Your Guide to Successful Corporate-Startup Partnerships

Since technology and knowledge are globally distributed, companies cannot rely solely on their research and development (R&D) teams to deliver innovations. In any industry, hundreds of thousands of startups are advancing new technologies and business models according to our data. Tapping into their expertise with external innovation provides businesses with a more flexible approach to innovation. Data-driven open innovation for example allows companies to collect, enrich, and analyze data from disparate sources to inform their innovation strategy. This is facilitating a spurt in the growth of corporate-startup partnerships, making the entire innovation ecosystem more resilient.

Traditionally, large corporations acquired startups or invested in them. More recently, collaborating with startups is becoming a popular method of making innovation more efficient for corporates. Since collaborations cost less than acquisitions, they allow companies to partner with multiple startups. Betting on multiple high-growth startups at once diversifies the kinds of innovations a company can pursue and lowers risk. For startups, the resources and being associated with a large company are highly valuable assets that further propel their growth.

Data-driven startup scouting scans data from multiple sources to find highly relevant startups for you to partner with.

Guide: Common Challenges to Corporate-Startup Partnerships & How to Overcome them

The power dynamic between a corporate and a startup is highly asymmetric. The differences in their sizes and structures can make it difficult for the teams of the two organizations to work together cohesively. To ensure a mutually beneficial situation, this friction needs to be managed. As an innovation manager, you need to ensure that the startups you work with find it easy to navigate your systems and processes. Let’s explore how to!

1. Challenges for Startups

If a corporate-startup partnership fails, the costs are greater for the startup as they have fewer resources to spare. Therefore, it is understandable that startup founders will have doubts before partnering with large companies. To generate confidence among the startups you partner with, you need to address the following aspects:

1.1 Lack of Reliable Data

In innovation management, it is usually the large companies that find startups to partner with instead of the other way round. Startups rarely have the means to extensively research hundreds of companies to potentially partner with. Moreover, innovation data providers often have greater data on the global startup ecosystem than large companies do internally.

This lack of reliable data means that often there is a leap of faith that startup founders take in corporate-startup collaborations. Open and transparent sharing of data changes that.

1.2 Competing with Other Startup Partners

A major reason startups choose to partner with companies is to test their product at scale. Many startups have a proof-of-concept (PoC) but lack the resources to test it in the real world. For instance, pharma startups can perform preclinical trials but need to partner with a larger company to take their solution to clinical trials. However, this pharma giant will have drug candidates from different startups, as well as some of its own, in its pipeline. This carries the risk that a particular startup product doesn’t receive the kind of investment and attention that the startup founder may have hoped for.

Further, this comes with an opportunity cost in terms of the value lost had the startup collaborated with a different company. Therefore, innovation managers need to manage expectations and have a clear roadmap to product development.

1.3 Fair and Equitable Partnerships

Corporate history is littered with examples of a large company using unfair means to grab a startup’s products or intellectual property (IP). Naturally, this makes startups wary, more so in some industries than others. Transparency in dealings from the beginning ensures that corporate-startup partnerships are fair and equitable for both parties.

In recent years, companies use one of two ways to engage startups in partnerships that improve fairness as well as the chances of success. These include engaging with a startup cohort, such as in a startup program, or through a startup funnel where startups are screened over multiple stages. In both of these models, startups benefit from continued engagement with the corporates as well as other startups.

2. Challenges for Corporates

Corporate-startup partnerships aren’t a cakewalk for corporates either. Robust management practices, however, allow corporates to smoothly deal with these challenges.

2.1 Finding the Right Startups

With literally millions of startups active globally, corporates are spoiled for choices. However, this makes finding the right ones incredibly hard for innovation management teams. The good news is that there are solutions that solve this challenge. Data-driven startup scouting for one offers actionable insights that allow you to narrow down the search and find the right partners quickly. For instance, the Big Data and Artificial Intelligence-powered StartUs Insights Discovery Platform searches through over 2,5 million companies worldwide to find the startups that best fit your innovation goals.

2.2 Technology Feasibility Assessment

After narrowing down the search to potential startups, the next challenge lies in assessing the feasibility of their technologies. This goes beyond just verifying the startups’ claims regarding how novel or innovative their technology is. Corporates need to assess how easy it is to implement the technology in their processes as well as estimate the degree of process improvement or competitive advantage it will provide.

2.3 Organizational Challenges

Lastly, working with startup teams poses organizational challenges to corporate teams that aren’t used to the pace or agility of startups. A startup may develop a great technology, but its culture could be highly incompatible with that of an established company. While this isn’t a large part of their work, innovation managers will benefit from an analysis of how their potential startup partners manage innovations. Further, they need to assess if partnering with a particular startup can create long-term success or create a profitable business model.

Engage Startup Partners More Effectively

Depending on your innovation goals, we at StartUs Insights provide a range of open innovation services. These services allow you to find relevant startups and engage with them better. Some of our deliverables include:

• Startup Programs: Boost startup deal flow through data-driven promotion, direct outreach & storytelling that reaches hundreds of thousands of startups & scaleups, making sure you attract the most relevant ones
• Startup Scouting: Discover over 2,5 million startups & scaleups globally, scouting the right partners, saving weeks of desk research
• Technology Scouting: Reveal emerging technologies that match your innovation goals

Based on your innovation goals, StartUs Insights Discovery Platform provides you comprehensive insights into high-growth startups.

To discover how we leverage open innovation to find the right startups for your corporate innovation goals, get in touch today!