The advantage of start-ups lies not only in being agile, but also the relatively small consequences of a failure, which allow them to take risks where a mature company would not.
One might ask a key question – with all of this, why only a negligible percentage of start-ups succeed? There may be several reasons for this, and they can include a lack of understanding of customer needs. Other reasons for failure include too little charisma and an inability of the team to convince others to back their vision, which often comes with a lack of sales skills. What is more, some start-ups fail not due to the lack of resources, but due to insufficient management skills as the business grows – this can be the final nail in the coffin for many young companies. That is why networking and stable funding increase the chances of success.
Partnering with a corporation that is open to innovation may be a good option given this predicament, since mature companies have a lot they can offer to start-ups. Helping to define a product or technology at the initial stage of development increases the chances of developing solutions that correspond to the actual needs of the market, but that is not the biggest advantage of such a collaboration. That comes with a way of ensuring the sale of the final product, since these companies are usually the first recipients of solutions or services offered by a start-up. What is more, due to their well-established market position, mature companies have access to potential target groups for the developed solution. This is particularly important due to the fact that the success or a demise of a start-up depend in 90% in the successful commercialisation of its product and the ability to scale it.
In many cases, companies that only recently stopped being start-ups themselves can support fresh teams with their experience, offering not only capital, but also competencies and involving their employees as mentors. Besides, they can offer start-ups their infrastructure and sales channels.
Benefits and concerns
The biggest concerns regarding collaboration between companies and start-ups concerns stake acquisition – this is probably one of the most common concerns; however, it is worth noting that this is not always the case, and sometimes the opposite is true. More and more corporations are opting for a minority stake, ensuring that start-ups remain independent and free to make their own decision. By doing so, they not only increase the probability of their success, but also gain actual profits in the form of licensing innovative solutions or reducing costs – in other words, using much fewer resources to produce the same value. What is more, the value of collaboration does not need to end there. It can also include access to new ways of working that corporations can implement, as well as a diverse talent pool and an offer of alternative development paths for employees, who can serve as mentors. It should be emphasized that in order for the cooperation between a start-up and a company to be effective, it is necessary to move away from straddling young companies down with standard operating procedures, charts, decision-making paths, strategic planning and KPIs. Smart companies only provide access to their resources, giving start-ups the free reign they need. Not every corporation is ready for this – the demands for independence may prove too much for them to offer. This stems from organisational culture – not every company is able to simply accept a new style of working with a start-up, often leading to the failure of the joint venture.
That is why companies set up special units and subsidiaries specialising in collaborating with innovators, as well as finding and accelerating start-ups at different stages of development – starting from preseed phases to already established ventures. Using accelerators, companies can offer their expertise by nominating mentors for start-ups, as well as providing the necessary infrastructure and funding. An apt example of this type of cooperation is Orange, which has created an accelerator programme for start-ups – Orange Fab. Another good example is the Euvic Group, which owns the eduLAB accelerator.
There are many such ecosystems based on mutual exchange – where mature companies support start-up business development with their experience and capital, while start-ups support companies with their innovative solutions. Let us hope that the future will bring more and more examples of such cooperation on the Polish market, since it shapes up to be a promising model for the future.
