Why Partnerships Are not What Your Early-Stage Startup Needs
The relationship between startups and corporates tends to be more artificial than organic
In the quest to grow a startup, sometimes founders run to establish partnerships that in many circumstances are in favor of corporates at the expense of the startup.
Many larger corporations are inclined to get more from a startup than they would want to give and many startups ignore their primary responsibility of building relationships with users.
Some of these partnerships work out well but early-stage startups tend to lose out and waste time in many of the partnership deals with larger companies.
Additional force
Building partnerships works well when the startup already has established a customer base so that the partnership is more of an additional firepower rather than the primary source of revenue.
In these partnerships, startups do not realise that they are signing a deal with employees of the larger corporation rather than the founders.
Employees in many cases do not care about the fate of the smaller startup as long as they make that sale or deal.
Distraction
In many cases startups realise later on that they were but a waste of time and a distraction rather than a source of growth.
The most useful commodity for founders is time. There is a limited amount of time founders are willing to allocate to an idea.
Investor driven
The partnerships are largely driven by investors who want to see them on pitch decks.
In fact, there is an entire page dedicated to partnerships on the pitch decks of many startups.
Instead founders should focus on building something that individual customers want in order to foster return customers who will last longer.
The relationship between startups and corporates in the partnership tends to be more artificial than organic.
Shortcuts
The reason most founders love partnerships is because they appear to be shortcuts. In some cases, they promise to give you more customers faster than the traditional customer acquisition channels.
However, customers acquired via partnerships may not translate to real growth as the startup may not have refined their product to fit the needs of individual users unless it is something that has no substitute in the market and users need it badly.
False impression
However, the reason founders also love partnerships is that they create a false impression of progress but in reality, they are not bringing in the dollars.
They appear big in theory and in presentations but they are not earning the company any revenue.
It is therefore essential that before founders choose to enter a partnership, they should ask themselves whether there is more to it than the clout.
How will it contribute to the bottom line of the startup? Having said that, founders may realise that a partnership deal they thought would be profitable turns out to be bad.
In this case, they should not hesitate to call it off.
