A startup guide to securing corporate partnerships
A startup guide to securing corporate partnerships
Words Alice Sandelson
October 23rd 2024 / 10 min read
Innovation and scale.
These are two key factors to succeed in an ever-changing business world. In simple terms, startups lead innovation, whilst corporates maintain incredible scale. For a corporate, partnerships with startups can help solve problems or create opportunities faster and/or at lower risk. For a startup, corporates can offer industry expertise and market knowledge, customer discovery, new business (and therefore, revenue), brand credibility and awareness, access to finance...the list goes on. Collaboration between the two should be an obvious source of competitive advantage and value creation for both.
But, from where I sit, it’s not that simple. Too often, I see corporates engaging in what might be described as “innovation theatre” – that is, bringing startups in to showcase their innovative technology or business model, without any interest in potentially developing a future relationship. Unsurprisingly, this leaves many founders frustrated. Only 27% startups surveyed by McKinsey were satisfied with their corporate relationships.
The question then is how can you, as a founder of an early-stage startup, build a partnership with a corporate that’s both meaningful and successful for both parties?
Founders Factory has seen its fair share of corporate-startup partnerships. Over the past several years, our portfolio has secured over 300 pilots with our corporate partners, including Aviva, Fastweb, L'Oreal, easyJet, The Guardian, M&S, Reckitt, Johnson & Johnson Innovation-JJDC, to name a few, plus other global companies in our network. Of these, 34% have converted to long term enterprise contracts.
Startup-corporate engagement is the cornerstone of our model – our “unfair advantage”. We’ve found the corporates that are looking to innovate with early-stage companies and we help you push against an open door. And we’ve learnt a lot along the way...
This article was originally written in April 2021 and updated in October 2024.
Disclaimer: This article is not intended to be a prospecting playbook, but we couldn’t get into the weeds of how to nail first meetings and beyond, without referencing how to get that first meeting. You can find five actionable tips at the end of this article.
1. Nail the first meeting
Engagement is a crucial part of successful startup-corporate collaboration, and excitement levels are often set in the first meeting. That’s why you need to make your absolute best impression: be prepared, research the sector landscape, and be clear about why you’re the best partner in this space.
Don’t rush into pitch mode. Use the first meeting to unearth their pain points, understand more about their business model and how they might be able to partner with you. You may uncover areas you hadn’t thought about. Note down the language they use to communicate their challenges and priorities - this will come in handy later on, when you present back a solution.
When you do talk through your business, make sure you present the idea and/or technology in really simple terms. Remove any technical jargon and use product imagery rather than text wherever possible. Visual representation can do wonders for buy-in. The more personalised you can make the pitch + visuals to illustrate the partnership - the more likely you’re going to get through the door.
Lex Bradshaw-Zanger, CMO of L’Oréal UK & Ireland puts it succinctly:
“When corporates, particularly big corporates, start looking at start-ups there’s suddenly a very long line at the door. This means that not only does your product have to be good but your pitch has got to be super tuned to what they’re looking for. It’s a little bit like recruiting; as the famous stat goes, if the first round CVs only get looked at for seven seconds, any initial filter on pitches is probably just as fast.
The key is not only selling your product in a clear and concise way but showing how it adds value to a specific brand or business problem the corporate has too. Adapt your pitch to your audience and show them what is relevant - not everything you have done and thought of for the future.
If you can’t impress me on the first round I’m unlikely to want to send it to anybody else since that will have an impact on my own credibility. You may have a fabulous idea and a super pitch but unfortunately, this isn’t a David and Goliath situation, if it doesn’t work for me there is little chance that you’ll get much further than the gatekeepers.”
Finally, an oft-underestimated agenda for the first meeting is to try to gauge the likelihood of working successfully with the partner in question.
“Try to figure out if the corporate has concrete examples of previous startup partnerships. If they’ve never partnered with a startup before or haven't launched anything remotely innovative recently, this may be a red flag - the reality of your partnership materialising is likely to be very slim.” says Lucie Marchelot Shukla, co-founder and MD of Straight Teeth Direct, a teledentistry company that has partnered with multiple FMCGs since their inception.
2. Come armed with multiple partnership ideas
Enter that first meeting having thought of partnership possibilities beyond a commercial deal – and take the time to think of creative ways you can add value to the partner. This is particularly relevant for very early-stage startups who are looking for customer feedback on the path to product-market fit.
