Over the past decade, we've seen a seismic shift in the way large businesses and startups work together. From viewing a startup as a competitor or potential acquisition target to the emergence of corporate incubators and year-over-year growth in investments backed by corporate budgets, more and more industry-leading organizations are looking to partner with startups to advance their businesses.
In a recent study, we found that not only are corporations more eager to work with startups but that a quarter of those companies surveyed view startup collaboration as “mission critical.” By partnering with a startup, these businesses tap into new technologies and game-changing solutions, enhance their internal innovation strategy, and grow the entrepreneurial spirit within an organization – all essential attributes of a truly 21st century business.
Sounds great, right? Well, it’s easier said than done. In fact, many large businesses struggle with working with startups. While 86% of large organizations view innovation as crucial to their future goals, most of their attempts to work with startups aren’t strategic, don’t have organizational support and tend to be underfunded. In fact, 25% of corporations aren’t even sure how much they’re spending.
Over MassChallenge's 10 years of experience connecting our global network of startups with corporate partners, we’ve seen the ups and downs of startup/corporate collaboration firsthand. Collaborating with startups can be an extremely high-impact activity for large businesses, but these partnerships must have a solid foundation to flourish. We see the following as the cornerstones of any strong startup/corporate relationship:
- Internal readiness: The organization as a whole is committed to becoming more innovative and is fostering other entrepreneurial initiatives. The organization has clearly outlined what it can do to support the startup’s business, has assigned an internal champion, and is ready to provide the startup with access to technology, internal resources and shortcuts to internal processes. The organization understands its pain points and motivators for working with a startup and is committed to building a “win-win relationship” in which both parties benefit.
- Risk tolerance: The organization understands its risk tolerance and has built its startup engagement or investment strategy with its risk tolerance in mind. Organizations can adjust for risk in their strategy that factors in volume – reviewing and working with more companies on smaller projects – and time – giving the startup a runway to demonstrate return. The organization also knows what stage of startup best fits that strategy and has developed strong criteria for vetting startups. For example, in our experience, organizations that understand the benefits of working with early-stage startups (e.g., emerging solutions/technology, market knowledge, talent and early investment opportunities) outweigh the costs (e.g., the organization’s time, money and people) and are able to make the most of these early relationships.
- Strategic fit: The organization knows how the startup will fit into its business. The organization and the startup have a shared vision for the partnership, which is supported by clearly defined objectives and deliverables. For example, the organization may want to engage in a more flexible, upstream partnership with a later-stage startup, in which both sides take risks and share in rewards.
- Internal innovation team: The organization has a strong internal innovation team that deeply understands the risks, challenges, and opportunities of working with startups. The innovation team works to streamline processes that might slow down startup impact, connects startups to the right stakeholders both internally and externally, and communicates progress. The organization’s C-suite supports the innovation team and its decision-making and understands that the innovation strategy is an essential element of the business.
If an organization is well-organized, deliberate and strategic about engaging with startups, a partnership with a startup can add incredible value. In turn, the startup can access the organization’s industry expertise, resources and connections that enable the emerging business to reach scale.
To help the world’s top B2B technology startups accelerate their go-to-market strategies, Ingram Micro partnered with MassChallenge on the Comet Competition, which has helped startups purpose-build for an indirect distribution channel, powering them to new revenue heights.
We’re excited to announce the winners of the Comet Competition at Cloud Summit X, the 10th annual world’s largest ecosystem event. Join us in San Diego on March 11-13, 2019, to see the top 12 global finalists showcase their solutions and discover which startup will be awarded the top prizes. Learn more and register for Cloud Summit X today: https://www.ingrammicrocloud.com/cloudsummit/.