5 Survival Tips for Startups Working With Large Companies

By Kathy Pretz

THE INSTITUTE Because of the fast pace of innovation, many of today’s large companies form partnerships with startups that have the technology or know-how they need.

In theory, the partnerships should be great for the smaller company because the more-established organization has the financial resources, name recognition, and market access the startup needs. IEEE Fellow Chenyang Xu cautions, however, that such relationships can be double-edged swords.

“There are many bright sides but many dark sides too,” Xu says. “Startups dream about these relationships, so they often overlook the downsides.”

Xu has advised hundreds of tech entrepreneurs and investors during the past two decades. He also has worked on the corporate side with global technology startups when he was general manager of the Siemens Technology-to-Business Center, in Berkeley, Calif., where he led a team of venture technologists who invested in and partnered with more than 50 promising disruptive-technology startups.

“To extract the full value out of these relationships, startups need to know how to successfully maneuver through them,” he says. “When done properly, not only can a startup benefit from the partnership but it can also minimize the negative aspects.”

Xu offers five things startups should consider to ensure the relationship works for them.

MAKE SURE IT’S MUTUALLY BENEFICIAL

Don’t partner with a company just for its name recognition or its financial assistance, but for how the relationship can help your startup grow.

The collaboration has to bring value to both parties, Xu says. The startup should have a clear understanding of such exchange values, as Xu calls them, and not just fuzzy, high-level objectives. The exchange values need to be clearly defined and understood from the beginning. For example, the value of the relationship to the startup might be access to established markets, larger distribution channels, product support, or validation of its brand. For the large company, the value could be acquiring new technology, filling product portfolio gaps, entering new markets, offering new services, or attracting new customers.

“If there is no mutual exchange value,” Xu says, “the partnership will not last or be successful no matter how much effort is spent on it.”

Go to IEEE The Institue to read the complete article.