To Partner Or Not To Partner
Three questions each startup CEO should ask herself before partnering with a large corporation
A few weeks ago I was invited by SOSA to speak with a group of startup CEOs in the water industry. After talking about innovation in general and innovation in the water sector in particular, our discussion focused on startup–corporation relationships. On the one hand we have many large organizations today repeating the mantra that says “We would like to partner with startups”. On the other hand, many startups are looking for partnership opportunities with large corporations that can boost their global reach and significantly increase their sales. On the face of it, the potential synergy is promising, however, reality is much much gloomier and not many organizations can actually demonstrate that they have successfully partnered with start up companies. In most cases the reason lies in the fact that the large corporation doesn’t really know how to partner with a startup and didn’t build the required foundation, team, and processes to do so. Thinking about this issue, I came up with the following three tests that can help every startup decide whether the partnership it is seeking has high chances to become fruitful. If the answer to one or more of the below test questions is “No”, I strongly recommend that you consider whether the risk you are taking is worth it.
- Does the corporation you seek to partner with has a designated/official startup partnership program?
- Is there a designated person/team whose title/role contains “startup partnership”, “open innovation”, “start up success”, or something similar?
- Is there at least one success story of a fruitful partnership between this corporation and another startup?
Bonus tests:
4. If the corporation is comprised of several distinct business units, has there been a successful startup partnership with the specific business unit you wish to partner with?
5. There are many types of possible partnerships. To name a few:
- Joint R&D
- Improving the corporation operations — mainly through increased efficiency and cost reductions
- Adding the startup’s product/service to the corporation portfolio
If you wish to engage with the corporation throw any of the above potential partnership model, find out if there is at least one success story of another startup that partnered along the same model
Balancing the pressing need to find a reliable partner with the various warning signs described above is important for you to be manage your limited resources wisely. Partnering with corporations has great potential benefits. Remember to stop and evaluate the situation before committing.
What do you think? Are there more tests you would add? Have you had a successful/poor interaction with a large corporation?
