Five tips for corporations who want to collaborate with a startup
While “innovation” is often considered an overused buzzword in the technology and startup communities, it’s also increasingly something that even corporations are focusing on.
In a rapidly changing technological landscape, being innovative is synonymous with staying competitive. A lack of forward-thinking initiatives is bad for business. For many large corporations, the ideal way to adopt new technologies and support their internal innovation agenda is through partnerships with startups. RBC, for example, recently partnered with the Toronto-based financial software company Wave. This partnership allowed RBC to provide new services, and better compete with other banks by providing new services to the growing population of small business owners.
Startups and large corporations vary in a number of ways, sometimes making collaboration difficult. The tips outlined below can help inform the ways corporations approach startups when interested in partnering.
1. Connecting with startups is easy. Connecting with the right startups is hard.
These days, throw a rock and you’ll hit a startup founder – by latest count, there are more than 1,000 startup companies in the Toronto area alone. Identifying which of those startups can both drive value for your business and benefit from a partnership with your company is a different matter.
To increase your chances of connecting with startups that are high potential targets for partnerships, recruit or work alongside someone who truly knows that ecosystem. You may choose to create an internal role, like an entrepreneur-in-residence, or leverage an external partner, such as an accelerator lead or venture partner.
The upside here is that this person can also act as a go-between, helping founders navigate the processes that stand between them and a partnership with your company.
2. Create an expedited path to partnership
Part of the reason corporate/startup collaboration isn’t as common as it could be is that many corporations haven’t created an accessible path. The paperwork, meetings and approvals that are the standard process for your company could be crippling for a startup of two or three people.
Although most founders understand that decision-making is a long process in large corporations, it’s important to be flexible. Work with the team to set reasonable expectations and timelines from Day One.
3. Make an easy “Yes” part of your process
One way to maintain momentum is to create an initial low-risk relationship that benefits both you and the startup. You could do this by hosting a collision day — a private startup demo day, running an accelerator or piloting a startup’s product within a division of your company or with your customers.
These win-win relationships control risk on both sides, build momentum and allow both you and the startup to evaluate whether a deeper partnership will provide mutual benefit.
4. Say “No” quickly
Be aware and respectful of the time a startup is devoting, and say “no” as soon as you realize the partnership isn’t a fit. They’ll appreciate it and be more likely to work with you down the road.
A startup is taking a big bet when exploring a corporate partnership, especially if it has limited runway (a reality for most startups). When their budget is limited, the time a startup spends on a potential corporate partner is time they can’t spend developing their own product.
5. Your reputation is your calling card
The startup community is constantly growing and evolving, and it remains tight-knit. People talk. If your corporation develops a reputation for piling on the paperwork, taking meetings with startups and then replicating their tech in-house, or stringing startups along with no intention of actual partnership, you’ll very quickly lose out on some of the best partnership opportunities.
Marcus Daniels is a founding partner of Highline BETA. He has 20-plus years of experience as an entrepreneur, and is passionate about combining his startup accelerator and pre-seed investing expertise to help companies transform their industries.