What motivates companies to partner with startups?

Landing the first corporate client is a milestone for many startups. But how do you make sure it’s a success and not a failure? How do corporate giants decide who to partner with and in what capacity?

In a discussion at Techsparks 2022, innovation team leaders discussed what they look for when they first partner with startups.

The session moderated by Ashok Chandavarkar, Director of Strategic Initiatives, Intel India, featured Abhay Tandon, Head of Digital Innovation and AI, TVS Motors; Sruthi Kannan, Director of Cisco LaunchPad, and Derick Jose, Co-Founder and CPO of Flutura.

Sruthi gave the example of Cisco moving away from the status of an accelerator to a partner.

“We are looking for alliances with startups of all sizes and to venture into new areas of the market. With new age requirements emerging and evolving, we can’t do it all alone. We are constantly on the lookout for what our competitors are targeting and want to partner with the best of the startups to beat the competition,” he explains.

Derrick spoke about companies’ “informal checklists” before forging a partnership with any startup.

“Companies first look at whether they have budget for the solution and how the partnership would affect their bottom line,” he says.

Startup partnerships often depend on a number of factors. For a company extending a hand of friendship to a comparatively smaller startup, it depends on whether it plans to scale or plans to disrupt.

No failure, just learning.

Abhay explains that some corporate giants want to scale gradually, while established ones interested in creating newer solutions look to disruptive startups. Then there is also a third category of companies that want to scale and disrupt the market.

However, he adds that each reason has its pros and cons.

“In incremental solutions through startup partnerships, there is less experimentation and more gap-filling solutions. If we pick the wrong partner who can’t handle incremental solutions, we’re going to fail big. Then the narrative going within the organization is that you wasted money and failed to deliver the products and results. And that’s why it’s important to first create the framework and then find the right startup to partner with,” he adds.

Abhay places the onus on larger corporations to shift their understanding of failure to partner with startups that can help them bring disruptive solutions.

“There is no failure, there is only learning,” he says.

India: the deathbed of pilot projects

Advising startups, Ashok says, “India is known to be the deathbed of pilots. So don’t call it a pilot, call it phase 1 of innovation when you go ahead and talk to companies.”

While there is no one-size-fits-all way to get your first corporate client, panelists agreed there are a few things that new businesses need to keep in mind.

  1. Get clarity before spending time with any corporate client;
  2. Do the competitive analysis to find global competitors instead of being the best solution in the country.

Sruthi adds: “It is not you against me. It’s about ‘we’: how we do it together to solve customer needs. There may be differences in attitudes and mindsets that need to converge; Technologies must be integrated. The relationship between corporations and startups has to be symbiotic.”

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