step 5. Choose your venture vehicle(s): Now that you have a better understanding of your objectives, expectations, and the scope of your corporate-startup collaboration, you’re ready to select the venture vehicle that best aligns with your vision and goals. Start by identifying your corporation’s higher-level objectives.
- Step 6. Determine what will make a collaboration with you unique: To attract the cutting-edge startups you’re seeking, it’s essential to identify the unique assets and capabilities that set you apart from the competition. This will make it easier for you to showcase the value and benefits that startups can gain by collaborating with you.
- Step 7. Establish your key criteria for startup selection: When choosing startups to collaborate with, it’s helpful to have clear criteria that align with your corporation’s objectives and goals.
- Step 8. Allocate your resources wisely: Successful collaborations require more than just funding; they need a thoughtful allocation of resources to thrive.
- Step 9. Get corporate leadership and stakeholders onboard: Engaging corporate leadership and stakeholders from the beginning is essential for the success of any collaboration. Position your collaboration vehicle close to the executive level, making it easier to gain buy-in, streamline processes, and expedite decision-making.
- Step 10. Set a clear timeline with tangible milestones: Develop a comprehensive plan for your collaboration, outlining the duration, process flows, milestones, and deliverables. Break down the project into smaller, manageable tasks and assign deadlines for each milestone.
- Step 11. Plan past the initial collaboration phase: Decide on what happens when the collaboration reaches its initial goal. Consider the various scenarios, like continuing the partnership long-term, integrating the startup into your organization, or spinning it off as a separate business.
The Best of Both Worlds
While this column focuses on the positive side of partnerships, a lot can veer off course as well. But as Bundl notes, “When done right, corporate-startup collaborations can unlock unprecedented growth quickly and with a reduced level of risk.” They can be especially valuable for companies navigating in today’s ultra-competitive landscape, where technologies and business models can change rapidly. Discovering your ideal venture partnership may be only a matter of finding the right fit, the right partners and the winning formula for both to thrive.
Video courtesy of GE Canada