Digital Solutions & Data Responsibility
The Key to Successful Collaborations between Startups and Corporations
Business collaborations between startups and large corporations can be like a yin and yang: very different, but highly complementary.
Startups can serve as a wellspring of innovations and solutions essential for industry players looking to stay ahead of the competition. On the other hand, corporations can reciprocate with market access, business networks, research, expertise, and brand power.
However, due to their innate differences, roadblocks are to be expected.
Corporates and startups work at different speeds and their cultures can diametrically contrast. With their differences in structure and resources, being in sync with each other’s goals and time frames can be a challenge.
To help streamline the process, many large companies have launched specialized accelerator programs. These are designed for innovation efforts that serve as an entry point for startup collaborations.
Increasingly common, accelerators date back to the early 2010s when Microsoft launched its Kinect Accelerator program. It sought to bring in startups and small businesses to create new apps and functionality for gaming and motion-sensing hardware, according to Aaron Wiener of Applico.
Spanish telecom giant, Telefónica, is also considered one of the earliest pioneers. In 2011, it sought talent and innovation to gain access to the newest technologies and business models.
“A corporate accelerator is a win-win proposition for both large enterprises and startups. Enterprises can increase agility and have their finger on the pulse of the startup ecosystem. Startups get insights they can use, whether or not they stay with their sponsor companies, to make waves of their own,” Wiener writes.
For its part, Mitsubishi Fuso launched FUSO GreenLab to invite creative external parties to collaborate on ideas across all sectors with a focus on mobility. Joining FUSO’s acceleration program opens doors to global market access. It also offers mentorships from experts, business development and, world-class workspaces and testing facilities with the goal of creating long-term partnerships.
Startups, small businesses, early-stage businesses and student groups are encouraged to apply. FUSO also values corporate partnerships for its innovations strategies.
It’s common for today’s accelerators to cast a large net to help achieve specific aims to design something around a certain technology or strategic innovation.
For instance, Mitsubishi Fuso has teamed up with the Kawasaki Business Incubation Center for a startup pitching event. On April 12th Mitsubishi Fuso held a reverse pitch to share details on current robotics and factory automation projects. The goal is to seek out partners with innovative solutions.
Presenters explained automation processes and the associated challenges they would like to solve. The event will be followed up by a second round in May for startups and externals to pitch their solutions.
What startups need to know about corporates
There are plenty of reasons to collaborate with corporations. When entering an accelerator program, it’s important for startups to understand several dynamics faced by the corporate side before getting started. Here are a few tips to consider before applying to an accelerator.
Be well prepared
Before reaching out, a startup should have a clear industry-specific value proposition and use case for their product, service, or technology. Even after a promising initial meeting, the corporate partner needs time to evaluate a proposal and gain internal support for a project.
A good strategy is to keep the lines of communication open between the startup and corporate and quickly provide appropriate supporting materials. Should things progress well, signing Non-Disclosure Agreements (NDA) among all parties is the next step, followed by preparing business cases and drawing up contracts.
Having a solid value proposition
Keep in mind if a large organization is to adopt your product, the commitment on their part can be massive. Corporates are working at making the process more nimble to match the speed of startups. But generally, the larger a potential collaboration, the more layers of approvals, due diligence, and compliance checks need to be cleared before a partnership can proceed.
However, accelerators are designed to streamline the process by implementing pilot programs, simplifying contracts and procurements, and providing feedback and resourcing opportunities. They also work internally to understand the pain points of various line functions and link innovations to the applicable challenges. Nevertheless, due diligence on the part of the startup is still essential.
“Startups need to understand that something that is simply ‘nice to have’ will seldom succeed,” New Horizons notes in a report about collaborations. It includes a “1,111-point concept,” for startups. One point is achieved for an idea, then 10 points for a detailed plan, 100 points for a team to develop it, and finally, 1,000 points for a working demonstration.
A successful demonstration should illustrate a solution use case that is applicable to the given corporation and its industry. Also, if similar technologies are on the market, an explanation of the key differentiators is essential.
Corporate accelerators differ by organization. Some offer seed funding in exchange for equity, while others provide mentorships, facilities, market access, brand power, or data and APIs. Therefore, before entering a program, a startup must prioritize which of its needs can be met with a corporate partner. Then it should clearly envision how an accelerator can help it achieve its goals.