Startup-Corporate Partnerships: Keep the Love Alive

The right strategic partnership between a startup and a corporation can be a beautiful thing, but the breakups can also be painful. Read on to find out what both startups and corporations should look out for—and how to keep the love alive.
Angela Martin and Pierre Dubié

For startups longing to grow, access resources and secure funding, the right corporate partnership can seem very tempting. After all, what corporations lack in the flexibility and agility of a startup, they make up for in reach and assets. Together, the startup and the corporation appear well-positioned to pivot strategies, train and hire teams, and launch entirely new businesses with speed and at-scale. 

Yet while startups and corporations have a lot to gain from one another, they come from very different worlds—and it shows. Partnerships are often fraught with process disputes and conflicting business visions. Without intervention, often from a third-party consultancy, structural and cultural clashes can doom once-promising relationships.

Obviously opposites do attract. In 2020, Vodafone partnered with Sparqa Legal to expand into the consumer legal-tech market. Schneider Electric partnered with Greentown Labs, a climate-tech incubator, to select promising startups in the energy space. Looking ahead, if startups and corporations want to drive innovation together, they’ll need to learn how to communicate and cooperate.

The warning signs 

There are common causes for friction in these partnerships: 

  • Timing: Startups make mission-critical decisions daily with ruthless pragmatism. Corporations need six months to a year to make similar decisions. 
  • Process: Startups lack the formality of corporate processesIncompatible operationlead to big headaches and dire missteps. 
  • Purpose: Corporations own large portfolios, measuring the success of their mission incrementally. Startups exist solely to disrupt the status quo now. 
  • Level of Risk: Stakes between parties are generally not the same. Startups are all in, betting big on partnerships. Corporations typically think they have less on the line. 

Making the connection 

For startups, making that initial connection with a corporation can be daunting. It’s critical to come armed with radical ideas, but also solid business foundations. “Startups need to reach a certain level of maturity before interacting with corporates,” says Sylvain Grivel, Innovation Lab Management Head at Sanofi in Lyon, France. “Proof of concept is not enough. They should already have a good understanding of both the business potential and the strategy to seize it.” 

It’s not unusual for startups to be suspicious of a corporation’s intentions. At frog, we’ve worked with many startups that are ready to be acquired but feel too protective of their vision to risk committing to the wrong partner. An acquisition can feel a kiss of death to a startup’s sense of purpose. “If the big co wanted to swallow us, they had to acquire us,” says Greg Sorenson, CEO of DeepHealth in Boston, Massachusetts. Alexandre Andre, who assists startups at the Lyon-based Incubator Manufactory, has seen how acquisition can lead to apprehension. “A common goal is to be acquired by a big company, but the fear is to be absorbed, dominated, without any countervailing benefit.”   

Keeping the love alive takes trustIt takes communication around IP, aligned success metrics for shared purpose and clear exit strategies. These are all areas where third-party intervention can keep businesses in sync, offering a neutral ground to experiment with new ways of workingwhile acting as translator to speak the languages of both startup and corporation. 

When to intervene
To bridge cultural and operational gaps, there may be cause for third-party intervention across the entire lifecycle of a partnership.
1Validation

During initial assessments, third-party firms act as matchmakers, helping businesses find common ground in a crowded, competitive landscape.

2Facilitation

Third-parties design a plan for strategic collaboration and a shared vision for the future, while ensuring both sides are heard equally.

3Connection

Bringing startups and corporations together into a larger partner ecosystem requires apparent mutual value. Third-parties remain neutral, able to make connections that benefit both sides.

4Acceleration

Driving rapid innovation in 2021 will require a committed customer-centric mindset. Third-parties act as customer advocates, helping startups and corporations speed up innovation on projects that improve customer experience.

5Post-Partnership

Not all business partnerships are built to last. Reports suggests as many as 70 percent don’t. Third-parties act as mediator between parties even as they go their separate ways, protecting company values and reputations along the way. Think ‘conscious de-coupling,’ not bitter divorce.

Making the romance last as long as it’s profitable for both

Looking into a Post-Covid business future—where continuous innovation is needed to address evolving customer needs at an alarming pace—startups and corporations are wise to form healthy bonds to meet tomorrow’s challenges head-on.

It’ll take TLC from both partners and often outside help to arrive at a happy ending. If the partnership’s a match, it’ll be a win-win. If it sours, it doesn’t need to be a devastating blow for either side. Like all breakups, the hope is to learn a lesson to take into your next alliance. Who knows? The next partnership could truly be the one.

Angela Martin
Senior Strategy Researcher
Angela Martin
Angela Martin
Senior Strategy Researcher

Passionate about innovation, Angie has earned her PhD in Economics on the topic of start-up’ cooperation for innovation, won two Best Paper Awards and created an original trademark called “Quantum Clinic” about exploring parallel universes to find the best business model for healthcare innovation. She brings a unique combination of scientific rigor, creativity and a lot of positive energy to all of her projects.

Pierre Dubié
Studio Head, Director, Org Activation
Pierre Dubié
Pierre Dubié
Studio Head, Director, Org Activation
Pierre has always been passionate about inventions. Unable to choose between technology and business, he earned an engineering degree in agronomy and then
completed a business management course. For Pierre, an inventing mindset marries usage and business. Pierre developed various experiences in Africa/Indian Ocean and Europe in diverse environments for Public & Private sectors. He led strategic projects for clients as Airbus, CNES, ESSP, SFR, DCNS, ENL Holding Group, Mercedes about new products, services, business models, M&A support. He also coaches startups. His motto: Collaborative, innovation-driven transformation by doing. Pierre manages the frog Toulouse Studio and the Org Activation Team in France.