Corporates and start-ups are linked for years. Start-ups are looking first of all for a long and stable client pipeline and corporates are looking how to be at least step ahead before the competition. Large companies know that they are not able to innovate fast enough themselves, so to win over market expectations they desperately need start-ups, to bring a ready disruption from the outside and adapt it wisely inside.  Why would start-ups be interested to team up with large companies? 4 reasons I believe matter here are listed below. 

First of all, corporates offer domain knowledge and are able to name real industry needs being close to the clients on a daily basis. Knowing niches and challenges is the first step to evaluate if the product brings any market fit. By incorporating large companies into Infoshare start-up chapter and evaluating more than 3000 startups over last years, I have observed with an astonishment how often the start-ups try to invent the wheel again or name problems that from the internal perspective never exist or are so niche that corporates are not even close to consider taking any action there.

Secondly, distribution channels are kind of gold bullion here. To enter the market for product validation is often the biggest challenge for start-ups. To win it over when the clients are numerous and are scattered requires a lot of effort, time and cash. It is not a secret that these are everything what start-ups mostly lack of. Having a partnership that opens you doors and makes this first introduction to your potential clients is priceless. Of course it is the start-ups’ duty to proof the product brings value, but reaching to clients is something that can help make it happen.

Thirdly, capital is something that one should not forget about. The money is not a king, but without capital it is impossible to proceed with any project. There is no doubt here. Corporations are a source of cash. The process to get the first transfer might take long, but it always works the same way with institutional investors, each and every euro cent is under much scrutiny. VCs are not writing cheques without any due diligence or at least knowing more about the technology, market validation or team.

Fourthly, start-ups can play experts for corporates. It is difficult for large companies to follow any technology appearing on the market or observe all not so obvious ways of known technology usage. In 2016-2018 among Infoshare Startup Contest applications there were almost no blockchain based innovations, in 2019 blockchain was in many pitch decks showing a lot of smart ways where to implement it. Since 2017 AI is present among 5 top areas of Startup Contest applications with a huge number of projects in 2020. Real AI might not still be there, but attempts to implement the concept in different industries constantly show its potential. Start-ups can bring optimisation by replacing hiring in-house experts for all possible technologies and to identify all tech trends in advance. 

Proving efficiency is important for large companies and it is important for start-ups. Corporations focus on professional innovation teams so start-ups do not just dance to corporates’ tune, they craft the result arm in arm. COVID-19 brought more challenges in the area, with optimizing what is only possible as a core rule. Bringing innovation from outside will be more common. Looking for faster access to market validation will be more common. The relation can be sometimes tough, but both parties need each other. That’s undoubtful.

Author: Agnieszka Meller, Head of Startup & Investor Relations at Infoshare

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