Service Designer at hasan & partners
Once upon a time there was an eager and innovative (and somewhat poor) startup that was dreaming of their own successful corporation in shining armor, with all their fancy resources and established connections. Luckily the big fancy corporation was too on the lookout for their own missing piece of young energy and modern innovation. So one day, just by accident, they run into each other on the street, their eyes and strategic goals meet and – boom – happily ever after.
But we don’t live in a perfect world. Like in dating between us human beings, the way to the altar with corporate-startup relationships usually involves some additional steps. A lot of energy, time and money can be wasted on kissing frogs until the right prince is found.
Actually, when the topic of corporate-startup collaboration was raised at a roundtable session at the Global Corporate Venturing Symposium in London a couple of weeks ago, there seemed to be a striking resemblance between the experiences shared around the table and the dating world.
Hence, I decided to try to package them to a neat list of dating advice for startups dealing with corporations. Drawing from the experiences shared around the table by CVC’s (corporate VC’s) and startups, here’s some essential dos and don’ts:
Where do all the single folks hang out?
A partner wanted, but where to start looking or how to get noticed? Your own proactiveness is of the essence here, but so is this valuable tip – sign up for an incubator or accelerator program. The corporate reps told us that it is impossible for them to validate all startups out there on their own, so they often opt to use these programs (or intermediaries like us*) for pre-validation and cherry-picking.
Don’t be an a–hole on the first date (sometimes it’s better to start slow).
Now the flirting phase is full-on and first meeting is upon you. How to survive that? Many CVC’s warned about getting serious too soon – the first date is no place to start talking about money. All of them stressed that corporate venture capital activity is above all about finding the right strategic fit. So instead of counting in your mind the value of the possible deal in euros, listen to what they tell about their business, its opportunities and challenges. Try offering them solutions and make sure to evaluate all, also non-monetary, assets of your partner and think about how they could complement yours.
Avoid partners that are still immature.
Relationships should be a two-way street where both are giving and receiving. Unfortunately, many at the roundtable reminded that there are also immature CVC’s out there, who have perhaps only just started their venture capital functions and don’t yet know how to behave or recognize their own best. The immaturity shows for example in wanting to “rip off” the startups, offering them greedy and unfair rules and starving them to death by exclusivity rules. And with time, that most likely backfires on both parties. So, choose your partner carefully – if it feels like a shady one-way street, look elsewhere.
The body’s saying “let’s go” but the heart is saying “no”.
If the corp is not in it 100%, some stormy clouds might be ahead. Often people mean well – your contact at the company really is all on board and excited about the collaboration to begin. But is your contact at the heart of the operations, or is there perhaps someone higher up with own ideas how to run the show? Make sure you understand who are the key stakeholders and decision-makers and that the venturing unit is aligned with the management floor. If yes, sailing is guaranteed to be much smoother.
You don’t know you want different things.
Take your time in dating and getting to know each other before making any bigger commitments. The majority of the examples of failed ventures had to do with poorly managed due diligence and expectation management by both parties in the beginning. Be selfish in the healthy way – it’s your startup and you probably have some ideas for its future. Hold on to the most important ones and find a partner that shares those visions.
Avoid the situation where you’re the mistress.
One startup representative at the roundtable gave wise advice about avoiding the role of mistress in a startup-corporate collaboration. If it all of a sudden seems like you’ve been downgraded to a role of a sales partner with stricter rules and it’s actually harming your business, probably time to leave. These partnerships are meant to be strategic, not strangling.
In the corporate-startup collaboration world, getting an intermediary to help in search for a partner might not be such a bad idea. *And Finnish startups FYI – that’s what we at HBH Investor Services do, so if you want to get on investors’ (and in this case, corporations’ or CVCs’) radar, get in touch with our YC or Timo. They can search and hook you up with relevant partners, and thus ease the pain of trying to find a needle from the haystack.
All in all, try to find a partner who shares your views on life (and business) and be honest about them.
If you both stay true to what you want in life, the relationship has better odds of succeeding. It’s really all about being strategic and thus a well thought prenup is actually not a bad idea at all but almost mandatory. Make sure you both know what you’re entering to and make a clear statement about them.
And then go have fun and prosper.
Happily ever after.
Post published originally on Aino’s LinkedIn Pulse.