When considering a partnership with a corporate, the pitfalls can seem endless: corporates sometimes feel as big and cumbersome as startups are small and agile, delays feel inevitable and navigating the bureaucracy? Instant migraine.
But business is like anything else: you generally learn the most from those who have different experiences. The first step? Recognising the most frequent sources of disruption in startup-corporate relationships.
Business units are often fenced off by innovation departments or managers refuse to talk to startups. Half the battle is figuring out the maze of the corporate organization you’re collaborating with. Firstly, are you approaching the correct unit? Secondly, once you’ve found the correct unit, are you approaching the correct person? Pitch smart, not hard. As Tanya Suarez of IoT Tribe put it, “Corporations have their own internal structure. So startups never really talk to the corporation as such but always to one of its components and the success of the interaction may very well depend on the choice of the corporate component that is most appropriate for a given startup.”
There’s usually a trade-off between building a standard product and trying to tick off the custom requirements your corporate client is looking for. So what should you do? Stephan Morais from Indico Capital said: “Cooperations between startups and corporates tend to be more stable and fruitful when they are based on shared technical objectives, operations, marketing or distribution channels.” Align on expectations early, and agree on a sufficient amount of time to co-create or cooperate (especially because a corporate often finds itself under pressure to show progress quite early).
It’s often said that the first five clients need to be given the product for free – or, at least, as partially paid trials – to get the sixth client to pay for the product. Similarly, corporates tend to require a lot of success stories before they buy, making it challenging to finance a startup in the beginning.
Why not ask customers who aren’t paying with cash to pay with advocacy instead? Give them your product or service in exchange for their testimonials or for their introducing you to other valuable contacts. This allows the startup to cut costs in terms of marketing. However, this is an approach which should be incorporated into your business plan and shared with investors.
A typical chicken-and-egg problem: corporate departments may not want to work with start-ups and their unproven products if they cannot provide references from previous corporate clients. How can you build trust without references? Come prepared: bring examples or case studies of projects you did in the past that overlap with the client’s needs; don’t just tell your success stories but back them up with hard data (numbers, dates, specific names, results) to stand out from competitors in your field; if you’ve worked with credible authorities in the field, cite them.
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