In our experience, successful commercial partnerships do not always begin as a pilot. Why? Because pilots or commercial deals take time, budget and resource, so there needs to be a real drive to push things forward. A more informal value exchange first, can help clarify the opportunity.
One successful example is Oxwash, a sustainable digital laundry service, who joined Founders Factory’s Home & Hygiene accelerator and partnered with Reckitt. While Oxwash were set on a commercial product partnership, they also identified quick and easy ways they could help Reckitt from the outset. Working with the Vanish team, they were able to offer up Oxwash’s cleaning technology to test Vanish’s up-and-coming products, whilst providing unique insight on their customer’s cleaning habits to inform product development.
Strong relationships were formed, with Oxwash delivering value from the get-go, making it worthwhile for Reckitt to engage in regular discussions. Eventually, this developed into discussion, and agreement of a commercial deal – the one that Oxwash originally had in mind.
3. Find your key stakeholders, and turn them into your champions
There are two important stakeholders you need to identify when you embark on a new corporate partnership: your senior champions and your day-to-day executors.
Senior champions, such as the CMO or Chief Digital Officer, are vital in setting directives, drumming up excitement and firefighting problems. But it’s often the day-to-day executors, the “innovation managers”, that are the lynchpin to successful startup-corporate collaboration. They can help you scope out the opportunity, navigate corporate red tape, and garner support from necessary business teams.
Getting buy-in from senior stakeholders can be tricky, and often doesn’t work through cold reach-out. Instead, don’t be afraid to ask your day-to-day contact which of their seniors should be involved – and then arm them with the reasons and materials to engage them.
Whoever you’re engaging, a good way of thinking about it is that, to many people within corporates, innovation is additional to their day job. So your challenge is to excite them enough to put in the extra time (think an extra hour of work vs leaving your desk an hour earlier), and make them want to push the business case internally.
Try to leverage the fact that – to many employees – being a startup founder is hugely exciting. Get them to believe in you. Schedule a quick catch-up, even when you don’t have a commercial request. Ask for their opinions. Share your passion, and make them feel part of your journey; people are much more likely to become internal champions if they feel personally invested.
“At the end of the day, you aren’t just working with corporates, you are working with the people inside these organisations. People have their own agenda and their own objectives - taking the time to understand this is critical. That's also why I would recommend building relationships with multiple people from a corporate: so you don't have to start from scratch if stakeholders change and have different agenda and success criteria."
Lucie Marchelot Shukla, co-founder and MD of Straight Teeth Direct
4. Adapt your behaviour and be empathetic
Appreciating the differences between startup and corporate culture is vital for success. We know that one of the reasons corporates work with startups is to drive more agile ways of working, but startups must still be empathetic and adapt to the different pace and processes of corporate life.
A recent Harvard Business Review paper noted this as one of the key strategies for successful collaboration: “Once you have evaluated startups for their capability to do the project, the cultural fit is the deciding factor.”
The best founders are those that are empathetic to their counterpart’s needs and motivations, work out how to maintain momentum and push them to action by continuously adding value, however small, whilst never losing sight of the end goal.
What does this look like in practice? Try to put regular meetings in the diary; it’s more likely that actions will be completed if there is a recurring deadline. Instead of continuously asking “is there an update from your end?”, try finding out exactly what needs to be done to move things forward – and then give the stakeholder the tools they need. This might be something as simple as writing an email for them to forward on for internal buy-in, creating a one-pager with the key benefits of the project or building a tracker with clear targets and goalposts.
As Lex puts it:
“Once you’re through the first hurdle it’s then about internal sales. This is key, because as a founder you don’t get immediate access to all the internal stakeholders, so you need a super clear document or demo that speaks for itself and a nugget that someone like me can share to get others interested”.
5. Engage budget holders beyond the innovation team
Most pilots won’t move the dial on revenue immediately for a large corporate. As a result, many ring-fence teams and budgets for innovation with the explicit goal of ‘test and learn’, removing them from the ROI pressures faced by core business teams. This setup is a great way to get pilots over the line speedily.
