The question that arises is why, with all these things, only a tiny percentage of startups succeed. There could be several reasons. These include a lack of understanding of customers’ needs, or not enough charisma, and the inability to convince people of your vision, which are often linked to a lack of sales skills. A lack of sufficient funding and poor management skills are also common issues that can affect the survival of even the best startups as the business expands. However, networking and stable funding improve the chances of success.
Mature businesses can do more
Partnering with a corporation that is open to innovation can be a good solution. Mature companies can offer a lot to startups. Help defining a product or technology at the initial stage of development increases the chances of creating solutions relevant to market needs. However, the biggest benefit of such cooperation is the fact of selling the product. It is companies that are usually the first adopters of solutions or services offered by a startup. Moreover, because of their long presence in the market, companies have access to potential customers, the so-called target group, to whom they offer the solution. This is invaluable because as much as 90 percent of a startup’s success is based on the successful commercialization of its product and the ability to scale it.
Sometimes companies that have recently been startups can support teams with their experience. They became a source of capital and competencies by involving their employees as mentors. In addition, they can offer their infrastructure and sales channels to startups.
Benefits and fears
The biggest concern when it comes to a company working with a startup is a share takeover. That is a common worry. However, it is worth emphasizing that this is not always what happens, and sometimes the opposite is true. Increasingly, corporations are opting for minority stakes, ensuring that startups are independent and free to operate and make their own decisions. Such an attitude not only increases the probability of the startup’s success but, above all, it results in real profits, such as access to innovations (e.g., through licensing) or cost reduction, namely using much smaller resources to produce the same value. The additional benefits of collaboration can be access to new “ways of working” that corporations can adapt themselves, access to talent, and the possibility of alternative paths of development for employees through appointing them as mentors. It is important to emphasize that for the cooperation between a startup and a company to be effective, it is necessary to move away from imposing a burden of procedures, patterns, decision-making paths, strategic planning or KPIs on young companies. Smart companies provide access to their resources, allowing startups the independence they need. Not every corporation is ready for this, however, and this amount of freedom may prove to be unacceptable. This is because not every organization’s culture can simply embrace a new style of working in a relationship with startups, often leading to the failure of the venture.
To cooperate with innovators, companies often create special units or subsidiary companies that specialize in finding and accelerating startups at various stages of development (from the early so called seed stage to already functioning projects). Through accelerators, companies share their competences, assign mentors to startups and provide the necessary infrastructure and funding. Good example of such cooperation are the company Orange, which created an accelerator program for startups called Orange Fab, and the Euvic Group, owner of the eduLAB accelerator.
There are many ecosystems of this type, based on mutual exchange, where mature companies support the development of startups with their experience and capital, while startups support these companies with their innovativeness. Let us hope that we will see more and more examples of such cooperation on the Polish market. It seems to be a promising model for the future.
Originally published in Polish on the Edulab website: https://edulab.io/wspolpraca-z-duza-firma-otwarta-na-innowacje/