Dancing with Corporates: Eight Tips for Israeli Entrepreneurs
A survival guide for startups looking to partner with multinational corporations
For startups, partnering with corporates is easier said than done. Corporations and startups need each other — the former to escape the constantly creeping threat of obsolescence; the latter for proprietary data and validation. But while most startups wish to foster such collaborations many do not. According to a Boston Consulting Group research piece published April 2017, almost all 380 out of 400 surveyed wanted to develop long-term corporate partnerships, but only 57% have done so.
For Israeli startups, the need is even more pressing, given the small size of their domestic market. To thrive, these startups need to learn to “dance” with corporate counterparts, overcoming cultural differences, slower decision making and development cycles, and cumbersome hierarchical corporate labyrinths. One wrong move — whether in the beginning or towards the end of a deal — can spoil months and years of hard work and time.
I asked six corporate innovation experts overseeing strategic partnerships and investments with startups for insights that can be helpful for startups looking to engage with corporates.
1. Find your sponsor.
“Make sure you find one executive sponsor within the company who’s committed to supporting you and your company,” says Ido Fishler, a business development lead at SAP Labs Israel. According to Mr. Fishler, support required from your corporate evangelist can include technical guidance and permission to access private APIs, mentorship, and introductions to potential customers in the organization.
2. Research corporate structure.
While a certain unit may seem a right fit as it addresses the same end-customers, reach to market may be done via another unit altogether, says Or Shin, a Director of Innovation at JCI Open Innovation. For example, some may seem relevant vertical-wise as they’re serving the same end-customers you target, but working with a different division so might not be the right channel for you to reach the market.
3. Consider your position.
If you are looking to sell your product to a corporate, make sure you understand what is involved in the process and how long it may take. A first nod is just that. Proof of concept on different sites and travel expenses can pile up and burn through cash available. “Long sales cycles can kill early stage startups,” says Gal Ringel, a principal at Verizon Ventures.
4. Do your homework.
Before approaching a corporate client, understand how your technology fits in with the client’s products. Don’t expect the executives you meet to come up with possible synergies — find the synergies beforehand and present them at the meeting, says Uri Pachter, a technology and innovation scout at Faurecia. “Don’t merely say, ‘This is what we developed, now it is up to you to think about a relevant use for it,’” Mr. Pachter said.
5. Enhance, do not replace.
NIH — Not Invented Here — is a major obstacle. Corporate research and development units tend to think they know best, tried everything, and anything other than their developments is inferior, says Mr. Shin. “Try offering your solution as a something that will complement the corporate product or helps enhance it, rather than replace or improve it.”
6. Brace for changes
Key people change places; companies can shift gears regarding expenditure, change strategies, or even get bought. “It often happens that your startup’s contact at the corporation has resigned or has received a promotion, or interests change and the momentum breaks,” says Yoni Blau, Director of Open Innovation and Strategic Investments at Flex. For this reason, it’s important to not just have a champion within the organization, but to familiarize yourself with other stakeholders as well.
7. De-size the organization
“Large companies are often sprawling and you can divide the speed and likelihood of accomplishing anything by n to the power n, where n is the number of different teams, business units, or departments that have their hands in the partnership jar. Focusing on taking a solid first step with just one group within your targeted partner, with a strong champion with some degree of executive power, will also limit the risk of scope creep and make any financial arrangement much easier,” says Mathieu Guerville, Innovation Director at UL Ventures
8. Drive the pace, and set it to “urgent”.
Startups work at light speed compared to larger companies, so it’s essential to be a bit pushy and aggressive in terms of setting timelines, milestones, and scheduling meetings with clean agendas that aim towards decision and action, according to Mr. Guerville. “Too often I’ve seen startups being too polite and fail to realize that the partnership in question is rarely above the fold in their partner’s ever-expanding to-do list. Eventually, the partnership talks become a zombie project where the infrequent meeting are just refreshers that start with ‘What do you do again?’ and end with ‘Let’s touch base later, we’ll find a date and circle back with a few dates for the next meeting…’”
