Unlike Silicon Valley, where the capital, talent, and temperament for change are all there to help a startup go from idea to IPO, startups elsewhere don’t always have access to the resources necessary to grow and scale. At the same time, corporations across the country are facing an onslaught of new threats. New technologies, new business models, and a changing consumer landscape are chipping away at the foundations of long-standing industries.
A largely untapped opportunity exists for tech hubs across the country to foster greater innovation by helping startups and corporations collaborate to leverage each other’s unique advantages and strengths.
The challenge in facilitating startup and corporate collaboration is that the two types of businesses live in largely two different worlds. Corporations have figured out a business model that works. They are designed to defend and optimize that model. A startup, on the other hand, to use Steve Blank’s definition, “is a temporary organization used to search for a repeatable and scalable business model.”
These types of entities thus act differently. Corporations have more to lose, have more legacy systems and processes in place, and aren’t incentivized to destroy the business model that got them there in the first place. Startups move fast and often break things. Corporations seek to leverage their core assets — market position, established networks, and resources. Startups want to leverage their speed, agility, and new innovations into partnerships and customers that accelerate growth and scale. Each needs what the other has.
So if startups and corporations can learn and grow from one another, how do you effectively bring the tucked and the untucked, the ties and the t-shirts, together for a greater good? Here are a few things to consider.
Invest in each other
In the Midwest and other areas, larger companies are beginning to look to startups as a way to grow. We’ve seen this through the rise in sponsored corporate accelerators (Sprint in Kansas City, Target in Minneapolis, Global Insurance Accelerator in Iowa, and others) designed to give corporations access to new startups for potential partnering and investment. There are also a number of corporations that now have VC arms like Northwestern Mutual in Milwaukee and General Motors in Detroit.
In addition to traditional investments and acquisitions, corporations are internalizing startup techniques to enhance their employees’ skills and mindset. My consulting firm, Econic, works with corporations in a variety of industries (health care, insurance, manufacturing, and banking) to develop internal labs and training programs focused on lean startup, customer discovery, design thinking, and other startup-driven methodologies. Meanwhile, startups can look to corporations as a means to accelerate traction and market opportunities.
Find the overlaps
Look for the overlaps between these two communities. If you’re a corporate leader, hang out at startup events, mentor at local accelerators, and attend, speak, or participate in meetups. Startup meetups (especially around specific technologies that cut across verticals) like Open Coffee and 1 Million Cups are usually a good place to begin to make connections to the startup community.
Startups, in turn, should look to corporations actively participating in the startup ecosystem — sponsors of conferences, attendees of demo days, mentors at accelerators, hosts of industry pitch competitions or hackathons, providers of partner programs, and board members of local economic development groups.
In my backyard of Lincoln, Nebraska, I’ve seen firsthand how these overlaps can bring big benefits. In June, I helped host the Inside/Outside Innovation Summit in Lincoln, where we paired startups with corporations looking for new investment and partner opportunities. We drew over 600 attendees, and several other cities have approached my team about creating similar events in their markets.
There’s also the annual JumpStart Challenge events, hosted by the Lincoln Partnership for Economic Development and the local accelerator NMotion (which I founded). For the past four years, local corporations have come to the JumpStart Challenge to pitch an industry problem to a room of entrepreneurial talent.
Entrepreneurs spend a few weeks working on possible solutions, with the winner receiving access to the sponsoring corporation as an initial pilot customer. This deliberate problem/solution/talent matchmaking event has resulted in the creation of three venture-backed startups and hundreds of collaborative conversations that wouldn’t have happened without a focused goal of bringing the two sides together to solve problems.
Align your goals
Once you start finding and interacting with potential partners, don’t jump immediately to working together. Assess the readiness and ability to partner on both sides. Nothing kills a relationship faster than being on different timetables with different goals and objectives. Are you looking for a paid trial, purchase order, free beta customer, capital? Make sure your potential partner is on the same page.
I’ve found that corporations are more likely to align with a startup if the company appoints a dedicated startup liaison whose job it is to help startups navigate the larger corporation. From developing entry path contracts to making qualified internal introductions, a startup liaison can help both parties align faster for more impact.
In the end, fostering these collaborative connections can help existing businesses solve problems, expand markets, enhance the brand, and rejuvenate the culture, while providing the traction and opportunities for the next generation of corporations to growth and scale. Heck, you may even find a new tie or t-shirt to add to your wardrobe.