Opinions expressed by Entrepreneur contributors are their own.
Technology adoption is a common challenge for startups looking to grow quickly. Startups understand the benefits of their technology, but it may not be widely known in the market. In my experience, corporate investment is beneficial for startups, not only to secure financial support, but also as a way to leverage corporate experience and expertise. Aside from helping with technology adoption, research from Global Corporate Venturing has found that corporate investment reduces startup bankruptcies and increases exit valuations.
Venture Capital as a Service (VCaaS) is a unique and innovative investment model that allows companies to invest in startups with the help of experienced venture capital partners. It allows companies to invest in the most innovative startups around the world without having to difficult and expensively build their own venture capital organization. VCaaS allows investors to easily scale their investments up or down as needed while aligning their investments with the company strategy.
Related: Corporate Innovation through Effective Startup Investments
Benefits of Corporate Investment
First, let's look at how corporate investments can help startups succeed in technology adoption and other ways. One benefit for startups is that corporate investors usually have a strong network of customers, suppliers, and partners. Corporate investor introductions can help startups bring their products to market faster. Startups can easily leverage the experience and knowledge of corporate investors. By leveraging this expertise, startups can make the right decisions faster and avoid common mistakes that entrepreneurs make.
Another benefit for startups is that most corporate investors have deep pockets. Investing in a startup gives the startup founders almost immediate access to a huge amount of capital. This allows them to invest more in technology, hire additional staff, and acquire critical infrastructure. Startups often need capital to manufacture or purchase more inventory to accommodate if their business grows rapidly.
Startups also benefit from the established reputation of their corporate partners and investors because the companies are likely to be well-known in the business community. Many companies have globally recognized brands, and the startups they invest in typically derive value from that relationship. When customers and other ecosystem members know that a reputable company has invested in a startup, they are more likely to take the startup and its products and services seriously.
Related: 5 ways to identify promising business investments
Collaboration Roles
I believe collaboration is crucial in any business relationship, and this fact is well known in the industry. A McKinsey study found that 75% of startups believe collaboration with corporations is important, but only 27% are satisfied with their relationships. I would like to share my perspective on how startups can increase the success of collaboration between them and their corporate investment partners.
The first insight is to ensure that communication between the startup and the company is clear and understandable. Both parties should clarify their respective objectives at the start of the collaboration to avoid confusion in the future. Ideally, goals that benefit both the startup and the company can be established, even if they approach the relationship from different perspectives. Ongoing clear communication is key to ensure that the startup and the company can learn from each other and clarify the goals they are trying to achieve.
It's also wise for startups and larger companies to be honest with each other about what they know and don't know. If they're experts on a certain topic, then of course it makes sense to leverage that expertise. On the other hand, if they're not very knowledgeable in a particular area, I think it's important to seek advice elsewhere. This can come from investment partners, third-party research, or connecting with other startup ecosystem members. It's often good to find people who have been in the same situation as you before and learn from their experience and expertise.
Finally, I believe a flexible attitude and approach is key in any collaboration. Partners are more successful when they listen carefully to their counterparts and the market. Instead of being set in their ways, I encourage startups and corporate investors to stay open throughout the relationship. By adapting quickly to feedback and changes, they are usually able to adjust their strategies and achieve better results in the end. This will result in more business for startups and more successful investments for corporate investors.
Related: Here's the key to truly “founder-friendly” venture capital
