Afrikan Heroes

Take it or leave it, startups are displacing large, established corporate organisations with the structures and the hierarchies and the sufficient capital base. Startups like Cellullant, Abacus, Paystack, iROKOtv are already gnawing at the big organisations’ market shares. While startups are going to be corporates someday anyway, exploring how best startups can partner with large organisations can be the best deal in an age of disruption. Below, we explore ways startups can partner with large established business organisations in ways that would be beneficial to both parties.

Startups Have To Understand Their Strengths and Weaknesses To Be Able To Explore Partnership With Corporates Fully.

The Strengths of Most Startups Include that:

• They have the freedom and less bureaucracy to explore trends and disruption opportunities. 
• Startup owners have the capacity to make quick decisions, and in less formal ways.
• Startups are always in a constant state of movement, refining, testing and in some cases entirely reviewing their business models.
• Startup owners are therefore more flexible and open-minded.
• Most startups use the lean startup strategy whereby they use trial and error methods to validate their results.
• They are also more willing to share their knowledge and experience easily.

Weaknesses

• Most startups assume un-calculated and less managed risk.
• Their financial capacity is still less strong. 
• Their flexibility and fragility may mean they may sometimes end up closing bad deals.
• They are more or less in the process of building their brands or reputation, hence they may have credibility deficit issues.

Corporates’ Strengths

Large corporations have the capital base, and most times, longer history. They can easily influence their ways through most things because of their size and financial capacity. They also do not need to prove themselves much. That they are still existing is because their business model is viable. They have different sources of income in most cases and have bigger weight in the economy. Most corporates, depending on their size, are well connected with the establishment and industry regulators. With longstanding brands and goodwill, they are usually afraid to make mistakes which could rub off on their reputations. They also have less threat to face if they don’t deliver.

Weaknesses:

Most corporates are bureaucratic in their operations. This means that they are less agile to catch up with disruption. In most corporates, information is shared only to a few people. Most of their employees are old fellows, who are out of touch with technology trends and innovations. Most of them spend large chunks of their time on internal politics, and are less likely to share ideas and test their products. Then come their high-level approaches, meetings and processes that require series of approval and authorizations.

Also See: New Findings Show Emtrepreneur Who Go Alone Survive More

Why Corporate-Startup Partnerships Are Yet To Succeed

Most partnership entered by startups with corporate organisations such as banks, multi-national organisations fail most because most times, startup owners have to move through the whole organisation’s hierarchy in order to reach a consensus and secure budgets. A recent WRL data suggest that interview respondents from large companies — who may not be their representatives in any case — disclosed a lack of faith in the ability of startups to deliver high-value goods or services that they may benefit from. Corporate respondents also appeared to feel that startups may be unable to deliver without adequate operational experience. In essence, corporate respondents think that startups suffer from a credibility deficit, which, justified or not, limits the willingness of corporations to work with them.

Most large organisations are also less willing to take risk and are heavily averse towards change. There is also some major lack of understanding of how each other works and makes decisions; this usually affects the way trust is built between the two.

Why Startups Need To Seal Partnership Deals With Corporates

Once such deals are sealed, many more deals could be sealed because external investors would now see the startups as trust-worthy and reliable. Again, the partnership can lower customer acquisition costs, and make market penetration come faster.

For Tina Sharkey, CEO and co-Founder of Brandless, the reasons to engage with a corporate partner center on “access to knowledge, experts, distribution channels, pricing or data. It could also be access to interesting projects or hard problems to solve.”

Knowing Why Corporates Are Looking For Startups To Partner With Gives You More Power

Banks and big corporations are increasingly looking for ways to partner with startups to solve their growing needs. Corporates need innovation and quickly. They need it mostly because a startup can just stick out of the woods and disrupt how everything has always been done. Big businesses are figuring out how to acquire, retain and deploy the kind of talent that can develop new markets or cannibalize existing markets, for fear of being replaced. This means more power for startups with unique solutions seeking to partner with corporate organisations.

How Startups Can Go About Partnering With Big Organisations 

According to Daphnee Lucenet VC — Founder of my MVP and Me & Khmer Vibration (non-profit)- Advisor, when partnering with big corporations, first ask yourself the following questions:

“Can you trust them? How can you build/win their trust? What are their past successes? What’s their reputation? Are they reliable? Are they responsive? How does their internal turnover look like? (high employee turnover +long sales cycles=NOGO!) What’s the potential outcome of a long term partnership? How strong are they in their area? Do they have the potential to make an outbreak thanks to you?Who are the decision makers? How fast is their market going?Who are their competitors? How do you position yourself compared to them?How much budget does your counterpart have to solve their problem? How much money do they lose if they don’t solve X problem? How much money can they make if they do? When do you have to deliver? (The answer is often “yesterday” but a realistic answer is better).”

“The wrong thing to do is to just litter your start-up with a lot of corporate logos and become distracted from execution. You’re looking for the corporate to accelerate execution, not decelerate it,” Sharkey observes.

She also notes that startup founders often make the mistake of trying to build a partnering relationship with the CEO of the corporate.
“Better to use the CEO as a channel to finding the right person in the organization and then cultivate that relationship closely,” says Sharkey.

An interesting scenario about how corporate-startup strategy has worked is that of on-demand shipping startup, Shyp which partnered with Banana Republic, in the Christmas of 2014 to help last-minute shoppers get presents to family and friends. Shyp representatives handled wrapping and shipping, offering a more traditional concierge for those who didn’t want to wait to use the service until they got to their home or office. Banana Republic got to experience working with Shyp, while the start-up got visibility and the opportunity to meet many potential customers.

According to Prith Banerjee, the chief technology officer of Schneider:

“Don’t be too excited about the first meeting. This large company is potentially talking to a thousand start-ups. Make sure that after the meeting, the next steps, the actions, are very well defined. You need to say to the corporate, we expect these things to happen or we walk away.”

Charles Rapulu Udoh

Charles Rapulu Udoh a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.