SHARKs and REMORA FISHes - Initiating partnerships between Start-Ups and Corporations
Best practices to initiate a cooperation between a start-up and a giant corporation
While working for more than 20 years in hardware development & maintenance, I had the chance to experience very different companies, both from the corporate world and the start-up environment.
Often I hear the question how an ambitious start-up can land a partnership with a “goliath”.
I have no miracle answer to it, but I am happy to share some best practices and thoughts.
This article is written from start-up perspective but I allow myself to have an ask to the innovation directors at big corporations at the very end of this article. In any case, I am happy to exchange on the topic and encourage to leave some thoughts in the comments.
When looking at both worlds, it is undiscussed, that start-ups are nimble and fast, creative in their way to find solutions, not bound to many processes and with fast decision making. The talent engaged in start-ups is ambitious and smart, very reactive and resourceful while strongly focused on the one business idea or product they started to develop. They live innovation in their daily life.
The big corporations on the other hand have years of experience, a broad portfolio of products, workforce, budget and a huge customer base. But when it comes to innovation, they are bound to processes, rules and larger organizational decision structures which are time consuming and sometimes paralyzing..
Both want what the other party has (partially) in its DNA - budget & market access would benefit the start-up and fast time-to-market with access to great talent would boost the corporate innovation.
So how can a start-up find its way to a successful partnership with a corporation?
Often the narrative of “David and Goliath” is used for partnerships between start-ups and corporations - see my reference to “Goliath” above - it comes natural.
But is this really the image to foster? David and Goliath were about to kill each other. So unless you want to go toe-to-toe with a corporation - why use this narrative and set a scenery of “war”?
I personally much more emphasize the narrative of “the shark and the remora fish” - those two very different animals found a perfect way to live with each other with equal benefits on both ends: health for protection or speed.
When heading into the adventure to seek a partnership with a corporation - evaluate your mindset upfront. War or symbiosis?
As mentioned before, the way of working is very different between start-ups and corporations. The “Culture Clash” is one of the biggest pitfalls when it comes to those partnerships.
None of the potential partners will or should change its culture. It is there for a reason. The culture also defines the advantages of both worlds. The very only thing to deal with this difference is: acceptance.
As a start-up representative- accept that a big corporation has processes in place which slow down decision making and budget allocation. Those processes protect the company's success in different markets and across thousands of employees. Accept that there are different people in charge for similar topics, maybe assigned to different industries. Accept that they have a broad range of product portfolio where the area you are active in may not be on their highest priority - again assume this being for a reason as you don’t know their overall strategy.
In other words - deal with it! And if you can’t accept the different culture and resulting challenges - re-think whether you really want or need to get into a partnership with a big corporation. You may be better off with smaller partners before wasting your energy in constant disappointment.
I have often heard and seen that from a start-up side a short cold email was sent or a LinkedIn contact messaged without having any deeper idea of the corporates roles in the distinct case. Unsurprisingly, it was never replied back to them.
It should be obvious but can’t be pointed out enough - when you decided to go after a corporation partnership - prepare yourself:
Understand the supply chain. Who are the players? How are they linked to each other? Who provides which parts to whom? As an example: In aviation, look into the OEM landscape and the Tier 1 / Tier 2 / Tier 3 suppliers. Understand how they support each other and visualize it for your very own product to understand to whom you are beneficial and why.
Understand the value chain and ecosystem: While the hardware supply chain now might be clear to you, look closer to the value chain. Who is the customer? Who pays the bills? Who interacts with the manufacturers aside from the customer? At what level? Again as an example in aviation: beside the hardware supply chain, understand airlines and lessors, how the aviation authorities play a role and who would benefit most from your product? Who would be your customer or your advocate?
Have your IP sorted! Is your idea novel and unique? Is it easy to copy? Can you get protection by a patent or a provisional patent application? Before starting to meet any corporation, have your legal side sorted. Know what you are willing to sign as NDA and have your IP protected. The early engagement of a legal advisor can save your start-up life and success. Corporates are prepared, they have gone through partnerships for decades and they know how to protect their interests - and therewith their company’s success.
Partnership Target Definition
Another common pitfall in partnerships in general is a misaligned strategy between partners. When the due diligence is done, as a start-up you have to define your own targets. What do you want the corporation to be? An investor? A customer? A partner, and if a partner, what kind of - sales partner, manufacturing partner, research partner?
