Innovation is fast-paced today. Meaning, most of today’s large companies often look at startups to have the know-how or emerging technology they require. According to a KPMG report, almost 90% of big companies believe collaborations are important to promote innovation (1).
Forming such partnerships sounds easy for startups in theory. In reality, however, it can be quite challenging.
There are so many questions, such as how to convince big corporations to change their conventional habits and take a chance on your idea? How to find those big companies? What’s the way in? Well, keep reading on this cheat sheet to sell your solutions to traditional enterprise corporations.
How to Convince Big Corporations to Change their Conventional Habit and Take a Chance on Your Idea?
Always Show Them the Business Impact
When it is about business, everything, at last, comes down to one important thing: Money. Be it saving money or making more of it by adding value for customers.
Be sure to show the business impact. Explain clearly in which of these categories your solutions belong to – would it cut costs or add value to their customers? No business will consider an idea that makes no credible business contribution (2).
Think Like The Product Team
To close a deal, ultimately, it is the product people who you would have to convince. Annoyingly, they are the ones who can be quite business with an inherent dubiousness towards anything new.
In addition, product people usually only like a supplier who can offer them exactly what they require, when they require it, and preferably already wrapped in a nice package that is ready to be shipped to the customer. What they don’t want is another issue.
Therefore, ensure to do your homework and use your network to build a comprehensive understanding of the industry’s most critical pain points and see if you can do something to mitigate them.
You can browse publications that share real-life problems and challenges or even RFXs posted by different organizations and companies. Study those reports carefully to find actual requirements that your startup or solution can satisfy (3).
Remember: Prototype Tops PowerPoint
Sure, PowerPoint decks and introductory videos look nice. However, they are nothing compared to an actual prototype, no matter how incomplete it may be.
It is okay if your prototype is not easy to use or does not look pretty to vow the audience at this point. But, it is important to have one. Companies look for technical maturity, and it would be challenging to demonstrate it if all you have is some words on paper.
Fake it Until You Make it
Often people blame lack of data or other information for not being able to demonstrate their solutions. However, try to simulate something to make it work. Even if you don’t have access to real data, make assumptions. The main point here is to demonstrate your offerings.
Big corporations are not short of any data. However, you will need to show them why they should give their data to you. And if you can’t show them what you would do, they probably won’t collaborate with you (4).
Read Also: Business Opportunities from 2021 Inc. 5000 Companies
How to find those big companies?
Well, in truth, you will have to speak to all your potential partners. You will need to talk to as many companies as you can, and in the end, it all comes down to their readiness to experiment with your offerings or whether their pain point is so severe that they have no other option.
In any case, make sure you make it easy for big companies to do business with you. Remove all the barriers that a procurement firm would put up. Create contracts that are more risk-averse, milestone-driven, and deliverable-driven, so companies don’t have to pay up until they get the value they were hoping to get. It would allow you to sell to a company that typically won’t deal with someone of your scale (5).
A good cold email is often your best bet.
Send a Good Cold Email
A good cold email is
- Concise and to the point
- Showcase the issue the company is facing
- And Specifically describes (include numbers too wherever relevant) how your solution can meet their requirements
Make sure to keep your sentences short, less than 25 words, and brief paragraphs, about one to four sentences, and use bullet points wherever you can.
If you show someone you have taken your time to research them and their business, they will be indebted to you and would be more likely to send an answer. In short, reciprocity is the key here.
Apart from looking into publications, you can also find more about their issues by:
- Listening to the company’s podcast if they have any
- Researching their recent investments and analyzing their investment trends via press releases or Crunchbase
- Reading the business’s annual reports
Lurking LinkedIn, company podcasts, and marketing materials is an excellent way to find your ideal targets.
Find an Internal Champion to be Your Internal Salesperson
An internal champion is someone within the company who is responsible for internal strategy and preferably passionate about an issue you are trying to solve.
