It is now well known that working with corporates brings numerous advantages to start-ups, and vice versa. In recent years, a thriving start-up scene has grabbed corporate attention and has resulted in a growing number of partnerships between corporates and start-ups, revolutionising the way that both sides innovate.
As someone who works on the corporate side of this partnership model, it is interesting to see the speed at which the start-up world is transforming, and observe how the business world is responding this rapid change. This environment breeds new opportunities on both sides and those with an ear to the ground can capitalise on these.
One of the biggest challenges for a modern day corporate is to remain proactive, which can be particularly difficult in a larger company which is well established and built around a strong network of shareholders and stakeholders. It can be challenging for corporates to match the pace of change, however the speed in which these corporates are able innovate has been revolutionised by start-up partnerships, providing both sides with a range of assets that allow them to grow and progress simultaneously.
But how do you find the right partner? And what does a successful partnership look like? It’s difficult to know where to start and there are a lot of elements that come into play when looking at these collaborations. We’ve identified what we think are the top three most important factors for start-up/corporate collaborations:
The most successful partnerships are the ones that allow both parties to advance simultaneously.
Due to the constant need to evolve in the corporate world, it has become increasingly popular for large businesses to have a dedicated innovation wing that works with early stage businesses and start-ups to explore new opportunities. At Kindred Group, our open innovation function is called Kindred Futures, and its aim is to form long term mutually beneficial partnerships with start-ups. These partnerships explore strategically interesting opportunities arising either from technological developments or customer trends in the gambling industry and other parallel fields.
A big part of why this type of programme has become so popular in the corporate world is because it makes it easier for both sides to create and evolve together. Partnerships between corporates and start-ups work because they’re symbiotic. Corporates can offer start-ups access to a network of expertise and experience in the industry, as well as the opportunity to leverage their marketing teams and be a first ‘champion customer’. These elements are all luxuries usually unavailable to companies just starting out. In return, start-ups offer access to the latest innovations and technologies, allowing corporates to explore new business ideas which may otherwise be inaccessible for large companies. Partnerships that leverage advantages, combining what both parties bring to the arrangement are far more successful than those that either mine ideas from start-ups or purely seek a fast track route to supplier arrangements.
As the relationship relies on both parties offering something that the other wants, a clear and well thought out partnership plan is vital to ensure that working together will benefit both, enhancing their business and maximising both profit and productivity.
Compatibility in any relationship is key, and the best way to facilitate this is to ensure that both parties are fully informed about how the other works before any sort of partnership is agreed.
Start-ups should ensure that the business model offered by the corporate is compatible with their own business model and aims. Whether the programme is an accelerator scheme, a joint venture, incubator, or direct partnerships, different models offer different benefits for start-ups, and it’s important that each individual business chooses the right one for them.
Cultural compatibility should also be taken into consideration. Many start-ups pride themselves on their unique culture, and it’s vital that they are not made to feel like they have to compromise on this. Historically, some large corporates have been seen as companies that lacked culture in comparison to smaller organisations. More recently, this perception has changed, with big companies discovering the importance of implementing culture in the workplace.
This shift in mentality has not only allowed them to retain a happy workforce, but also makes them increasingly compatible with the start-up community. We frequently find that having a great working relationship with founders is as important, if not more so, than the technology or service they may offer. We aim for long-lasting partnerships and so that compatibility is vital to ensure it doesn’t break down. A lot of this hinges on honesty; it’s incredibly important that both sides are honest about what they can deliver when proposing a partnership.
Mutual respect from both parties is vital and there needs to be an equal share of risk and reward in any collaboration, ensuring that both businesses are invested in the opportunity together. Stable and long term commitment is important, with both sides equally interested in the progression of the other.
This can be difficult when corporates are looking for equity, IP or exclusivity in exchange for their investment of resource. In my experience, partnerships where restrictive requirements are avoided and efforts are focused on long term growth is where most benefit is found. There also needs to be a significant time commitment from both parties. This may not be a written contract, but a willingness from both sides to iterate, to be flexible and to not put undue pressure on delivery timetables. Projects frequently take longer than originally planned and competing commitments may arise, thus both the corporate and the start-up should instead focus on the long term aim and offer flexibility when needed.
There is a world of talent outside any corporate walls that can supplement, build upon and enhance the service businesses deliver to their customers. At any large business that wants to stay at the forefront of innovation in their industry, and for any start-up that is looking for investment, partnering with the right company is one of the most effective ways to ensure continued mutual progression and development.
Will Mace, Head, Kindred Futures
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