1 + 1 = 3

As a venture capital company, we want to make 1 and 1 become 3. Two startups from Starquest Capital’s investment portfolio, Webdrone and Olnica, just partnered in anti-counterfeiting. Starquest exposes the strategic issues of partnerships and synergies between French tech startups.

Webdrone is an anti-cybercrime solution, monitoring platform, and investigation service. Their expertise, experience, and know-how in the areas of business intelligence and cybercrime have enabled them to develop a versatile tool for monitoring and fighting against various forms of cybercrime.

Olnica supplies unique and innovative authentication systems, capable of protecting the property of companies and governments. They combat counterfeiting, fraud, misappropriation, and theft, with Molecular DNA, specific fluorophores, connecting detectors, cloud, or digital breadcrumb trails.

Startups specialized in B2B primarily position themselves as large companies’ suppliers, whatever the industry. Nevertheless, major firms tend to adopt annuitants’ investment strategies. They traditionally have a low-risk appetite and seek to limit intermediaries. When several startups confront the same corporate interlocutors and orbit common markets, they should pool their networks. The advantage for the client is highly superior: a bundled offer can cater the value chain extensively and reduce its risk exposure. It allows him to enhance productivity by reducing his fixed charges and simplifying his sales cycle.

Regarding Webdrone and Olnica, both firms deal with anti-counterfeiting through different sectors: industrial DNA proofing systems and cyber-investigation. The joint offer they propose provides global protection (physical and digital) to brand owners. “This partnership lets us fight illicit trade more efficiently,” outlines Hervé Putigny, CEO of Webdrone. The needs in anti-counterfeiting protection have become more and more substantial for the past years. Every industry is concerned, and counterfeiting offshoots are challenging to identify. According to the French Union of Manufacturers (Unifab), counterfeiting represents 5 to 10% of global trades. International criminal organizations invested extensively in physical counterfeiting and cybercrime. The consequences have a disastrous impact on public health, employment, and fiscal balances. Olnica and Webdrone thus decided to pool their expertise and propose a global analytical approach to secure their clients’ products and brand. Their combined solution integrates a physical unique DNA marking (Olnica) and a digital investigation service (Webdrone). Thanks to this exhaustive package offer, big industrial or retail brands, pharmaceuticals, tobacco companies, or agroindustries will trace the circulation of their products, guarantee their authenticity, and identify criminal organizations that are interfering with their businesses.

Nevertheless, if the Webdrone/Olnica association is a success, all joint ventures do not always lead to happy endings. Some collaborations fail. We can identify some criteria for success, beyond technological compatibility. Above all, it is necessary for joining startups to share the same corporate culture, to address the same type of clients, and to reach equivalent maturity levels. Entrepreneurs who focus on lab research and sell work in progress cannot collaborate coherently with a firm with high delivery standards. There is also a risk to see your good ideas “borrowed” by the other firm during the process of association. Hence, you must identify the competitive landscape accurately to connect with complementary businesses and avoid true rivals.

Before you engage in an active partnership, you shall capture:

- The financial health of both firms to be sure not to participate in flawed negotiations

- The possibility of future collaborations (not limited to one product)

- Corporate culture compatibility

- The coherence of the track records

- The material and ethical risk of plagiarism from the other startup

- The complementarity of the businesses

- The power balance with both customer bases: if the market is competitive, product delivery must be impeccable.

- A shared vision of the market and the set objectives

- Beyond business, the compatibility of teams and CEOs’ personalities

- A mutual comprehension of working methods

- The capacity of everyone to share information in a transparent and accountable way

A partnership between two startups is not just another business move. It often engages the future of your company if you are small and starting up. That is why your venture capital investor might be a good moral guarantee (even though it is not sufficient) to bond with another firm from the same portfolio. By any means, you should seek for such opportunities. In the vast jungle of business, small companies united shall not be defeated!