After the initial discussion, your internal champion can extend your team responsible for internally reselling your products. They should be able to enunciate your solutions as concisely as possible. It would be best if they concisely know the issue, the solution, and how it helps a business.
You can fast-track the system by making materials like Word documents or PowerPoint presentations that your champion can easily edit and use to craft their emails and presentations.
Equip them with materials that they can adapt to a wide range of audiences, like technical and non-technical. Try to pre-answer all the questions your champion is likely to get like:
- Who else is there in the market?
- Does this startup meet our criteria like security and other accreditations?
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What’s the Way In?
Apart from reaching out to companies, the best way to make your way into large corporations is through their accelerators, investment funds, and other programs aimed at small-scale startups (6).
Use these programs as a chance to receive funds and build relationships with potential major clients. Most companies run such programs via an open application process, whose links you can easily find via their websites.
Big companies look at these programs as an opportunity to find new ideas and even partner with, invest in, and learn from today’s most innovative founders and early startups.
According to David Kidder, Bionic CEO (7), a US-based startup that helps corporate executives think like entrepreneurs, “It is either disrupt or be disrupted. Big corporations need organic growth, and they reach out to their startup roots to get it.”
For instance, Johnson and Johnson had put 500 million USD into a 200 million USD venture fund to support early-stage biotech companies back in 2019 (8). In addition, J&J also created a biotech incubator in the US, where early-stage companies can rent offices and lab spaces without committing any of their research to J&J.
In short, not only startups but big corporations are also eager to top into the expertise of innovative founders. They have established several incubators and funds for startups to do so. And they present an effective way for startups to build relationships with those big giants.
Read Also: Insights from India’s Fastest Growing Companies 2021
Things to Keep in Mind
Big Companies Won’t Steal Your Ideas
Smaller startups often believe that the only reason big corporations want to work with them is to steal their ideas and innovations.
Even so, most of the time, it is not true. Instead, big corporations look for new ideas and existing solutions to plug them into their ongoing projects. The idea behind the collaboration is to make these projects more efficient or deliver them faster using an already existing solution.
Meaning, big companies are not looking to build something of their own on what a smaller company has come up with. No, they look to save time and resources by using things already out there. Often, big corporations resell the partners’ or suppliers’ solutions to customers or integrate them into their products, or sometimes they are also interested in acquiring the entire company (9).
Find Strategic Goal For Your Solution
As per a collaborative research study by Imaginatik and MassChallenge (10), both big companies and emerging startups agree, by far, the “strategic fit” is the primary criterion for their collaboration, even more essential than shared mission, startup quality, or bandwidth.
As we mentioned above, before you reach out to any enterprise for collaboration, set the strategic objective you are looking to solve. Does your solution lower costs or increase margins? Does your solution help a business gain a strategic presence in a new market or technology? Remember, such strategic collaboration can be crucial for ongoing innovation for both companies and startups.
For instance, Sphero (11), the maker of state-of-the-art robot-based toys, found that its technology with impressive performance specs would make a valuable addition to Disney’s product lines. It reached out to Disney for a lucrative market path and to infuse its products with more character.
The team manufactured a product that resonated strongly with customers after an extensive mentorship from Bob Iger, the former CEO of Disney (12). Consequently, Sphero secured a strong partnership with Disney involving commercializing the newest Star Wars toys. In short, no one can exaggerate the importance of partnership among businesses. It offers support to startups and innovation to bigger and established corporations.
You will be wasting your efforts to partner with big companies if your company fails to solve a strategic objective. It would be great if you knew what value you bring to the table and why it is worth a big corporation to take the time to discuss a partnership.
Read Also: Hacks to Finding New Business Ideas
Never Put All Your Eggs in One Basket
Often, startups become too focused on landing that one big-name partner that they drop everything else to make that collaboration happen. It is a disaster recipe, if nothing else. You need to avoid becoming a consultancy for one company; it will create dependency. You will have to be especially cautious if you are sucked into discounted or free work.
