Entering into strategic partnerships in the early stages of your startup can often do more for your brand than an outright acquisition. Finding the right big-name partner early on can help you build and refine your product much faster, substantially lowering the chances of failure. It also grants your company access to the resources of a major corporation, enhancing your overall market value and giving your brand a competitive edge.
It also allows you and your strategic partner to share resources that you wouldn’t generally have access to as a small business, resulting in a win-win collaborative experience because the strategic partner acquires access to technology or intellectual property, and labor resources.
A notable example of such a partnership is BMA Group, which needed to ensure that new hires were a match with the company culture with the help of a startup TalentTalk. They met through a business accelerator and their partnership was very fruitful, the startup was able to expand its team and branch out into different markets much sooner than if they’d worked alone, while the big corporation improved client retention and satisfaction.
The dream situation is for your company to enter a large corporation’s radar and have them reach out to you through a scouting campaign or accelerator program. Unfortunately, this is not very common, which means startups need alternative plans for finding the best strategic partner for their business.
Things to remember when looking for a corporation to partner with
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You are not a supplicant coming to these brands. Corporations gain just as many benefits from things like startup innovation, agility and faster time to market. Approach big brands as an equal, and know your worth.
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Most companies are only concerned with seeing results that prove your product or service is viable. There are some cases where a corporation wants to partner with a startup that has already generated revenue, but most are concerned with the near-future potential of your offering.
3. The company needs to believe in your mission and share your ambition. If your goals aren’t aligned, the partnership won’t be productive.
4. Big corporations may see too much risk or competition and decide not to get involved, or their own internal agendas might discourage them from partnering with your company. Keep seeking out matches until you find the right one.'
What can startups do to find a partner and scale their product?
These are 5 steps that can help you:
1. Find the best product-market fit
First, clearly outline the problem your product solves for users, then test your hypothesis to ensure that the problem really does exist and your product solves it better than any other solutions on the market. If you pass these checks, it’s time to move on to a pilot program or beta testers. Assess all aspects of your business and identify areas of growth potential.
It is important to establish how a strategic partner can help you. Do you need more exposure on the market, better resources or maybe new equipment? Has there been a product like yours before, and why hasn't it worked? Before engaging with big players, you need to make sure that your product has potential and is worth investing in. For that, you can meet industry experts and your future customers. For example, if you are developing equipment for radiologists, get their feedback on what kind of product they actually need and if there has been anything similar on the market before.
2. Attend industry events and meetups
Attending events gives you an opportunity to network and build important connections with potential partners. Firstly, you can look for events that specialize in your niche like local support groups for small businesses. It is beneficial to meet other business owners that you have something in common with.
Even if your product is at an early development stage, you can benefit from attending industry meet-ups. They give you insight into the market’s needs and prospects as well as your competitors.
Most industries also have a strong presence in accelerators like 500Startups, Plug’n’Play or others. They meet regularly at demo days, so keep up with their local agenda.
3. Stay agile and flexible
Remember that initial success doesn’t always mean future success. Stay on top of market analysis and product refinement, collecting feedback and adjusting as the market demands. It’s possible that your partner may suggest alterations or feature integrations that could help you reach a larger portion of your target market. If this happens, it’s wise to pivot your MVP early to maximize your chances of success.
4. Don’t settle for the first corporation to show interest
Big companies often have entire teams dedicated to scouting new startups with the potential to form a beneficial alliance. You could be approached by scouts, R&D recruiters, marketers or business development managers who all want to discuss a partnership opportunity.
However, it’s important not to jump at the first offer you receive. Even if it sounds ideal, take some time to consider all angles of the partnership first. Remember that what you’re offering is valuable too, so it’s best to wait for a deal that meets all of your requirements.
On the other side, if you’re pitching to corporations, you should take just as much care. Research your contact, develop a tailored, compelling pitch, and understand that, even if you don’t agree on a partnership, you’ve still made a potentially valuable connection.
Make sure you enter into a nondisclosure agreement with your partner and only then send your product or proposition.
5. Be transparent
It is important to be aware of your own potential and resources when exploring new partnerships. Having a clear understanding of the type of partnership you are entering will result in greater trust between companies as well as a stronger sense of accountability.
Overall, strategic partnerships are a win-win for both sides. Startups get a helping hand forward, while big corporations get one thing they lack, the freedom to be fast-moving and agile.