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Key Takeaways Startups gain innovation and speed while facing challenges of resource scarcity and lack of experience.
Partnering with established industry leaders offers startups scalability, resources and market access, but can come with cultural and operational risks.
What are the top advantages of a startup? Innovation and nimbleness. These are companies too young to say “no” to possibility. But what are the top vulnerabilities for a startup? Lack of resources and experience. Without support, too many startups fail to launch.
It wouldn’t seem that established industry players would want startups to succeed; after all, startups could disrupt their business models. Yet, it is precisely because of this disruptive energy that some industry leaders prioritize helping startups thrive — with results that benefit both sides. This is why many startups that are looking to advance the technology readiness level (TRL) of their products are partnering with major players to accelerate their development processes.
So, if you’re running a startup that could use a boost, let’s consider the advantages and risks of partnering with an established player — and also learn about some leading companies that have extended a helping hand to startups.
Related: 6 Effective Funding Strategies for Startups
First, let’s think about the advantages. Established companies have the advantages of scale, resources and distribution that can bring an unknown product to market. Their deep expertise helps them recognize what works and what doesn’t. In some cases, these companies have been around for generations and have seen many market cycles come and go. Although growth and age have slowed their nimbleness when compared to younger startups, well-managed legacy companies have compensated for those changes with wisdom and stability.
How about the risks? For one, veteran companies may view your startup as a threat that needs to be mitigated. They may also have ossified under decades of complacent management, or stratified into conflicting departments that don’t work together to advance new products. Perhaps the biggest risk is a conflict of culture: If a large company and a startup don’t operate well together, the strain could grind down the startup’s promise.
Which of these potential scenarios might apply to your startup? To answer this, consider the type of company you’ve built and what you want it to be. Does your business thrive on being combative and challenging existing market forces? Is your brand dependent on taking down the establishment? If so, a collaborative partnership is probably not for you. On the other hand, does your business offer a new innovation that could be additive to an existing company’s product line? Have you created a new way of doing business that overlaps with a legacy framework? If so, collaboration may be ideal for you.
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