There are many potential benefits to be gained for startups when they engage with a corporate organisation. It may be a new route to market, or to the corporate itself. It may be a good testing ground for a product or service; it could lend credibility, or provide access to the corporate’s resources.
“Know what you’re asking for before you go to companies.”
Stephen McDonnell, Senior Manager, MotoMods Ecosystem, Motorola
(Source: The Drum)
Getting a corporate partner on board requires work and commitment. Decisions take longer due to complex corporate structures and the relationship may involve additional checks on directors and shareholders. You should also be prepared to share a lot of company information—especially in industries with heavier regulation such as FinTech and HealthTech.
That’s where your strategy is important. Before any plans are set, assess whether it makes sense for your business to target corporate organisations. If you lack the runway or resources to spend time engaging corporates, you might consider deferring this activity until you have sufficient funding and resources to see the cycle through to completion. It is not uncommon for it to take 12 months to win and begin delivering on a corporate contract.
Establish your overall strategy and goals, including what you want from a corporate as a partner, as well being clear about how you can add value to their business. If you can establish a fair value exchange, your strategy will become clearer and you will spend less time engaging potential partners that don’t fit this plan.
It’s important to be aware of the fundamental differences between you and your corporate partner.
Generally speaking, a corporate organisation is:
An established business, with robust processes and procedures
Large and multifaceted with complex approval paths
A complex collection of different departments, often with different and potentially competing initiatives
- Travelling at a different velocity to startups, with longer lead times and processes
A corporate organisation is not:
The singular reference customer that will propel your startup into the stratosphere
An easy win with exhaustive resources for you to use
- Always able to ensure total alignment of goals with the startup, due to complex internal drivers and external market factors
Understanding the level of technical integration required for your product or service to be deployed in a corporate organisation is critical. You should also investigate any potential internal technical and regulatory barriers. This is particularly important where you need access to a client’s data or their systems containing data, especially in heavily regulated industries such as FinTech.
As a startup, it can be hard to feel empowered to work with a huge organisation without feeling obliged to meet every demand made of it. But this is where your strategy should guide you.
Negotiating requires flexibility, but setting yourself limits and sticking to them is key to establishing a good relationship that provides value to both parties. Although offering a large discount or free trials—or agreeing to develop your product or service away from your roadmap—may help win you the contract, the overall impact on your business can be damaging.
“What resources are needed to deliver a full service to a corporate organisation?”
Startups generally work in the very near future, taking small agile steps. This is a hallmark of a flexible organisation and one of the reasons that startups are so well equipped to deal with rapid change. But it’s important to plan beyond the initial engagement (whether it’s a trial or otherwise) and establish a longer-term view. For example, what resources are needed to deliver a full service to a corporate organisation? What level of client management and integration will be needed? Although you may not be able to answer these questions in detail at the outset, spending time considering the options and potential variables will pay dividends in the future.
Think through the effects of being dependent on revenue from one large client, particularly when starting out. Consider what may happen if you find yourself with a single client, whose considerable contribution to your business might make it very difficult to decline requests for product changes. Undoubtedly, it’s best to build out your client base and increase revenue potential from a range of different clients, as this provides more flexibility.
Aim to avoid dependency on one customer. After all, if a company accounts for 75% of your revenue and wants to acquire your startup, your position is fairly weak. Compare this with a scenario where they only account for 20% of your revenue—at this stage, your position is immeasurably stronger.