Partnership business concept.
Entrepreneurs and companies often find themselves at odds in the popular consciousness. Entrepreneurs are heralded as disruptors of the status quo, deftly seizing opportunities from slow-moving companies. Meanwhile, companies are positioned as behemoths ready to use influence, funding and brand recognition to retain customers at any cost.
While these outdated stereotypes remain ubiquitous, a bigger truth remains: Entrepreneurs and businesses need each other to survive. In fact, startup founders often discover that partnering with companies is a wise move, especially at a time when the flow of seed capital is slowing.
Not long ago, The Wall Street Journal reported that the second quarter of 2022 is at an early stage investment deals had fallen by 22% in a year-over-year comparison. That translates into less start-up capital for startups. It makes sense, then, for entrepreneurs to consider finding ways to partner with incumbents in hopes of building rapport – while also laying the groundwork for future financial investment opportunities.
Still, money is not the only reason for entrepreneurs to join hands with businesses. Entrepreneurs can learn a lot by taking notes of what is happening in large organizations today. The truth is, if you have big business ideas, seeking partnerships with larger organizations may be your best bet for success. If you’re a startup founder, check out the following four potential benefits you could experience from partnering with an established organization.
1. You get exclusive access to expert mentors.
Having reliable mentors is one of the easiest ways to find success in the corporate world. Fortunately, working with executives and thought leaders who want to help you grow your products or services is a great way to attract mentors early in your business journey.
BizTimes recently published a piece about a Milwaukee Incubator Program offered by Northwestern Mutual. The program is designed to help black entrepreneurs in the tech sector turn their dreams into reality through relationships with businesses in the region. The program also has a strong mentoring arm that helps deliver tangible results for participants, as evidenced by some companies raising more than $500,000 in their first year.
As such, mentorship is a key benefit of partnering with a large organization. Not only do you get insights from people with more experience, but you can also offer your help, such as providing insight into what’s going on in the entrepreneurial scene.
2. You can take notes on great management and leadership principles.
Large companies that have been around for a while generally have good management practices and processes. They may lack the speed of a startup, but they can make up for it by using proven repeatable systems.
Getting an insider’s understanding of how a larger company is run can also serve as an informative training ground for your startup’s design. You may want to take notes on what seems to work best. For example, what aspects of your business partner would you like to imitate? Are there any management principles that can bolster your nascent business?
You won’t like everything you see, and that’s fine. Still, you can learn a lot from an established organization and eventually go home with valuable concepts and ideas to use in your own business.
3. You get the benefit of a “gut check” on your own innovation practices.
Diving knee-deep into a foreign ecosystem can be a great way to reconfigure your own innovation methodologies. After all, you and your corporate partner strive for the same result: attracting 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 discover alternative possibilities when partnering with companies. “They’re starting to understand the reality of the market,” Hoch explains. “By using their partnership with a company as something they can learn from – really digging into ways to leverage the knowledge gained – these startups have been able to transform into something much more valuable, both for the company and for the general industry.”
In Hoch’s experience, such a win-win approach can bring huge benefits. You just have to stay open-minded and be willing to turn based on what you discover.
4. You are introduced to a network of sources.
Maybe you’re just getting started. You may not even have an office outside your home. This puts you at a disadvantage as you have to scramble to find resources and double work to get your business off the ground.
Fortunately, by attaching yourself to a company, you give you reasonable access to that company’s resources. Even if you only get a quiet workspace, you’re ahead. And rest assured that you will probably get a lot more than that. Entrepreneurs who collaborate with companies can even leverage resources such as systems and software. This can save you a lot of money, especially since you don’t have to cover the cost of subscriptions or equipment.
Many large companies that partner with startups have a philosophy similar to that of investor Mark Cuban. A piece from CNBC shows the Cuban mindset when it comes to investing in dreamers. Simply put, he doesn’t expect miracles. As Cuban wrote on Twitter, “Sometimes my deals are purely to help someone or send a message.” So being part of a partnership can make you feel good about using resources even if your first innovation doesn’t take off.
It can be difficult to live up to the romantic ideals of the scruffy entrepreneur who “does it alone.” It can also be reckless if venture capital dries up. Consider helping your startup in a unique way by partnering with a major company. You may be surprised at how beneficial a partnership can be for everyone involved.
