Corporate entities have become critical stakeholders in the cleantech startup ecosystem—they’re starting funds, acquiring startups, and providing pathways to market for innovations in need of customers. We sat down with our Advisory Board to discuss their advice for startups looking to take advantage of the resources and opportunities corporate partnership might offer their company. Many thanks to our meeting facilitator and Greentown Labs expert Trond Undheim for his help in this conversation. For more information about Trond and his work, check out his new book on startup corporate partnerships here.
This is the third installment in our blog series about working with corporate partners. Here are the big takeaways from the recent discussion:
It’s Different than a VC Pitch
Our corporate partners shared their disappointment that many founders go out of their way to land a meeting with their company and once they are in front of them, they give the corporate the pitch they would give an investor prospect. This approach, our partners agree, can stifle mutually beneficial collaborations for the following reasons.
- Strategic Fit is King: Most corporate leaders are not looking just for financial return on their investment of time, money or resources into a startup. They are also looking to achieve a material advantage over the competition. This is a nuanced value proposition that startups used to pitching investors must carefully qualify when preparing a pitch to corporates.
- Other Outcomes > Investment: While opportunities for financial return matter for venture investment, and many corporates do have a ventures arm, evaluation of strategic fit typically comes first and investment is one of many potential outcomes a corporate can work towards with a startup and perhaps not the most valuable to either party.
- It’s a Conversation: Startups are accustomed to presenting financial investors with a ‘plan’ for how their financial contribution will support the development of a startup from the founders perspective. Corporates are looking for an opportunity to collaborate with technologists on how they work together based on the respective resources on either side of the equation. Startups pitching should be prepared to turn the tables and discuss how the corporate envisions collaboration before assuming one pathway only.
Additional advice from our Advisory Board on making a corporate ready pitch:
Highlight your Team’s Capabilities
When corporates choose startup partners, they are typically in it for the long term. This means they have, after extensive diligence, determined they want to work with a team not just a technical innovation. While an investor pitch traditionally highlights ‘product,’ ‘solution’ and ‘IP’ more than ‘team’ (which usually earns 1 slide only in a 10+ slide pitch deck), corporate stakeholders generally care more about what a team can do in the future than what their product can do right now. This is because value added solution(s) developed in collaboration with startups are often informed by forward-learning corporate strategic priorities—priorities that may be very different from the fit the startup sees based on their capability, and the corporates focus, in the short term.
Develop Customer Knowledge
What is strategic to a corporate’s customers is what is strategic for them. Many of our partners described the challenge of understanding what innovations are needed in the value chain downstream from them and lauded startups as a high value source of this information in some cases. Our partners noted that startups that had come to them having interviewed even 1 of their customers fared way better than startups that started from square one. This conversation was a reminder to us that customer discovery is vital for startups both to ensure long-term success and to provide corporates with the data they need to make the case internally for a strategically aligned partnership.
Our partners note that while they know it can be hard to permeate their organizations, startups should keep trying and not take the first, second or third ‘no’ as a final answer. Furthermore, they recommend that networking your way into multiple divisions within an entity and into multiple levels of each respective division can be a critical way to build the internal reputation and brand recognition needed to get a corporate behind taking action with your startup. One of our Advisory Board members referenced a scenario wherein he identified a company through ventures that he wanted to find an internal home to justify an investment. When he called the business unit leader he thought may be interested and prepared to explain the company, the unit leader interrupted to say that he had already spoken with the founder and that he agreed there may be a strong fit. This deal progressed because the startup had already done the internal networking necessary to make his value proposition known within the business.
Stay tuned for more insights about how to create mutually beneficial partnerships between corporate strategics and startups!