As a startup founder or senior exec., one of your goals is probably to partner up with a corporation, to benefit from their expertise or to lure one in as a client. There are different ways to try and achieve that purpose. You can join an incubator, sign up to an accelerator program or work at corporations' office. We’ll give an in-depth review of the three common ways to partner with a corporation.
But first: Why should you partner up with a corporation?
The first years of a startup are about staying afloat. Unfortunately, most startups are Jacks, few are Roses. You need all your attention to become a Rose. Enough Titanic puns. If you’d have to create the right infrastructure to run your business, you’ll lose sight of your main goals. You won’t get to spend as much time as you should on figuring out your product, the way you work internally and your management. This is a recipe for disaster.
2. Access to Funding
Many corporations invest directly in a company. The upside of this is that this is easy for you to manage and make the lines of communications less intricate. Asking for advice or guidance gets easier when the organisation you’re asking it to has a direct interest in your success.
Another way of getting funded by a corporation is through an incubator or an accelerator program. These are often spearheaded by a patchwork of corporations, all on the prowl for the next Uber or Airbnb to invest in. While these can be inspiring, and certainly have their upside, they have their downsides too. But we’ll get to that later.
3. Access to mentorship
Having a mentor who has built a successful business or who has achieved growth is a massive asset. You’ll obviously learn from their successes and more importantly from their mistakes, so you won’t have to make them. If your mentor, i.e. corporation has your best interest at heart, he or she might even hook you up with other business or industry leaders.
A good mentor will challenge you. She or he will question your goals, vision and future roadmap. This though love will definitely make you grow. Don’t just accept any mentor. Choose her or him wisely.
4. Exposure within your industry
Your partnership with a high profile company gives you exposure. It will make your stock rise within your industry. People might stop thinking of your startup as a cute startup and will consider you a force to be reckoned with. This kind of exposure leads to opportunity. You’ll get to meet other corporates and start-ups to partner with. Your startup will garner more attention from investors. And you’ll get to sit back and evaluate the offers that will be pouring in.
5. Access to professional resources
A good corporate partner lets you draw from its well. You should get access to top-notch software and benefit from their vast array of business tools. But the real gold is in the knowledge. It’s the bedrock of corporate success. And you get to tap into that. Not all knowledge is created equal, though. Some topics are very niche and only applicable to you in a certain situation. But other topics like future forecasting, business fundamentals, how to obtain funding, legal structure and quick prototyping are evergreen.
6. Accelerate the Growth of your Startup
All of the above will lead to growth and success. The networking, funding and mentorship opportunities will pay dividends. Especially if you’re attempting to expand into a crowded market. If you still have doubts, consider this: the five-year survival rate for start-ups that partnered up with companies is estimated at around 75 to 87 percent.
We’ve established the ‘Why’. Let’s tackle the ‘How’.
1. Be part of a cohort
According to Shameen Prashantham, professor of international business and strategy at CEIBS, a cohort is “a type of partnership with between corporation and startups where a set of startups participate in a programmatic initiative, like an accelerator, over a pre-specified period, usually a few months.” Collaboration and peer engagement among startups is a key part of the process. There’s often a competitive nature to enter such a cohort. But completing the process is a collaborative affair. Many big corporations have established accelerators. Microsoft established an accelerator program that included four months of access to their technological and business infrastructure. The participants also got mentoring and several networking opportunities. Most startups would benefit from having access to those tools.
However, there are downsides to joining an accelerator program.
First, the equity cost: You’ll have to give up a piece of your company. You’ll get much in return, but only for a short period.
Aside from the equity cost, you also have to consider an opportunity cost. These are the opportunities you'll lose when signing up for an accelerator program. Mostly because of the time you put in in the accelerator program.
Being part of an accelerator program is indeed time-consuming. Some events are useful, while others are a drag. When you’re part of accelerator you are expected to attend most if not all events. There are only some many like conversations veiled pitches and finger food you can take, right?
And lastly, accelerator programs rarely lead to long-lasting client-provider relationships. There’s more of a mentor-mentee dynamic. The company that organizes the accelerator program becomes part-owner, guides you for a while, but after that, you’re on your own.
2. Be part of a funnel
A funnel is another type of partnership program with a corporation. A funnel is less accessible and more competitive than an accelerator program. And it’s less collaborative: there’s no peer engagement at all. If you participate in such funnel, you won’t be in touch with other startups. On top of that, you’ll be constantly evaluated during the process and you’ll run the risk of being screened out.
SAP Startup Focus is an example of this type of funnel. They worked with promising startups that develop new applications on the corporation’s database platform (SAP HANA). The program aimed to help accelerate the startups’ market traction with its enterprise customers. 15% of the startups are then provided technical assistance to build enterprise-centric solutions, with a further subset that successfully validated their solutions then receiving go-to-market support.
The downsides are obvious: there’s a lack of collaboration between participants, so no knowledge-sharing, no sharing of experience. Just like with accelerator programs, there’s a time issue. You’ll be putting a lot of time and effort in attending meetings and events. There’s a lot of unspoken pressure to scale. Some participants just aren’t ready to scale just yet. These start-ups are then quickly screened out. And lastly, the temporary nature of it all. These funnels only last for some time.
3. Go work in their office.
According to us, the easiest way to collaborate with a corporation is to work in one. Not as an employee, but literally in their office and among their team members. Some corporations organize coworking spaces on a floor of their office building. They bring you a step closer to your eventual goal, but it’s not quite it. These initiatives mostly serve to monetize an empty space or to profile a company as innovative without actually being it. The coworking space is often a floor where only you and some other tenants rent a desk. You won’t really get the chance to meet anyone from the team.
Those who are really about that innovation life go a step further: they share their own office. These companies allow you to work among their team. And they organize sessions, events, and projects where you can actually get to know them and collaborate with them.
That way, you’ll get numerous networking possibilities. There are few better ways to connect with a CEO than actually working together in an office. These companies regularly organize events where you can get to know your host.
You’ll get to share knowledge with the employees of the hosting company. This is invaluable when it comes to establishing long-lasting relationships. While you gain knowledge and insights from a team member, you get to tailor-make your product to their needs.
Sharing expertise leads to collaboration. You might not fully realize it, but you’re a hot commodity. The hosting corporation often has issues or projects on its own and your product or your ideas might be the solution to their problem. Startups are the ones that make innovations and improvements within big companies happen.
And all this without losing a portion of your company. Or competing with other start-ups. It also seems too good to be true, but sharing an office does lead to collaboration and co-creation.
Here’s how André Convents, Serial Innovator at our partner Procter & Gamble put it.
We enable these connections.
These corporations offer their workspaces on our platform and you as a freelancer or startup can rent them there. Without any hassle or upfront payments and as long as you want. We partnered up with 28 companies and will soon create and manage an in-house incubator with Procter & Gamble.
Here’s how you can rent an office within a company in 60 seconds or less.
That’s it. Stay tuned for information on this topic. We’ve got big interviews and in-depth insights coming up. In the meantime, head over to our platform and start working in other companies.