The #startup world moves at breakneck speed — what’s hot one minute is old news the next, and it can feel like the rules of the game change every day.
For successful startups, rapid growth often attracts the attention of incubators and accelerators, and popular programs such as Y Combinator and Techstars have been instrumental in launching some startups to great success.
However, there are other options. Namely, partnering with tech “titans” — bigger technology companies that used to be startups themselves and understand the journey. These titans can offer access to resources, R&D, capital and customers, and many are now seeking to attract startups to their own ecosystems.
Business visionary Steve Case argues we are now entering the Third Wave of the internet — an era in which entrepreneurs have the ability to change the way we live by driving transformation through technology. Part of this new era requires rethinking relationships, specifically those with large organizations that have the capability to support startups’ missions to invent new business models and scale.
Founders may be wary of partnering with a large company because they don’t want to get locked into a particular platform, or, even worse, look uncool to fellow startups! But partnering with a tech titan to advance goals is actually a very smart move. Of course, careful calculation is required. How do you choose the right titan? Here are some things to look for.
What equity does its brand name hold?
Choosing a tech titan with which to partner requires an honest assessment of the company’s credibility in the market. Beyond ensuring their values are a match, it’s important to assess whether the titan’s reputation and brand cachet has the power to attract and provide you with top-tier guidance, technology and go-to-market capabilities. Another indicator to consider is the titan’s track record of dealing with startups positively and supportively.
Access to customers — and funding
Once startups build their products and obtain seed funding, they often struggle to scale and gain traction with their market. In fact, 75 percent of startups fail, according to The Global Startup Ecosystem Ranking 2015. This is due to lack of customers, not necessarily funding — although many founders spend a huge amount of time chasing their next rounds.
The best companies understand that innovation doesn’t happen in a vacuum, and that relationships are the key to success.
To succeed, early-stage startups not only need to build the right product, but also need to gain traction with the right customer base. Titans may introduce you to their established customers, in addition to potentially investing directly. In fact, corporate venture capital is picking up speed, as many large companies that prioritize innovation are setting aside funds for external investment in companies and startups. According to the Venture Pulse Q2 2016 report published jointly by KPMG and CB Insights, VC-backed companies raised $27.4 billion across 1,886 deals in Q2 2016.
Find the titan that understands your audience
The reality facing founders today is that there is no shortage of potential partners in the market willing to hedge their bets on a group of promising startups. For that reason, selecting a titan that truly understands the market you are targeting is paramount. Key to establishing and defining this shared commitment is holding open and honest conversations during the discovery period of your relationship, setting joint milestones and remaining true to your vision but open to suggestions. This will help you determine if a titan is willing to invest some skin in the game and be a true partner when you need it.
The best companies understand that innovation doesn’t happen in a vacuum, and that relationships are the key to success. While tech titans might not be the most obvious place to start when thinking about partnerships, ignore them at your peril! All startups don’t want to be startups forever. Titans can share key insights for navigating your growth journey. And many are generous when it comes to sharing resources, customers, experience, funding and more.Featured Image: Bryce Durbin