How startups and established companies can work together and what steps should be taken

This article was also published on January 21, 2016 on deutsche-startups.de.

How startups and established companies can work together and what steps should be taken

The development of innovation is the point at which different business forms such as startups (a startup is an organization created to search for a repeatable and scalable business model) and established companies face the same challenge. Both need to develop new products, processes or business models. While startups often have the chance to think “out-of-the-box”, innovative companies have the potential to use their existing resources and customer access. For example startups are confronted with internal cannibalization and can therefore think bigger. These heterogeneous strengths of the two types of companies show why cooperation between the two can be very valuable.

When talking about cooperation with startups, it is important that both sides understand each other. This means that the people concerned understand each other’s circumstances. Since both forms of business are very heterogeneous, understanding is often a challenge. For example, some purchase decisions in established companies can take a year, which is often difficult for a startup. At the same time, startups do not have a long history and develop new innovations that have not yet been validated (see  Technology adoption lifecycle).

How working with startups works

In the second step you start to identify relevant startups, which correspond to the self-defined target. With a clear goal a clear invitation to tender can be created, which allows better results. This tender can be used, for example, to identify participants for an event at which employees of a company can come into contact with startups and get to know and understand them better (e.g. Lange Nacht der Startups, Telekom). A closer form of cooperation is the identification of startups as research partners. Formats for identification and exchange with startups vary greatly, for example: startup scouting, startup pitching, innovation competitions or an event on the subject of startups meets established companies.

As soon as relevant startups have been identified, forms of cooperation can be identified and evaluated on the basis of objectives. In this phase, startups are selected and decisions on the next steps are made. The responsible persons exchange their goals and visions and come to a cooperation to the mutual advantage. These cooperations can, for example, simply take the form of an initial general exchange, a supplier relationship or a customer relationship. As soon as good experiences with the cooperation have been gained, further forms of cooperation such as research & development cooperations or API cooperations become interesting. In later phases, forms such as corporate investments, takeover recruiting (so-called Acqui-Hires) or mergers and acquisitions (M&A) are added.

Forms of cooperation with startups

After the selection of the form of cooperation has been completed, the energies will be directed towards the implementation of the cooperation and thus towards the expected benefits for both sides. Expectation management and open communication on objectives from both sides play an important role. The intensity of cooperation can vary greatly, from loose cooperation to strategic cooperation (e.g. Tesla and Daimler). The definition of milestones and a code of conduct are good methods for laying a strong foundation for long-term cooperation. If an established company works with different startups in one sector, this can become a challenge if these startups compete with each other. For intensive cooperation, operational support in the form of change management is also recommended. Ambi-Vation is your partner for the identification and selection of startups, as well as for the development of cooperation concepts.