Think of a country. No matter where you have in mind, it’s likely its government is driving programs to stimulate innovation, corporates are looking to re-brand as innovators to accelerate new experiences or markets, and the hopes of a new generation of opportunity are being carried by startups.
Governments clearly benefit from a vibrant startup ecosystem. But what can corporates and startups gain in terms of co-dependency?
Do startups need corporates? Traditionally, the view has been that if you can be successful as a startup without depending on a corporate relationship, then that’s the way to go. Does the Mars One project depend on NASA? Does Tesla depend on automotive giants or dealerships to create and sell electric cars? No (although Mars One’s CTO, Arno Wielders, does double-up with a job at the European Space Agency).
Interestingly however, how many of the world’s 142 (and counting) ‘unicorn’ start-ups – which have a combined value of over $US500 billion – are invested in by a corporate venture partner or have a corporate-startup relationship in place? The majority.
I’ve been thinking about the advice generally given to startups that are looking to approach corporations – and it is a little inconsistent with my observations of what has the greatest likelihood of success.
The old train of thought comes from a time when the chief navigators of corporates and government couldn’t see as clearly the changes coming in on the tide.
Now, the need and speed to innovate and the growth potential for tech companies is well recognised – which means startups can connect with corporates on a new level. Corporations are not, however, a white space, so make sure you recognise how you fit in with what might be an already crowded picture.
Before the process begins, ensure your startup has in place a vision, a solid, customer-focused value proposition and the capability to address the opportunity. With that foundation, here are the next steps to building a corporate-startup relationship:
1.If you build it…
Create your own ecosystem and market if you can, initially, without a corporate partnership. Please do. If you’re able to build a proposition independently or connect directly to an ecosystem you may not need to take the step towards the corporate relationship at all.
2. Participate in existing initiatives
Review your options for avenues to engage with corporates. Look out for channels such as innovation and co-working spaces that corporates align with, for example the fintech hub located in AMP’s Sydney building, Stone & Chalk. Research new roles announced and contact those people directly. Seek open innovation events or hackathons, look at the APIs available, or research upcoming pitches, competitions or ventures.
3. Synchronise objectives
Now you’re ready to prepare for a pitch. Clarify what your shared objectives with the corporate could be. Avoid the generalist view. For example, drawing the conclusion that a corporate that is keen to work with startups would therefore definitely be interested in your mobile enterprise yoga application…. well, that might be a stretch.
What is the corporate looking for? Put yourself in their shoes. Ring-fence a customer base and bring it to life. Which of their clients, customers or patients would you target? Why? What kind of value proposition or validation do you have that says there’s customer pull? How can the offering from the corporate combine with your value proposition to address this group?
Separately, what are YOU hoping for? Brand association, corporate insight and feedback, customer base, or investment? It’s a good idea to understand the milestones of what you’re trying to achieve in the short and the long-term. The goal is to come away from the pitch with as many lessons of value as possible – not just yes or no.
4. Seek to validate
When will the concept become tangible? i.e, what is the least effort required to prove value? Instead of a long-winded virtual tango, list the most simple steps to get traction. For example, if you were to sign an agreement on Monday and immediately receive a set of test data, you would be able to offer predictions by Wednesday.
5. Scale and commercialise
Sketch out the journey your collaboration might take and align potential objectives, including how you might measure progress at each stage. For your business plans, consider how and when you will broaden your scope to a wider customer base or ecosystem. This will ensure you balance focus with keeping strategic options open, as well as maintaining awareness of how much progress your team might be making.
Kate Eriksson is the head of innovation at PwC Australia’s Digital Change services. A stalwart of the digital industry, Kate’s experience and network spans across some of the most iconic digital businesses in the world such as Google, Facebook, Skype and Twitter.