Today innovation is stronger than ever, and the traditional and innovative world must be connected as never before. From studies emerge the fact that most companies believe that is necessary to collaborate with startups in order to stay innovative and collaboration could become a strong point. Every relationship and also this one, generate success when all the parties involved gain benefits. A company could learn about new technologies, their use and implementation but more important, innovate and enter in new markets in order to gain a competitive advantage and startups could learn the best way to develop their products, scale and business strategy implementation.
But what is a startup? “A startup is a human institution designed to create a new product or service under conditions of extreme uncertainty” (Ries, 2014). These different from enterprises because on many aspects. Are fully dedicated to their idea and follow and believe the dream that generates these, often have no legacy, follow innovation and apply a business innovative approach, are composed by small but complete teams and generally lack in know-how and business strategy.
Most of the companies today see the importance to digitalize and enter in contact with the startup world. Collaboration between technology startups and large corporation is key to fostering innovation. Overall is important to say that a win-win situation for both the parties involved must be present, no matter what kind of collaboration parties decides to implement.
Startups could benefit from:
- Revenues from external capital: revenues represent a key incentive for an early-stage company and receiving investments from big corporations, can free startups from the need to seek outside investments. In addition, corporations can also guarantee long-term interests which may stabilize a start-up and help it reach the break-even point or achieve a sustainable growth;
- Enhance their reputation: startups could benefit from large corporate sustainability in reputation and credibility;
- Internalization: working with large corporations offer the possibility to expand into other countries by partnering with the company’s local subsidiaries.
Large corporations could benefit from:
- External innovation: in order to gain competitive advantage, companies need to become aware of market changes and external innovators have more freedom to develop and implement disruptive solutions;
- Customer focus: startups are generally more focused on customers’ needs as they do not have standardize processes and can adapt and customize solutions more easily;
- Access to an entrepreneurial and more agile culture: working with this reality, could bring back more openness and intrapreneurship. In a fast-changing environment is key have a culture of openness.
The collaboration between corporates and startups is a challenge for the mindset of both parties. Is fundamental a mutual understanding because both parties must be aware of the risks and differences of the other face in embarking on collaboration. For example, startups have to accept the fact of dealing with the constant risk of running out of money, due to long corporate sale processes and vendor risk assessments while corporates may see their reputation and brand at risk.