Much has been said about the differences between startups and corporations — and between their modi operandi and cultures. Until not long ago, the only conceivable form of cooperation between a large company and a startup that did not have a commercial product yet was acquisition. However, the awareness about the benefits of ongoing cooperation is on the rise — both amongst startups and corporations. Meanwhile, the perception of the differences between startups and corporations is shifting from that of irreconcilable differences to complementarity.
Based on our observations at the AtomLeap High-Tech Accelerator, startup-corporate collaborations are becoming increasingly popular, especially in the realm of R&D, as more and more companies are resorting to them in order to stay ahead of competition. Naturally, the parties in such partnerships have different objectives in mind when engaging in open innovation efforts.
Startups are seeking out access to resources like equipment, money, specialists, as well as the potential for future contracts and access to pre-existing sales funnels.
Meanwhile, for corporates concerned that innovation will disrupt their market — and erode their share — collaborating with startups gives them access to innovations that they would otherwise ignore and…peace of mind that they are plugged into the most recent developments.
There are many different forms that these collaborations can take, ranging from joint ventures and co-creation models to innovation units within corporates. However, many fail within the first few months or do not even get off the ground. So naturally, with all the time and money that goes into it and the insecurity regarding the success and survival of those alliances.
Things to bear in mind before approaching a partnership with a corporate
Seeing how several of the participants in the AtomLeap High-Tech Accelerator have approached us lately with questions about how to best negotiate a partnership with a corporate partner, we have decided to devote this week’s post to cover a few important strategies and techniques that startups should keep in mind before embarking on such an effort.
Some of the most common questions we hear are:
How do I interact with corporates?
How do I close a deal?
How do I choose the right partner to collaborate with?
How long can I expect the closing of the deal to take?
And the most important question:
What kind of collaboration do I engage in?
While there are no right or wrong answers to these questions — contextual factors play an important role in influencing the development of each and every partnership — below are some insights that AtomLeap has developed over the course of four years supporting startups and corporates forge partnerships.
- Find the right partner. This requires commitment and might take a little while longer than anticipated. However, it is crucial to find a partner that has a compatible agenda and similar expectations from the collaboration.
- Define the relationship you want to have in advance. Do you want to develop a new product, work on developing an existing prototype, or use your know-how to help your corporate partner overcome specific challenges? Define what YOU want to achieve first and then look for a suitable partner that can help you achieve it.
- Agree on the relationship before the start of the collaboration. Make sure you and your partner firm both have the same idea of what you want to achieve before you go into negotiations and especially before you sign an official document.
- Be patient. A viable and suitable collaboration will take some time to establish. Negotiations can take a long time until all parties are happy. Plan ahead and do not get discouraged if it takes longer than anticipated.
- Be sure to engage the R&D department in corporations. This is usually the department that is most interested in outside-in innovation. Hence, it will push other departments in order to ensure that the collaboration moves forward.
- Emphasize the benefits that you bring to the table during negotiations. Aside from their technical know-how, teams of entrepreneurs bring a suite of benefit for their corporate partners. Among them are their agility and resourcefulness — the ability to do more with less. This “trial, error, try again, succeed”-mentality is also exactly what startups should emphasize when looking for a collaboration, as it encapsulates the innovative mindset in small companies — the type of thinking that corporates are looking for in such partnerships.
Much of the abovementioned advice is commonsensical, but, based on our experience, it is precisely such fundamental aspects that startups often fail to consider when approaching collaborations with corporate partners.
Are you a high-tech startup looking to forge partnerships with corporate players and need support figuring out what kind of an arrangement is best for you? The AtomLeap High-Tech Accelerator is here to help. Our six-month acceleration program covers topics as diverse as financing, negotiating with investors, business models, UX, and forging advantageous partnerships. We are currently looking for one candidate to join our program starting in January 2019. Feel free to get in touch with us using the contact form on our website if you are interested.