A note of caution, however. Having an innovation team cover 100% of the cost and execution of a pilot can lead to challenges down the line – especially if there’s zero buy-in from the stakeholders who will have the buying power going forward. That’s why investors often question corporate logos on slides: they want to find out whether the partnership sits solely within the innovation team or whether the relevant business unit is engaged.
To set yourself up for success in the long term, we recommend encouraging the innovation team to split budgets between their own and the relevant business units, or at the very least, to encourage businesses units to participate actively in the pilot scope and execution. This ensures they have skin in the game from the outset and will more readily take the reins to scale post pilot.
6. Set common goals and be clear on expectations
When embarking on a pilot, the key to success is to be honest and transparent from the get-go, to have a shared rationale for collaboration, and to align on objectives and deliverables.
It’s far too common for pilots not to have a clear scope nor agreed expectations: 70% of the startups interviewed by McKinsey felt they didn’t have concrete goals to work towards. This can present one of the biggest roadblocks to successful pilots, as well as being a typical obstacle to scale: with ‘no clear gateway’ defined upfront, it's too easy for corporates to claim that the insights or learning delivered by a pilot were too limited to move forward.
To avoid these hurdles, you should lay out a clear pilot proposal plan:
2) A blueprint for how the test will be executed
Here is a great example from Riviter, a visual search platform, that sets clear expectations of the timeline and time required from a partner from the outset:
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3) What success looks like
4) If the pilot is successful, what does the path to scale look like?
7. Be on the front foot with the procurement process
Procurement and onboarding (IT, legal and financial) can be incredibly painful, even for those inside a corporate.
As soon as you’re close to getting the green light to launch your pilot, ask what you’ll need to do and which teams you’ll need to engage across the business. Try and think it through ahead of time, so there are no last-minute stresses: who from your team will be responsible for filling out the forms? Will you need legal support?
Your internal champion can also play a vital role here, presenting the business case to procurement and working patiently with you if you have questions on the process or the information required.
8. Project manage seamlessly
The smooth running of a pilot, coupled with the results, can often be the linchpin to successfully retaining business and scaling to different teams or divisions within a corporate.
The key here is to stay on top of everything, and to over-communicate with the stakeholders involved so they are clear on the status, future actions and timings, and any blockers (particularly from there side) that might affect delivery.
Riviter successfully uses tools to keep timelines updated. They find this particularly useful in giving corporate partners full visibility over how adding new requests might lead to longer timelines, as well as being a good visual reminder of the agreement, and how reliably they are keeping to it. If they are waiting on the client for anything, they include that as well and update the delivery date accordingly.
Corporate partnerships are hard worth it
Corporate partnerships are hard, and each collaboration will have its quirks. What they all require is energy, resilience, and changes to both mindset and procedure for early-stage founders.
Corporate partnerships can be hugely transformative in driving revenue and investor interest, but they can also distract focus and drain a team. Indeed, I couldn’t write an article on corporate-startup partnerships without drawing attention to a less celebrated skill: the ability to recognise when you should cut your losses.
Make sure you’re always acting in the best interests of your business. Be mindful of the cost-benefit analysis, and avoid overly customising your product or roadmap if it doesn’t have broader benefit. If a partnership is not going to create value, then it’s better for you to realise this sooner, rather than allow it to distract from other opportunities.
After all, if you’re building a brilliant business, there should always be other partners in the wings!
Quick tips on how to get a first meeting with a corporate partner
As promised at the start of this article, here are five actionable tips to begin reaching out to corporates. Please note, that this is based on the premise that you are reaching out to cold contacts. We always recommend, when targeting larger brands and corporates, to try and find an introduction, however indirect.
(1) Define ideal target companies and customer job titles
(2) Articulate the ways that your product will help them
(3) Build an outreach list
(4) Craft outreach emails (referencing step 2) plus 2-3 follow up emails
For most people in corporates, engaging with startups goes above and beyond their day job, so be clear on how you will make their life better and easier. Asking for advice, rather than pitching, is also a great way to build an early relationship.
Lastly, be creative. Our emails are already hard to stay on top of, so connect via LinkedIn, or their professional social channels (e.g. Twitter). Hand-written notes are a creative strategy worth testing too (when offices re-open).
(5) Send, track and iterate
Finally, don’t give up: you'll be lucky if 10% reply to you, but don't be disheartened. Follow up and try alternative methods to reach them.
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