Ascent B2B IT Forum – Secrets to a Successful Startup/Corporate Relationship

Today’s ultra competitive, ever-evolving and customer-centric business landscape demands a continuous flow of change – change that’s often delivered in the form of “shiny and new.” Innovation has become the cornerstone for sustainable success, and one way to achieve this is through strategic partnerships. As a result, mergers and acquisitions activity continues to trend upwards, and more than ever, corporate giants and startup companies are joining forces to accelerate innovation through collaboration.

We explored secrets to successful startup/corporate relationships last week at Ascent’s B2B IT Forum, with a panel of experts from LogMeIn, PTC, Aqua Security, Carbonite and CloudLock. As startup/corporate relationships have changed over the years, we kicked off the event with a discussion on how it’s evolved – and answers varied. Upesh Patel, VP of business development at Aqua Security, noted that larger companies are now looking at smaller companies as an “activity” and a way to feed their pipeline, not just a technology. Sabine Schilg, VP of customer success, renewals, cross and upsell at Carbonite, attributed the change to the cloud – it is shifting the selling model and relationships in general. Iain Michel, corporate VP, corporate development at PTC, found that the biggest change overall for larger corporations was more direct engagement with startups, earlier in the lifecycle.

Companies have begun working together in new ways, with a focus on early-stage, flexible and open partnerships. For both emerging companies and larger established players, the benefits of aligning are significant – startups provide corporations with the new, cutting-edge ideas and technology they need, while gaining corporations’ exposure, funding, and other resources. Also, as emerging companies are becoming more expensive to acquire, today’s large legacy providers are incented to “buddy up” with innovative, hot companies even earlier in their lifecycle, so they can acquire them at a younger stage. With 67 percent of corporations preferring to work with startups at an early stage, this trend is only gaining steam.

With panelists from a range of professional backgrounds, most of them still agreed that mutual trust and communication is central to relationship building. “Partnerships are as good as the amount of effort both sides put into it,” said Rob Lawrence, SVP of strategy at LogMeIn. “Having really clear expectations and goals on both sides is very important.”

This was echoed by Ron Zalkind, co-founder and CTO at CloudLock, who likened startup/corporate partnerships to sales: “At the end of the day, a partnership is like any other sales opportunity. You need to know your champions, decision makers, and you need to qualify the relationship.” Patel drove this point home, emphasizing the importance of trusting your partner in order to work together toward success.

When asked about best practices around approaching a corporation as an emerging company, the near unanimous response: offer a great customer, be explicit with what you want, and prove your value and growth potential. DON’T expect a company to respond to solicitation. Rather spend time ensuring that expectations and goals are clear and aligned. At the end of the day, the goal for any collaboration is business acceleration and this definition varies depending on every, unique situation.   

Rob Lawrence offered five quick and dirty tips: know the target customer; if your customers overlap with those of the larger company; what you are solving for that customer; how you are different from the competition; and your formula for how you’re going to help accelerate the company. Bottom line: do your research and have a crisp story.  

As innovation continues to speed along and shape almost every industry, new partnerships will only become more significant. As new companies emerge and markets (especially tech) continue to mature, symbiotic relationship between emerging companies and bigger legacy providers will become increasingly critical for both parties. While the reality is that only five to 10 percent of startups succeed, every year brings new minds and ideas to the workforce and the potential for the leaders is substantial. As for large companies looking to partner with the best and brightest, they will need to be armed with the tools – be it data and/or intuition – to determine which startups will fade away, and which will result in long-lasting, solid, and fruitful relationships.