Corporations + startups: a marriage of convenience

The close relationship between corporations and startups is a large and still relatively new chapter in the textbook on business. However, both have discovered that they may need each other and that their cooperation can result in a lot of good things. Corporations can draw inspiration from the agile startup company culture (things that take six months in a corporation are resolved in a week in startups) and mainly by new technologies, an original creative approach, and unusual working methods. On the other hand, cooperation like this exposes startups to expertise, contacts, and business opportunities, and getting connected to the corporate distribution channels enables them to expand abroad or to different market segments.

Before this fruitful cooperation actually starts, there has to be some dating, i.e. meeting, growing fond of one another and clarifying if taking further steps even makes sense at all. It may not be simple to get discovered by corporations; despite the above-mentioned mutual advantages, a startup still plays the role of a poor-yet-hard-working girl trying to get engaged to the rich boy next door.

Here are some practical tips for all the startup brides to help get you noticed by the right, wealthy, corporate groom you chose:

• Find out which events representatives from the corporation attend, such as trade fairs, supplier forums, etc. Example: Honeywell holds an Open Day to present its current challenges and needs, while E.ON organizes its own Pitch Day. Lots of corporations organize their own innovation competitions and hackathons that you should keep an eye out for.

• Be easy to find: Yes, your uncle Google, auntie Wikipedia, brother LinkedIn, all these little helpers should be working hard for you behind the scenes. Don’t underestimate the basics, such as website optimization, keywords and SEO, and make sure to have your elevator pitch ready. 

• Think about who you sell your products to in a corporation, who’s interested in your solution, and go directly to them. Who’s your user in a corporation? Who’s in charge of purchases? Who does your solution affect? Look for senior managers, R&D managers, innovation managers – these are the positions likely to push a good idea through.

• Make sure you know exactly what you want. Want to sell something? Interested in a strategic kind of cooperation? Want the corporation to sell your solution? 

• Start on the local level and take small steps up the ladder: It took 12 years for Y Soft to become a global partner of Konica Minolta. 

• Learn corporatespeak: speak the language of the corporation you’d like to contact and find out as much as possible about its internal processes. Y Soft: “We hired a man who had been working for a corporation for 30 years and was able to sell our product to it simply because he knew its language and internal processes.”

• Don’t talk about the product; talk about the technology instead. Don’t forget that your technology may be used in a totally different way and place than you think it would. 

Examples of successful cooperation 
Among these examples is the successful cooperation between VRgineers and E.ON Czech Republic. Thanks to the crystal glasses and VR software by VRgineers, E.ON can now simulate life-threatening situations that would otherwise have to be simulated in reality, which would be both complicated and expensive.

Another one is Toyota Tsusho Corporation. Together with SEWIO Networks they have just finished two projects in Canada and the USA. Its location technology helps the oil industry evacuate people in emergency situations more efficiently and quickly locates the injured thanks to the precise location tracking.

• Find out what the corporation needs. Learn about its technology portfolio and get to know more about the corporation from its existing customers or suppliers. Corporations are companies full of people with various problems. If you adjust your solution to them, you will find more success.

• Timing matters! It’s important to find out what challenges and obstacles the corporation is up against. Follow the markets on a global level, watch for the signals they send, follow the legislation, the PR activities of the corporation, and its annual shareholder reports.

• It’s good to know when the corporation plans its budget and when it spends money, so you can identify the right time to start cooperating. Usually, it’s the beginning of a quarter or year. Thermo Fisher Scientific: “In August, the first version of the budget for next year is finalized, so you need to get in touch with us in the first half of the year.” On the other hand, the fourth quarter is the best for development centres.

• Contact some partners: find a matchmaker, such as JIC or CzechInvest to get help establishing a working relationship with the corporation. They have their know-how to do things efficiently and lots of contacts you don’t, and making connections like this is among the services they regularly offer.

• Network with the companies already supplying the corporation; join forces or at least get inspired.

• Spear hunting as an efficient strategy: choose a corporation and prepare an offer tailored to its needs. Ideally, it should be compatible with the solutions it already uses.

• Be open to compromises and don’t panic if the very first attempt fails. You can always make it the second, third or fourth time…

Links to the most famous open-innovation platforms that pair demands for new solutions with supply, including startups:
www.innocentive.com
www.ninesigma.com
www.yet2.com

Good to know: 

• A corporation isn’t a single company, and nothing there ever depends on a single person. Often, corporations don’t even have a unified structure. The results of negotiation with one department may be totally different to the results with some other department, to say nothing of various branches and countries.

• Some corporations have to reduce the price by a certain percentage, especially once you agree on regular supplies of your product. Bear this in mind as you begin to negotiate price.

• ​And the dating phase with the corporation may get quite lengthy. Often, specific employees are responsible for new solutions, and they need to make sure that the solutions they recommend are both useful and effective. It may take months or even years to verify that, but it doesn’t mean you’ll never actually establish the cooperation. Be patient and think about how to make it easier for the corporation to adopt your solution. Offer a demo version, get your use case and references ready…

If everything clicks and you do establish cooperation, get ready for rough beginnings as both sides of this new relationship get used to the rhythms and expectations of the other. Despite all these challenges, though, a corporation teaming up with a small startup company remains an attractive way for the corporation to innovate and for the startup to begin doing big business. So don’t be afraid to grow or to work with corporations. You may like your sexy startup image (so hot right now!), but remember that you can’t stay a garage band forever.