Fireside talk about the cooperation between startups and corporates
On November 17, corporates and startups gathered to talk about how they could cooperate better in the future. VodafoneZiggo organized a panel talk during Crossroads 2020, a startup festival organized by StartUpUtrecht. The discussion aimed to understand what both sides (corporates and startups) need to co-operate, developing a list of insights into how corporates “think” with the core intention to help startups.
The panel consisted of the following members:
- Benji Coetzee Digital Director VodafoneZiggo
- Hidde Koning Founder and CEO Bittiq
- Daan Witteveen Deloitte NSE Technology Sector Leader
- Silke Wesselink Manager Innovation NS
- Desiree van der Gracht CEO Ambient Wellbeing
The conversation was moderated by Jan van Boesschoten, yes that is me, and Femke den Ouden both platform managers at VodafoneZiggo.
The audience was a mixture of corporates and startups, some with a specific question for a panel member or to promote a particular solution, others to learn and share experiences.
So what did we learn?
Corporates need to keep on closely work together with startups to stay innovative. As corporate work with large numbers (budgets, clients, stocks), small creative projects don’t add to overall turnover. But what is small can become significant. Corporates are good at innovating their business because small changes can have substantial gains. Corporates are complex organizations, and they lie under a magnifying glass regarding legal and legislation. Working together with a corporate as a startup can be slow due to the legal department's checks, not to mention privacy laws and regulations. According to Hidde: Once you sign a big contract with a corporate, you are no longer a startup. They engage with you because they like you and your ideas, but if you want to close the deal, it’s serious business: you have to adhere to their rules and procedures, which means you might have to deliver a lot more than just your product. Your risk management, security, and compliance all need to be enterprise-grade.
As a startup, you need to have mature documentation and processes. Be sure to involve experts who understand the tricks of the trade and the consequences of what you’re going to sign for.
Getting to the stage as a startup working together with a corporate requires some effort from the startup founder. Benji, who had a startup herself, emphasized the need for the one-minute pitch. Within a corporate, you have to find a sponsor that will promote your startup. The sponsor needs to clearly explain what you are doing and why it is crucial to work together. Corporates have financial statements out every year. In those, you can find where most cash is burnt and see whether you have a solution in that field. Note that innovation doesn’t have to be in a corporate's core business. It all can be in HR, recruitment, supply chain, or inventory management.
Define your proposition short and sharp focusing on what you do that other companies cannot do and why it matters, preferable in one sentence.
As an innovation manager, Silke added that she is looking for startups that are highly specialized in one specific niche. Once you have that and you are gaining traction, you can offer more diverse subjects related to your core business.
Focus on your core competence and become a specialized partner in that field for corporates.
Once you cooperate as a startup with a corporate, you can create a joint roadmap. When you deliver the core needs to transform a corporation's business, they might acquire the startup or offer a partnership. Although that might or might not be the founder's dream, new challenges arise on the horizon if it happens. According to Daan, you have to be prepared to keep the team's talent and deal with the unique dynamics to double your team within a week. Because every phase in growing your start-up has its challenges, you need a different kind of skillset and people to help you go through them. Pay especially attention to the role of the CFO. You need to understand the numbers to recognize the phase you are in as a startup and plan the best next steps.
Every stage in growing a startup has its own challenges. Hire the right people to guide you through them, but don’t forget the talent that made your startup.
Corporates are number-driven, but even when you have a “soft product” aiming at employees' well-being, for example, you can translate that to numbers, according to Desiree. You might have to relate them to general statistics that are well known and accepted, like the burn-out percentage of Dutch employees. Sick leaves cost money, and you can provide a cost-benefit analysis if you can prevent them.
Numbers are important like great negotiation skills.
These days, when Covid and climate change rewrite business and social rules, startups can play a unique role in defining and working according to new principles and insights like the circular and doughnut economy. They have a clean sheet, and their business is not yet interwoven with other ventures like suppliers as long-existing corporates. However, their impact is limited in the beginning unless they can team up with corporates. So there is room enough to create opportunities to work together.