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Published on 2019-05-14

These are the ways startups and big businesses can collaborate for mutual advancement.

May 7, 2019

For many, big corporations are a natural enemy to startups. The common perception is that large businesses try to kill off new businesses before they become threats by overwhelming them with lopsided competition or by buying them off. It’s like corporations are merciless predators to hapless newborns. This shouldn’t be the case, though.

Startups can be useful to corporations while corporations can lend a helping hand to fledgling businesses. It’s possible not to harm each other’s interests through the following ways.

Startups serving the needs of corporations

Instead of competing for the same consumers, startups can build a business aimed at serving the needs of large companies. It could be a business that provides a platform to link raw material suppliers to large manufacturers. It’s like putting up a middleman between manufacturers and farmers but not necessarily in the traditional sense. The business could be a platform like an online and SMS-based marketplace made simple and more accessible to ordinary folks.

The key is to avoid targeting the same customers. If there are other business options, it would be better for startups not to directly compete with already established businesses. Larger businesses can be the customers for startups. Instead of treating them as competitors, it wouldn’t hurt to see them as opportunities.

Larger businesses creating opportunities for startups

The initiative to collaborate may also come from bigger corporations. They can intentionally create gaps in their solutions that can be filled by new companies. For example, instead of developing their full-fledged in-house IT department, they can outsource the functions to a startup that specializes in IT solutions. Instead of assembling their own language translation or localization specialists that will play an important role in overseas business expansion and operations, they can hire a business translations team supplied by a smaller company that focuses on language solutions.

There are instances when these “gaps” are not deliberately created by larger companies, but they just consequently appear and are exploited by creative entrepreneurs. Smartphone accessory manufacturers are some of the best examples of businesses taking advantage of opportunities that emerge out of the business operations of larger companies. They were not told by Apple or Samsung to produce phone cases, screen protectors, device holders, keypads, adapters, or blings. They simply took the initiative after seeing the viability of developing and selling these products.

Moreover, many corporations have startup assistance programs, venture capital programs, and accelerators meant to help start and grow businesses that can be useful to them. Microsoft, for one, created a community designed to help startup companies by providing technical resources, access to technology, and opportunities for co-selling. The company also runs M12 (previously known as Microsoft Ventures), which serves as a strategic partner to startups, typically providing Series A to D investments. BMW, Toyota, Google, Samsung, Sony, and many other large global companies are involved in corporate venturing, the primary goal of which is to foster startups that can be useful to their respective business interests.

Startups and big corporations reaching out to each other

There are also times when corporations purposefully reach out to enterprising people or groups to come up with a business that will complement their products or services. Similarly, startups may contact big companies to engage in a joint venture or partnership. Startups with novel or innovative ideas understand that it will be difficult to find success for their products on their own. By partnering with established brands that have the name recall and big marketing resources, they can boost the chances of their product ideas making it out to the market. On the part of corporations.

On the part of corporations, they acknowledge how ideas from small startups can be useful to their business. These big businesses are pursuing partnerships either as a prelude to acquisition, as a way of keeping a new product idea or technology away from competitors, or a way to reign over a potential competitor that offers an exciting new concept. Of course, there’s also the possibility that big businesses simply want to make money out of something that can be done through a startup-corporate partnership.

Examples:

  • Nokia/Sony-Light camera tech partnership. One good example of a startup-corporation cooperation is the partnership between well-known Finnish brand Nokia and the new camera maker Light (which specializes in multi-lens systems) to produce Nokia 9 Pureview. Light debuted its technology a few years ago but it only managed to bring its product out to the market with significant hype and an actual product buyers can buy when it partnered with Nokia. It was also recently announced that Light is partnering with Sony to come up with new ways to implement the multi-lens camera setup.
  • IBM-Spare5 cognitive computing partnership. IBM forged a partnership with Seattle-based startup Spare5 for the development of applications that employ the company’s Watson technology, a computer system capable of answering questions in natural language. In this case, it’s the corporation that has the technology while the startup is the one trying to find ways to make good use of it. As a result, Spare5 developed the Watson Golf Pro, a mobile app that provides advice to golfers.
  • Regions Financial-Fundation finance technology partnership. Startup-corporation partnerships also happen in the financial industry. Regions Financial Corporation, one of America’s largest consumer and commercial banking service providers, made a deal with Fundation, a lending startup, to enhance the way it (Regions Financial) serves small businesses. This partnership entails the expediting of loan applications to small businesses.
  • Telefonica-Social & Beyond entrepreneurship-advancing partnership. Spanish multinational telecommunications company Telefonica partnered with Social & Beyond, an app designed to use a company’s free POS Wi-Fi as a social media marketing tool. This partnership helped Telefonica convince retail stores to upgrade their broadband services. Through the Social & Beyond app, customers get free Wi-Fi connection in exchange for submitting a feedback. This scheme helped Social & Beyond get a new revenue stream while allowing Telefonica to provide an incentive to retail stores as they upgrade to more expensive broadband packages.

Connecting through cooperation platforms

There are third parties that try to help connect large businesses and startups to form productive or beneficial partnerships. While corporations and startups fail to see the opportunities, others do and they are eager to put these opportunities to good use.

The University of Minnesota and the Holmes Center for Entrepreneurship, for example, have established platforms aimed at assisting local startup ecosystems. Healthcare.mn was established to connect innovative startups and others who share passion for healthcare. Startup Europe Partnership (SEP) is a pan-European platform for innovation created to facilitate connections between the best startups, investors, and corporate players in Europe. NextBig was created with the goal of becoming serving as a platform and partner for corporate-startup co-creation. There are several summits held to facilitate cooperation among startups and corporations.

Cooperation for mutual progress

It can’t be denied that big businesses invest in startups for their own interests. Not many “help” new businesses just for the sake of helping. However, this is not exactly disadvantageous to the startups that receive assistance. The silent clash of business interests behind the scenes will always be there, but if it creates opportunities and facilitates success, it can’t be a drawback. Startups and corporations can work together and there are many proofs of the viability of such cooperation.

As the CEO of Day Translations, Inc., Sean Hopwood understands how to make a global expansion strategy work. Together with his team of native language experts, Hopwood has been assisting businesses, organizations, and individuals in bridging the language divide to enable communication and correspondence that facilitate success. The online translator of Day Translations greatly helps individuals and companies with their immediate translation requirements.



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