Partnership business concept.
Entrepreneurs and corporations often find themselves played off against each other in the public eye. Entrepreneurs are touted as disruptors of the status quo, quick to seize opportunities from slow-moving companies. Meanwhile, companies are positioned as giants, willing to use influence, funding and brand recognition to retain customers at any cost.
Despite these outdated clichés that are ubiquitous, a greater truth remains: Entrepreneurs and businesses need each other to survive. In fact, startup founders often find that partnering with companies is a smart move, especially at a time when seed capital flow is slowing.
Not long ago, the Wall Street Journal reported that early-stage capital closes fell 22% year over year in the second quarter of 2022. This means that startups have less seed capital available. It makes sense, then, that entrepreneurs would seek opportunities to partner with established companies in hopes of building relationships – while laying the foundation for future financial investment opportunities.
But money isn’t the only reason entrepreneurs join forces with corporations. Entrepreneurs can learn a lot by taking notes on what’s happening in large organizations today. The truth is, when you have big business ideas, collaborating with larger organizations may be your best bet for success. If you’re a startup founder, take a look at the following four potential benefits you could experience from partnering with an established organization.
1. You get exclusive access to knowledgeable mentors.
Having trusted mentors is one of the easiest ways to succeed in the corporate world. Luckily, working with executives and thought leaders who are interested in helping you grow your product or service is a great way to find mentors early in your business journey.
BizTimes recently published an article about a Milwaukee incubator program offered by Northwestern Mutual. The program was created to help Black technology entrepreneurs realize their dreams through relationships with local businesses. The program also has a strong mentoring arm that helps produce tangible results for participants, as evidenced by some companies raising over $500,000 in the first year.
Therefore, mentoring is an important benefit of partnering with a large organization. Not only do you get insights from those with more experience, you can also offer your help, for example by sharing insights into what’s happening in the entrepreneurial scene.
2. You can take notes on great management and leadership principles.
Large companies that have been around for a while tend to have good management practices and processes. They may lack the speed of a startup, but they can make up for this by leveraging proven repeatable systems.
An insider’s look at running a larger company can also serve as an informative training ground for shaping your startup. You might want to take notes on what seems to work best. For example, what aspects of your corporate partner would you like to emulate? Are there any management principles that could strengthen your emerging business?
You won’t like everything you see, and that’s okay. Still, you can learn a lot from an established organization and will ultimately go home with valuable concepts and ideas to use in your own business.
3. You get the benefit of a “gut check” of your own innovation practices.
Diving knee-deep into an alien ecosystem can be an excellent way for you to reconfigure your own innovation methods. After all, you and your business partner are pursuing the same goal: winning customers with your innovations. Unfortunately, if your innovation roadmap is not optimized, you could be wasting valuable time.
Fred Hoch, co-founder and general partner at TechNexus, has seen how entrepreneurs can better test their assumptions and explore alternative options when partnering with companies. “They start to understand the realities of the market,” explains Hoch. “By using their partnership with a company as something to learn from — by really looking at ways to use the knowledge they’ve gained — these startups have been able to transform into something that’s much more valuable, both to the company and to them.” for the entire industry.”
In Hoch’s experience, this type of win-win approach can pay off enormously. You just have to keep an open mind and be willing to rotate based on what you discover.
4. You will be introduced to a network of resources.
Maybe you’re just getting started. You may not even have an office outside of your home. This puts you at a disadvantage as you have to struggle to find resources and double work to get your business off the ground.
Luckily, when you join a company, you get reasonable access to that company’s resources. Even if you only have a quiet place to work, you’re ahead of the competition. And rest assured that you’re likely to get a lot more than that. Entrepreneurs working with companies can even draw on resources such as systems and software. This can save you a lot of money, especially since you don’t have to bear any subscription or device costs.
Many large companies that work with startups have a similar philosophy as investor Mark Cuban. A CNBC article reveals Cuba’s mindset when it comes to investing in dreamers. Simply put, He doesn’t expect miracles. As Cuban wrote on Twitter, “Sometimes my deals are just to help someone or send a message.” Therefore, being part of a partnership gives you peace of mind when it comes to resources even if your first innovation doesn’t materialize .
It can be difficult to live up to the romantic ideals of the scrappy, ‘go it alone’ entrepreneur. It can also be foolhardy when venture capital dries up. Consider helping your startup in a unique way by collaborating with a large corporation. You will be surprised how beneficial a partnership can be for everyone involved.
