What do I need to know about effective Partnering as a Start-up?
It is well known that most startups never make it beyond their first years in business. But when founders bond their startups to a larger, more stable company that needs - and benefits from - what the start-up offers, start-ups can increase their chances of long-term success. The reason? Companies can give a start-up stable revenues. When a large company works with a start-up, the result should theoretically be a win-win situation. The problem with this is that only 45 percent of companies actually do start-ups, and those who do often don't know how to do it right. But even start-ups can be hesitant when it comes to partnerships with large companies. As industry experts like to say, giant companies are slow and inflexible, a nightmare scenario for agile start-ups that tend to move quickly and adapt flexibly as needed. All too often such alliances fail.
Reasons for failure:
- Misunderstandings and conflicts of interest
- Lack of commitment from one side
- Loss of information on the way there
- Problems in identifying feasible plans
- Problems managing large enterprises to reach consensus and approve budgets
- Economies of scale: Due to lower volumes and initial investment costs, there is often an imbalance between the expected unit costs that a company has in mind and those that the start-up can actually offer.
- Risk appetite and aversion to change in large companies
- Lack of understanding of how the other person works and makes decisions
- Failure to build trust