Building a Corporate-Startup Partnership? Here's What Will Help Make It Successful.
Established corporations that partner with startups spur job growth and enhance the benefits new employers bring to communities.
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A recent Congressional Research Service report for the Small Business Administration indicates that startups often have a lasting effect on the economy. Of course, there’s a catch: They have to survive for at least a few years to make their mark.
Enter the world of corporate-startup engagement.
Related: How Startups Can Find the Right Corporate Partner
It’s well-known that most startups never make it past their first few years in business. CB Insights does a great job of telling us why. But if founders tether their startup to a larger, more stable corporation that needs — and benefits from — what the startup offers, startups can increase their odds of long-term success. The reason for this? Corporates can provide steady revenue to a startup that desperately needs it.
The problem? According to Innovation Leader research, only 45 percent of corporations actually engage with startups, and even when they do, they often don’t know how to do it well. This leaves more than half of companies giving up major opportunities to innovate and leaves corporate executives feeling lackluster about results when they do.
Still, startups can be just as hesitant to enter partnerships with corporations as corporates are to engage with them. As those in the industry are prone to say, giant businesses are slow and unmoving, a nightmare scenario for agile startups that tend to move quickly and pivot as necessary. Fortunately, this stereotype is often unfounded.
A world of adaptable, innovative corporates
Our company routinely connects startups with major corporates, like Comcast, UPS, and Allstate. Far from slow and unmoving, Comcast has built an engagement team well-versed in understanding its own deepest needs and how it can best partner with founders to solve internal challenges. These engagement team members routinely travel the country in search of startups that are mutually aligned with their goals.
Once a relationship is established, it begins a mutually beneficial symbiosis of sorts. Startups stay afloat thanks to an influx of steady revenue from corporates, and corporates become increasingly nimble and innovative thanks to new ideas, products and services from startups.
Comcast is not the only corporation that has seen the light. Target recently announced its 2019 summer incubator and accelerator programs. For several weeks, entrepreneurs will work at Target’s Minneapolis headquarters and enjoy access to information, mentoring and a chance to pitch their solutions to investors. In the three years since Target’s dedicated approach to supporting startups began, many have taken hold and grown.
Related: When It Comes to Corporate Partnerships, Remember These 5 Relationship Tricks
Getting the corporate-startup relationship right
Here’s the real secret, though: Just creating a startup engagement program at a large corporation doesn’t mean a relationship will automatically be successful. Corporates and startups alike must ensure they align on values, measurable goals, what “success” will ultimately look like and the timeline. Otherwise, corporate executives are apt to cut startup programming before it’s ever truly off the ground, and startups risk confirming their fears around corporates’ lack of agility and desire to truly work with startups.
Here are four questions we recommend each corporate innovation group ask itself before engaging with startups:
1. How might we help startups connect with the right people at our company?
Comcast’s corporate engagement team knows the innovation needs of almost all of its business units, and when it finds a startup that could help that team, it immediately connects it with the business unit that most needs its products and services.
Corporations that don’t make these connections tend to operate with a little bit of a silo mentality that keeps innovation away from the business units that need it the most. That, in turn, makes effective corporate-startup engagement next to impossible. Because of this, the faster corporate partners make the right connections internally, the more successful the partnership will be. Sometimes, the only way to build bridges is with help.
2. Have you both been honest and transparent about your strengths, weaknesses and values?
The key to successfully building these bridges is to encourage transparency. Corporate teams and founders have to be honest about what they do well and what they don’t in order to stay on track and meet goals together. Even though stumbling blocks are bound to come up, corporates and startups should communicate openly with each other and proactively identify challenges that could derail their pilot program.
And just as it’s key to communicate strengths and weaknesses, it’s equally important to communicate the values that are important to both the startup and the corporation. This allows both to know why they’re doing what they’re doing, which is no small thing when working together to achieve something bigger than either party can do alone.
3. Have you defined clear, measurable goals?
Clear road maps are essential to a satisfying post-pilot relationship. Without long-term engagement plans and goals, startups and corporations can’t reach a level of trust and transparency.
My personal suggestion? Startups should get corporate sign-off on the specific, measurable and time-bound three-year, one-year and quarterly objectives for the project they’re embarking on together, making time to review and measure goals every quarter. The smaller and more tangible the goals are, the better.
4. Do you have plans to check in often?
Just as you need to establish goals, you also need to establish regular team check-ins to test whether those goals are being met. These check-ins are powerful tools to keep the relationship in a good place and to gauge whether any changes are needed to keep moving toward those goals in tandem.
Related: What Corporate Incubators and Accelerators Can Mean for Your Business
Everyone can use a helping hand, from tiny startups to enormous corporations. By connecting startups with their more established counterparts, we can continue to facilitate not only job growth, but also the impact that startups and corporates can have on local communities.