A powerful way for corporates to partner with startups …
with real business impact for both and no one harmed in the process
At our last company, we experienced a particularly challenging corporate GTM collaboration process. So, as founders, we wanted to rethink how Corporates and Startups could successfully partner and be aligned in their missions. This led to my first article on the topic in February 2016:
Beginning in late 2015, we began deep research into the typical ‘corporate / startup innovation’ programs — most of which take the form of yet another corporate accelerator program. Now, if the corporate goals are HR or simply marketing themselves as ‘startup-like’ and innovative, these can be successful. But, we decided to apply our founder DNA and craft a better collaboration approach where go-to-market and real revenue is THE goal.
Exit3x Founders is a post-Seed stage startup partnership acceleration model. It’s a new framework that aims to more realistically achieve near term business development results for startups and corporates — in terms of testing new business models and go-to-market approaches for growth.
Startups need to have quick wins in order to continue fundraising. That is their number one priority and obligation to investors. They must show strong signs of being focused in a business area with high potential before they run out of limited resources and funds. Corporates need to understand and support this — and we believe they can do it in a way that gives more bang for the buck than existing corporate accelerator models.
My colleague and I developed the Exit3x Founders approach based on our combined 40 years of experience working as product creators and company builders, business developers and brand experts, CEO and CMO in deeply technical fields such as federated cloud, machine learning, medical devices, B2B SaaS, and heavy industry.
We’ve seen what it takes to innovate from both sides, as entrepreneur and corporate director, and we’ve developed this model to bring a mature startup perspective to bear on the opportunity that awaits within existing corporate capabilities and partnership channels.
Business development partnerships usually take way too long to get through due diligence, and then often fall flat of expectations. We propose to accelerate the process by treating the initial phase of partnership as a new co-created startup, with the corporate acting as a co-founder through the experimentation phase.
In an annual term, we hand-select four to six new, high-potential companies based on a corporate’s stated needs. We then do hands-on, dedicated, 1-month rolling kick-offs with each startup to co-customize their product with corporate team members along the corporates requirements, and ensure their success within the larger organization. We get them ready to go to market with the highest possible chance of success. We help corporates act like co-founders.
This significantly increases the chance of finding innovation that contributes to the near term top line. Together, we create strategic partnerships with real business outcomes.
We think the sweet spot for these partnerships in terms of startup maturity is post-seed stage. Companies at this stage have passed critical success filters, but they still fail because they can’t get access to the customers, market and distribution, or overcome regulatory and other domain issues. We also think this is an underserved segment of the startup world. Accelerators tend to focus on pre-seed and seed stage companies, and corporate VC’s tend to focus on A/B/C stage companies. Post-seed stage is sort of out there on their own, trying like hell to prove they can tap into scale.
Unfortunately, this sweet spot of opportunity lies untapped for the most part, because the way that collaboration is handled between big companies and startups at this stage is totally broken. That was proven through our experience as one startup working with four different big companies who were hot for our technology, as well as connected industry experts who hear the nightmare stories on a regular basis.
We propose that there is a better way for Corporates to become dramatic catalysts for startup growth by providing a co-creation and business development framework that fast-tracks validation of strategic partnerships with startups.
In the initial phase, Corporates need to Think Like A VC, and and support the startups time working on the partnership with a cap-table-friendly convertible note. Remember — startups need to have the right numbers in place for future fundraising at this stage, so asking for more will definitely close the doors to the really interesting opportunities.
In the second phase, Corporates need to Act Like A Co-Founder. Apply a few expert team members to the startup, and fully immerse the group in the problem space. Rapidly co-customize the product following the Design Sprint methodology developed by Google Ventures. Focus on one startup at a time to get them kicked off with a running pilot and the right amount of attention to validate the partnership potential.
In the third phase, Corporates need to have a program to GTM (go-to-market) Together with the startup. This means all research and testing has been completed within a couple of months, and a clear go-no-go decision can and will be made. In some cases, big companies may prefer to establish “Labs” brands to support the expectation that these relationships are experiments.
Throughout the three phases, the focus is on quick turnover of outcomes, leeway with experimentation, and clear business development results. Big wins mean big partnership deals and hand-off of the relationship to the corporate team in charge of strategic partnerships.
If business development results are not achieved, the relationship is terminated. And that’s a good thing for both sides — the Corporate have a low risk way to develop and test an opportunity that enhanced their innovation image at the same time, and the Startup had a powerful level of quick insight into what it takes to bring their idea to the next level, if not a game changing deal.
The key to this working is the “quick” insight, the notoriously Everest-like challenge that causes most VCs to tell startups to stay the hell away from Corporates. With a dedicated team, aligned senior management, appropriate resources and in-built mentoring program development, we think this process can be accelerated dramatically versus typical partnership establishment timelines today.
If you’ve gotten this far in learning about the Exit3x Framework, you’ll have noticed that we are borrowing on best practices and combining ideas from various models in the market today. However, the place where we think we’ve added some unique polish and perspective to this is on phase two, where we want Corporates to “Act Like A Co-Founder.”
By working with our approach through 12 weeks of partnership development and testing, we believe Corporates and Startups could significantly impact the odds. Nine out of ten startups fail. With this approach we expect that number could change from five to seven. And there would certainly be much greater benefits that ripple through the knowledge sharing in the ecosystem.
So that’s the short overview of what we learned from decades of experience and the last 18 months of deep research on the topic of startup and corporate innovation. Exit3x brings the startup perspective to the corporate innovation conversation. We’re senior operational founders with a strong track record. We’re product creators, fundraisers, company builders — innovating on both business models and business strategy — creating and growing something from nothing.
We strongly believe that the Exit3X Approach as a partnership acceleration model has high potential and deserves exploration and investment. What’s your opinion? Let us know in the comments below.
And if you’re interested in building something together, here’s my info:
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