Startup-corporate partnerships: a bit like soufflé. Yes, they’re intimidating and seem to require discipline, patience and attention to detail. But we believe that when done correctly, they’re delicious enough to warrant the effort.
On 17 November, we assembled representatives from both sides of the equation. From the startup world: Markus Lukasson, the CTO of visual search startup nyris. From the corporate world: Philippe Souidi from SAP.iO Foundry Munich, who was accompanied by Axel Menneking from hubraum Berlin. We recorded the discussion, which you can find here, if you want the full thing. Otherwise read on for the lessons we learned during the event.
Read contracts. Re-read them. Read them one more time. OK, now you can sign!
Markus pointed out that one big part of negotiating the partnerships is reading and signing a lot of documents, some of which will be so complex that you’ll need a lawyer to really untangle what they mean. “There was one corporate whose documents we didn’t sign. It was a one-sided technological transfer — the document stated that everything they learned during the partnership would become their intellectual property.” He states that some corporations might have clauses like that which won’t necessarily be immediately obvious so take your time and read contracts really, really carefully to avoid signing away something huge.
Do your research before sending applications
Axel says that he receives applications on a daily basis from founders who are clearly bright but haven’t spent the requisite time performing due diligence. He suggests finding out who the potential customers at the corporate are, what such customers are looking for, what the customers’ key issues which need solving are, what jobs need to be done based on these issues. In a nutshell, “these founders need to decide: ‘can I really be of value here? Am I in that sweet spot of what they are looking for or not?’. We receive a lot of applications where the startups clearly haven’t even spent five minutes researching what we’re looking for. Unsurprisingly, that’s a deal breaker from the very beginning.”
Don’t bite off more than you can chew
Markus observes one key mistake startups make is doing too many programs. “You have to invest time, time from your sales team, time from the founders team, to make the program work. If you think you’ll go into a startup program and present your solution and you’re expecting the sales team to then take the product and go and talk to every customer they have, this will not happen.” He notes you have to invest significant time and effort into each partnership. Instead of enrolling on as many programs as possible, find your “sweet spot” – ie. the right program for your startup and give it your all.
Before recruiting startups, ensure the right people are involved in selecting them
Markus said “One of the biggest things that can create friction is when your program is run in an area outside of your main business, so you take startups that you find interesting but no one of your actual business people is involved in the decision to select the startups. As such, you present the startups to them at the end and they say we don’t need them and there is no knowledge transfer or technology transfer.” So before you even select the startups you want to work with, there should be agreement from the sales team and from the customers they talk to.
Give startups a point of contact
Markus notes that it’s useful to have someone within the corporation who you can always talk to and who can solve any questions about how to navigate this corporate world. “This is something SAP.io managed well, you have mentors from sales, from pre-sales from marketing, who are your startup mentors and when you run into issues, you can contact them and ask who do i need to speak to to solve a, b, c, how do I approach customer x. You have a mentor from the team who can guide you through this corporate jungle. “
Resolve possible onboarding issues
Markus notes that corporates can be wholly unprepared for startups in many ways. He states that sometimes legal teams are so unprepared they send over a 50-page contract full of liabilities that mean a startup founder is unable to sign it. Axel notes that years ago hubraum had the corporate-style guarantees and penalties in their contracts. “Of course a managing director cannot sign this! Not when a corporate is asking for hundreds of thousands if something goes wrong, because in the end he’s risking his company.” Instead, look over the contracts with the startups’ priorities in mind and make sure there’s no liabilities in there.
As in the real world, relationships work best if both sides want it to work. Axel notes that “You can have the best tech skills and the best product in the world but if the attitude – the mutual will to succeed – is not there then the end result will be disappointing.”
Assess how much energy both sides are putting into the mix. On the business side, is the corporate mentoring or working with the team to bring their product to a market-ready state? On the startup side – are you phoning multiple times and not getting a response, sending emails and getting nothing back? If the balance feels off, this could suggest you’re on the wrong path. The key to a partnership is implied by the word — both sides need to be pursuing it, not just one.
Want more? There will be another hubraum On Air event on Dec 10, so note it in your calendars. If you can’t wait til then and want to read more on the topic, check out our earlier guide for startups and corporates for making it work in a partnership together.