Yes, working with a big company can bring a lot of benefits to a small startup. However, it also has certain risks. There are several red taps and bureaucracy that may prevent final decisions and finalizing contracts. Hence, it is important never to put all your eggs in one basket.
Instead, reach out to multiple big firms to reduce your risks. That’s how a collaboration should be – never a one-sided deal.
Michael Zeisser, a mentor at Techstars, stated in his book “Do More Faster: TechStars Lessons to Accelerate Your Startup (13),”
“I have seen startups over-investing in collaborating with a big company. They put tremendous effort into finalizing a deal. Hence, in the end, even if the deal finally materializes, the benefit falls far short of their expectations. It is quite easy for founders to develop “happy ears” while in discussions with companies, a tendency to hear what they wish to hear while overlooking signals suggesting otherwise.”
Instead, be merciless while working with large companies. Don’t make several concessions, and be especially wary of signing any exclusive collaborations that may impair your potential for long-term growth. Instead, be focused on building relationships with organizations’ key stakeholders to mitigate risks. When you focus on developing authentic relationships, you will be better positioned to place bets with people who have your best interests.
Set Your Goals and Frequently Revisit Them For a Successful Collaboration
You need to set clear expectations for a successful collaboration. However, revising them and refining them is even more crucial for a successful startup-corporation partnership.
In such strategic partnerships, startups often look for the deeper pockets of big, established companies, along with advice, official feedback, and other strategic, small-scale benefits. On the other hand, companies look for a safe passage to support their innovative efforts.
However, often, their mission and culture may not align with those goals. Hence, resetting expectations and refining goals throughout the collaborations is important for a successful startup-corporate partnership.
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Set Realistic Expectations
The greatest challenge startups report when collaborating with big corporations is the speed mismatch (14).
In partnering with a corporation, even if it is only in a purchase agreement, they know that they won’t sign any deal overnight. As per the above-mentioned KPMG report takes about nine months from the first meeting until a collaboration is finalized. As a startup, your time is priceless. You need to decide whether entering into a lengthy discussion with a large corporation will divert your other efforts. Make sure to do your pros and cons to decide the extent to which the potential partnership can derail your several other activities as a startup.
Know When You Should Leave
You need to know when to walk away if the discussions are too fraught, the collaboration becomes uncomfortable, or even the timing doesn’t feel right.
Sometimes the best strategy for you is to walk away. Entrepreneurs need to decide carefully since time and resources are the most precious assets for any emerging startup. It is essential to know the right time to cut losses.
Terminate the collaboration politely and be open to reconnecting with the enterprise in the future.
Why Should You Collaborate with Big Corporations?
Does all of these sound like a daunting task? Here is why it may pay off to go through all those troubles:
Access to Market
No matter what industry you are working in, there is no way better to get in front of real potential clients than by collaborating with the biggest players in the market.
Customer Value
Even if your solution is not revolutionary alone, it may yield significant customer value when bundled with bigger offerings.
Scaling Big
When you collaborate with a global company, it means that even your small but successful solution can have enormous growth potential. It is something even your stakeholders will take into consideration.
Read Also: Saying “Yes” to Any Investor is Bad for Your Startup: Here’s Why
A strategic partnership between large corporations and startups has always been imperative for both parties. As per Unilever, more than 46% of startups that have not yet worked with any big firms are likely to do so in the future (15).
“The partnership between large companies and emerging startups and early-stage businesses have never been so crucial,” says Sherry Coutu, a serial entrepreneur (16).
Back in 2017, Unilever Foundry (17), an international platform for startups and innovators, released a report that predicted both startups and corporates would work in the same physical space side by side by 2025 (18). The report highlighted three essential factors driving the urge for robust partnership between corporates and startups:
- To learn something novel
- Enhance efficiency
- Solve business issues in novel ways with the potential to scale
“Corporates and startups collaborations will evolve from an optional extra to a business-critical investment in the upcoming few years,” predicted the report.
The significance of a strong partnership between big companies and startups is undeniable. However, startups need to use the right strategies to pitch a business collaboration.
