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Our Three Success Criteria for Partnerships Between Corporates and Tech Startups

Make, buy, or partner — here is what we have learned

by Manuel Wesch, JUSTROCKET & Dr. Michael Reinicke, EISBACH PARTNERS

Source: Charles Forerunner on Unsplash.

In the last decades, we have seen an increasing number of enterprises acquiring or partnering with tech startups. Even traditional corporations that initially doubted the benefits of startup collaboration gave up their pushback. They now take part in the hunt for the best startups to reach strategic goals and overcome innovation challenges by embracing their different working cultures, agile work principles and disruptive product development processes.

Collaborations make sense for both (if done right)

Corporations strive to work as agile as startups — startups strive for the power and endless resources corporations might have. So, both parties can have a positive impact on each other. And definitely will, if these collaborations are planned strategically and managed well.

Having partnered with numerous enterprises in my former life as an entrepreneur at carpooling.com, I experienced how difficult it is to work with a corporate counterpart. We partnered with Daimler, BMW, DB, UBER, ADAC and many more and learned a lot from these collaborations. Today, working as a consultant at Eisbach, I’m seeing many collaborations and acquisitions fail. My partner Manuel, a founder at JUSTROCKET, had similar experiences when collaborating with corporates during the early days of their startup or when partnering up with bigger enterprises on various tech and transformation projects in recent years.

In our projects, we frequently get asked about how to avoid pitfalls and realize sustainable wins when partnering with startups or acquiring them. When we dig deeper into the precise reasons for merging or getting into a partnership, we seldom get robust and proven answers.

“The rationale for an acquisition or partnership needs to be stated well-founded and aligned to the companies’ overall strategy: Otherwise corporations purely burn money and bind resources instead of driving innovation and revenue.”

Failing on the make, buy or partner decision often leads to poor scenarios for both parties. We saw startup partnerships disappearing in the drawer and founders losing the power to make decisions within their new role after being acquired. Besides that, we often witnessed the loss of the biggest startup values: team spirit, agility and speed.

What to take in mind before collaborating

When it comes to analyzing potential startup partnerships, we have identified three major topics for understanding and deriving engagement decisions:

1. Closeness to the Corporation’s core business

It is inevitable to evaluate the proximity of the startup to the corporation’s core business when analyzing the startup.

  • Does the targeted startup contribute to the sales of your core product or its connected devices?
  • Does it strengthen the user base or CLV (customer lifetime value) of your own digital services?
  • Does it fuel your brand awareness & recognition?

If you answer most of the questions with a clear yes, you should either buy it or — if speed is not of the essence (see 2) — just make it yourself.

The Otto Group successfully brought innovation to the dusty catalog business — their own core business — by setting up the online fashion retailer About You. About You was founded out of an internal innovation project together with an external agency. Otto.de recognized the indispensable need to transform its core business. By facing this importance for the corporation, purely following the approach of partnering would have led to long term issues.

2. Speed

Is the targeted startup giving you rapid access to a market (region-wise and/or product-wise) or does it defend/lock in market leadership? The higher the relevance, the better when you are aiming for an exclusive partnership or an investment/acquisition opportunity.

When Daimler invested in Flixbus and myTaxi back in 2012, the rationale behind the transactions was to get data and insights into the transforming mobility market that Daimler could neither serve nor develop on its own. Smart decision, Flixbus still is a great investment giving Daimler many insights into the bus coach market. Later on, when Daimler bought market-leading myTaxi, the acquisition was a huge success.

3. Exclusivity of Know-How

  • Does the targeted startup hold a technology/competence/product know-how/content that is key and its exclusive ownership could protect a market or keep a relevant competitor from gaining market share?
  • Does it involve an IP (brands, patents) that is key and could protect a market or keep a relevant competitor from gaining market share?

The higher your need is, the more you should consider an acquisition — a sole partnership does not protect the know-how.

Obviously, the huge exit of Flaschenpost last quarter was based on such a rationale: Dr. Oetker acquired Flaschenpost at a valuation of €1 billion, having a negative cash flow of €2.5 million per month — the price was paid for the know-how and to gain and protect the market, Dr. Oetker’s player Durstexpress did not succeed sufficiently and did not show the rapid growth Dr. Oetker needed. The acquisition is the attempt to exclusively own the market.

Source: LinkedIn Sales Navigator on Unsplash.

Our Key Take-Aways

It is our strong recommendation to consider these topics to build your partnership rationale on. The process of thinking, discussing and finally writing down decisions makes them clearer, actionable and successful — for you and the startup.

“Being well-prepared ahead of the transaction and having a well-defined Post Merger Integration Strategy that takes the enterprise’s vision into account, is strongly advisable.”

At the same time, this pre-arrangement has to be executed in a short time in order not to threaten the momentum of the transaction. The above-mentioned pillars should support the process of deriving individual future strategies for the target company. Eisbach and JUSTROCKET regularly support such transactions and the planning process to make the new enterprise a long-term success.


To offer our clients “the best you can get” by combining strategic expertise and execution excellence JUSTROCKET and Eisbach decided to join forces. The combined, project-based power enables us to tackle challenges starting with establishing digital strategies up to bringing state of the art tech startups to life by acting as a company builder.

With this article, we would like to share some key findings we’ve made during the last years. Findings are based on a joined project.

About the Authors:

Dr. Michael Reinicke, former co-founder of carpooling.com (sold to blablacar in 2015) is a founding partner at Eisbach, a Munich-based consultancy, that focuses on supporting companies to set them up for the right path towards digital transformation.

Manuel Wesch is co-founder of JUSTROCKET, a tech company based in Munich and Cluj, Romania. Next to building tech & product teams for Startups, Scaleups and Mittelstand, the company is investing in startups & is developing scalable products to grow new JR ventures.



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