Switzerland
13 September 2021

Corporate Partner and Startup Collaboration: Best Practice Guide

Written by Matt Lashmar

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Finding startups and connecting them to partners who can help them disrupt the status quo and create meaningful change is MassChallenge’s core purpose. And it’s a huge amount of fun. We aim to grow and transform businesses and economies. 

But one thing I’ve noticed is that actual collaboration leading to a concrete definable outcome is tougher than finding startups.  Indeed, MassChallenge Switzerland connects  each partner to approximately 12 highly relevant startups, but on average each partner only creates a concrete next step with 3 startups per year. 

On top out-comes are not the same for all corporate partners when working with startups. Some consistently collaborate with startups and create joint value. Others struggle. Why? 

At the beginning of 2020 I set up a series of workshops to delve into best practice collaboration between partners and startups. We worked with over 200 MassChallenge’s Experts, Partners and Startups. These meetings, combined with MassChallenge Switzerland’s experience of connecting over 300 startups and partners over 5 years, informed the below guidelines.

It’s grouped in 5 sections: 

  1. Corporate partner preparation
  2. Common partner mistakes
  3. Transparent communication between parties
  4. How startups can do better
  5. How MassChallenge can help

Corporate Partners prepare yourselves!

Be Clear on the business needs

Why are you working with startups? A MassChallenge study shows that the number 1 reason is to explore new technologies and/or business models. However, getting insights into industry trends, developing potential acquisition targets, demonstrating internally or externally that the organization is “innovative”, getting to market faster, and getting access to entrepreneur talents and culture are also common motivators. Probably it’s a combination of all these factors. Our first advice is to be clear on the why. 

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Get ready internally. There are 2 mantras here: Right people; and Right process. 

Right People. This is by far the most important. Corporations have cultures that can resist ideas from the outside. People are busy and have their own agendas. 2 things stand-out:

  • C-level leadership: The CEO sets the tone and makes it clear bringing the outside in is a strategic choice. “Not-invented-here-syndrome” is banned. On a daily basis there’s likely to be a C-level leader responsible for leading across functions or categories.
  • Innovation Startup Champion: Someone who can work across company functions and categories with enough seniority to spot opportunities, help the startup integrate into the internal team, and move roadblocks. 

Right Process. Christophe Duprat from Société Générale summed it up: “anticipate the issues beforehand”. He advises partners to “go heavy on the preparation phase to become the preferred partner for startups and reduce the number of failed scaleups”. Which startups you work with should track back to the business needs, and if you are managing a significant number of projects you probably want to spend time evaluating and adopt a portfolio approach before you start expending resources.   

From an operational perspective the most important elements are: 

  • Preparing a simple Non-Disclosure Agreement or contract. Startups don’t have the resource or time/money to wade through 40 page contracts or comply with every procurement request you’d make of a normal trading partner.
  • Get cross functional alignment. This is back to the “right people”. You need a coalition across functions or categories to act fast. 
  • Get your systems ready. Paying a startup in 90 days might be your norm, but your startup needs cash to stay alive. 
  • Have the budget. Startups are not going to run pilots for free. 

Overall, the clear advice is to be agile and flexible, and we advise you to invest and set up your own fast start collaboration process.  

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Common Corporate Partner mistakes

Mistakes are part of business. Our experts, startups and partners highlighted 5 so you don’t have to make them. 

  • Don’t be impatient. The startup isn’t going to be anything close to perfect. They are still learning. You’ll need to be flexible and understanding.
  • Don’t be slow. The startup world operates on days, corporate’s on quarters. Whilst you wait and evaluate, the best startups are investing their scarce resources with someone else.
  • Don’t just send in R&D. Innovation is not just R&D’s prerogative. We advise any company starting out with startups to kick-off with looking at their core business. However, those getting the most value out of startups apply ideas across functions and categories. An example is the field of operational excellence. Many corporates miss opportunities to take costs out as they are are fixed on their core chemistry or technology.  
  • Don’t treat startups like a normal business partner. They don’t have procurement teams, or in-house lawyers, or senior managers on hand to advise them. They are founders, alone, doing everything themselves. If you can, keep things simple!
  • Don’t do it for fun. (It is!).  Work with startups from conviction that it will build your business and company culture. 

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Communicate transparently

This goes for both startups and corporate partners. 2 things stand-out as best-in-class

  • Align Expectations. Invest time at the beginning to run a workshop together. Agree the KPIs and timing of any pilot. Get into the who, what, when, how, and critically the why you both want to work together. Importantly discuss what’s next. Best in class for pilots is to already agree the success criteria and timings that would lead to scaling. 
  • Feedback. Partners are sometimes too polite to give bad news, they hide behind being busy and avoid it. Corporates should be clear if they aren’t interested, and this might be a straight no, or a maybe later, lets reconnect in 6 months. Startups don’t have time to wait and a “no” is preferable to not knowing.  The same goes for startups. You are an equal partner in a collaboration. You need to share your feedback to enable the partner to help you.

What can Startups do better?

Like any collaboration both sides can get ready for it. We asked the founders of Genlots, Microcaps and Decentriq for advice. 

  • Show (don’t just tell) how you add value. Seeing what you do applied to the partner’s business is very powerful. Tests, pilots, case studies, demonstrations with data all work.  Once you have joint results package them up so your contacts can share them. And share with senior stakeholders and broadly across contacts. Create momentum.
  • Look at the Partner’s culture. Before working with a partner check if they are aligned internally. Engage up, down and across your contacts and see if you get consistency. Watch-out for groups that are resistant to change or respond slowly. 
  • Bring the startup difference to the Partner. Startups can bring the outside-in to a company. Be different. Be creative. Inject energy into joint work. Founde bringing new ideas are interesting. Leverage this advantage.  
  • Don’t overpromise. Any POC is a 1st step and likely more work will be needed after. Corporates need to plan and budget, so be transparent and help them.
  • Don’t do it for free. Everyone is interested in free, but someone who pays is committed. 
  • Don’t give up your IP. Ian Roberts CTO Bühler and MassChallenge Switzerland President says it best “Serious corporate partners will not ask you to give up your IP”.  If in doubt talk to a MassChallenge IP expert.

How can MassChallenge Switzerland help Corporate Partners?

Here are 4 things we can do to help:

  • Planning engagement with startups. We clearly see correlation between resources allocated to work with startups in the accelerator and positive collaboration outcomes. However, resource is finite and partners should avoid “innovation tourism”. MassChallenge can help plan resource over the course of the accelerator and run webinars to brief people about how things will work so expectations are managed.
  • Bring in C-Level Managers early. Judging startups is the easiest and has been described as a “Spa for the Brain”. Seeing new ideas and business models will leave managers invigorated, and hungry for more. 
  • Managing early-stage engagement between startups and partners. Once a partner has selected a startup to work with they can follow MassChallenge’s best-in-class approach to enable collaboration. This is a 2 day workshop that sets up a joint team, and has them work towards a specific outcome within a prescribed time deadline. 
  • Facilitating engagement. We know our founders and are happy to talk with them about how they are getting on once they are collaborating. Often misunderstandings and frustrations can arise from startups or partners, and we can help dig in understand and resolve these. A typical example could be explaining why a partner is using a standard NDA.

My thanks to all who contributed to the workshops that powered this article. You are too many to name. If anyone is interested and wants to learn more or add to the topic please contact me at MLashmar@MassChallenge.org
 

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