Sep 14, 2016 Pauliina Martikainen
It is often claimed that enterprises need new business opportunities and innovations in order to survive, whereas startups are quicker to adjust their operations to conform to new situations. Lisa Barnett, Partner at Sherpa Foundry and an upcoming speaker at Slush 2016, works to connect the world of innovative startups with long-time incumbents.
“When I meet impressive founders, I’m constantly thinking, how can I use my network to help them grow their businesses faster?” she says. Seeking to answer this question is what excites Barnett every day, and one key answer is collaborating with big enterprises.
According to Barnett, there will always be an interesting, synergistic yet competitive relationship between enterprises and startups. Enterprises have what startups struggle to get: scale and resources. On the other hand, startups have what enterprises fight to bring back from their early days: agility.
“What we will see is corporations continuing to be more comfortable with looking at new technologies and taking risks with startups in a couple of ways. From an investment perspective, corporate venture groups deployed about $7.7Bn in 930 deals in 2015. This was the highest investment total and deal count since 2000, and comprises 13% of all VC dollars invested and 21% of all deals made that year. Big, traditional companies are finding that in order to see growth in mature markets, they need to engage with the outside startup world. We are also seeing companies embracing the value of incubation and external thought leadership in corporate labs models, and there are more and more large-scale partnerships emerging,” Barnett explains.
It is not self-evident that collaborations between the two will ever reach their heyday. Like many relationships, the business ones need some nourishing to live up to expectations. According to Barnett, the most significant barrier between startups and corporations working together is a misaligned vision.
“Oftentimes, we see startups fail to create partnerships with corporations because both of them are only thinking transactionally – what can we gain from one another? Sure, any deal must work for both sides financially, but before you put ink on paper, you should make sure there is alignment on the mission and an early product or service that is being scaled. My experience in brokering these deals is that having an aligned vision gives you more sustainable long-term benefits than a mere transactional deal,” Barnett says.
Most of the other barriers to collaboration are often internal to the company, related to issues in strategy and corporate structure, processes, and culture. Also a lack of transparency and asymmetric information can often slow or block startup-corporate relationships from forming.
“What we try to do at Sherpa Foundry is to help mitigate the aforementioned barriers by being Switzerland between startups and corporations. But whether it’s us, or other people who have proven to be successful in navigating inside big and small companies alike, corporations and startups should invest some time in learning from these people how to best work with the other party,” she says. ”For startups, it often takes finding the right champions and top-down support in a large organization to help get a deal done.”
There are thousands of eager startups coming to Slush again this year, and Barnett has important advice for them on how to operate in the corporate world.
“It is never too early to invest in building relationships with industry leaders, and with anyone you think is interesting and has a unique experience to share. I have known too many startups that shy away from engaging with corporations – worried that taking a strategic investment could limit their exits, worried about them taking your idea and building it way faster and with a ton more resources. Sure they can, but if it’s that easy, then you’re in trouble already. That exit opportunity won’t emerge from thin air, and if you find your company struggling to get funding, to get traction, it is going to be much harder to acquire if you only start to build the corporate relationships during a time of need. So talk. To everyone.”
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