For both startups and established companies, partnerships and investments can be mutually beneficial. Corporate partnerships can provide much-needed resources and tools to startups. And successful startup investments can lead to big returns for corporates.
However, the initial stages of crafting a corporate partnership can be a challenge.
“I think some of the pitfalls startups run into [are]…if you find a way to engage with a big corporate, how are you thinking about ensuring that the person you’re working with at the corporate is actually in power…and isn’t just burning calories with you, but is really going to be in a position to do business with you?” says Claudia Reuter, former General Manager at Techstars and CEO of a stealth mode startup. “For a startup, it’s so critical to be able to focus your energy where you’re going to have results.”
In a recent interview, Reuter shed light on how to best coordinate startup and corporate collaborations; the best practices for startups looking to show their worth; and the importance of identifying goals when pursuing partnerships. This interview is part of a research project, “The Changing Landscape of Corporate-Startup Engagement.”
What are some common misconceptions that startups face when it comes to engaging with a big company?
At the end of the day, all of this stuff comes down to people and relationships. … We’ve coached startups on taking the time to understand who you’re talking to, understanding the burning challenges that they’re facing in the large organization, doing the research on what the company is experiencing in the market, what they say their strategy is, and really being thoughtful about what you’re building and [being] supportive of what that organization needs. … Take the time to do the research on who you’re talking to, and what matters to them, and then think about how you can help solve that problem for them…
And sometimes a corporation may be interested in partnering with a company and not using their full solution. … They may just be interested in learning from you, right? There’s all these different reasons that people want to connect, so just doing the research ahead of time.
What lessons do you have for larger companies that are looking to invest in startups and grow those partnerships?
It’s about identifying what you are hoping to do with the startup ecosystem. Is it that you have a market you need… do you have a customer need that you can’t meet quickly enough with your current resources, and you want to identify some startups that you can partner with or acquire or invest in to get to meet your customer needs more quickly? Is it that you just want to identify any potential innovation that could be disruptors to you and stay engaged and stay on top of that? And if you’re a software engineering company, it might be the Facebook style of you just need to be able to go get engineers when you want them. So, I think it comes down to [answering the question] what is the objective of the company?
What are some of the qualities in startups that bigger corporates are looking for?
All these things come down to credibility. So it’s how big is the market you’re going after? Have you actually done your research and identified a pretty big opportunity? Have you demonstrated that you can pull together a team that can make things happen? Can you execute? One of the things I tried to do, and I advise other folks to do, is really being very clear about what you plan to do this quarter, and then being able to clearly say, “This is what I did.” … The proof is in setting clear goals and hitting them.
Do you have any general advice for the initial stages of a corporate partnership?
Thinking in terms of [the] early stage pilot, scoping the work… I always advise that startups should make sure that the corporate has skin in the game. It’s very easy for startups to fall into a trap, where they’re doing a ton of work, and burning a lot of calories on something that they think is going to turn into a huge sale. And it turns out that they’re not even going to get paid for the work they did and it may turn into nothing. So I think making sure that there’s some sort of skin in the game to show that there’s real engagement on both sides.