Ideally a partnership covers more than one of those pillars - as it is proven that partnerships having a holistic approach are more successful than those only targeting one pillar.
Get back to your mapping of the supply chain and value chain, and identify those corporations where your product and ask fit best. Define for every single corporation you want to get in touch with, what your targets and values are. Be crystal clear for each single corporation how you enhance their product(s), what is in for them? This will be very different depending on their place in the ecosystem.
Research & Practice
Now, since you have chosen the ideal corporation partner, know your values and targets - a little more preparation is recommended.
Invest some time in researching the corporation's behavior in innovation. Press releases and LinkedIn are solid sources of information. Scan the organizational charts published on the corporate website (or whatever you can find online about their structure) to identify whether they have their own accelerator programs or who is in charge of innovation.
Then prepare your pitch - assume you have one minute to convince them to meet you. Be clear on what problem you solve for them, how you enhance their products or how they can reach their goals better with you. There is great sources of advice for preparing a pitch - check out e.g. Techstars Entrepreneur’s Toolkit - and then practice! Practice your 1 minute elevator pitch - and practice a 3 min presentation. You’ll need both.
Choose a devils advocate, maybe out of your advisor or mentors or a fellow start-up. Practice the pitch with them to finetune it. Once you manage to find the right person in the corporation you have one shot to get their interest. Always remember you are not the only one trying to get into a partnership with them! And the one target of your first meeting is getting to another meeting!
Grow visibility and network
While likely everyone in the industry you want to get engaged in, knows the main corporations active in it - nobody knows you. Attend events online or live, engage in relevant discussions on LinkedIn to grow your followers, connect to corporation accelerators, connect with other start-ups in the field with similar but not competitive interests (and exchange with them) - invest time in getting closer to the corporation representatives and bring value by engaging discussions. Talk about your start-ups success stories or your participation in events - and talk about the solutions, not only the fact that you’ve been there!
And aside from talking - once you manage to get an appointment - listen to your potential partner! Understand what challenges they face. With credits to Bradley Elsbury - listening to your counterpart gets you so much more insights to adapt your speech for the next meeting. Listen!
Is it all worth it?
All the above is time consuming especially when you are not yet a part of the industry you are keen to partner in. To stay fast and nimble, think about using your advisors and mentors network to help you prepare and above all connect to other start-ups in this industry to prepare together. In aviation a program like @Sustainable Aero Lab is worth gold to short-cut the preparation time.
And coming back to the Acceptance piece - partnering with a big corporation will not be done in a few weeks. If that is for a good reason not acceptable - re-think whether you really need to partner with a big corporation. Maybe your first step into the industry is done quicker and faster with a smaller partner. This is all up to your very individual situation and product. Just think about it! Credits to Ivor van Dartel for bringing this to discussion in our Sustainable Aero Lab session back in February 2023.
I am in - and now?
You made it! Congratulations! You signed a partnership agreement of whatever form with a big corporation. That is a great start - now be aware that another common pitfall is missing success measures of a partnership. For a running partnership, I see 3 main factors to success: the team & leadership, the definition of joint metrics and feedback, feedback, feedback.
That's all good topics for the next piece of article. By now, you may dig some deeper online. There are many sources out there for strategic partnership and strategic alliance advice. I personally still get inspired by Alliance Best Practices https://www.alliancebestpractice.co.uk/
A final word to corporation Innovation Directors
As mentioned above, may I have one ask to all the SVP / VP / Directors of Innovation in big corporations?
For both sides it would be utterly beneficial if the company's website would give some transparency on how you deal with start-ups in the field of innovation. Are you open to connect? If not, say so. If yes, in which fields and how? And is there any process (!) to use? A simple contact form connected to your CRM with some minor background intelligence could give you free insights to identify high-potential start-ups and connect them to the relevant internal innovation manager without binding resources. Let the start-ups know if and when they could expect an answer. It would save you a lot of unstructured and mistargeted cold emails and LinkedIn messages and could bring you some great talent in house fast.
As always, I am happy to discuss and receive feedback. Please feel encouraged to reach out!
Fun fact: All images used for this article are created by AI, using DeepAI and Craiyon.