Increment versus disruption: What motivates corporates to partner with startups?

Landing the first corporate customer is a milestone for many startups. But how to ensure that it is a hit and not a miss? How do corporate giants decide who to partner with and in what capacity? 

In a discussion at Techsparks 2022, innovation team heads spoke about what they look for when they first partner with startups.

The session moderated by Ashok Chandavarkar, Director of Strategic Initiatives, Intel India, featured Abhay Tandon, Head of Digital and AI Innovation, TVS Motors; Sruthi Kannan, Head of Cisco LaunchPad, and Derick Jose, Co-founder and CPO, Flutura.

Sruthi gave the example of Cisco which is moving away from the status of an accelerator to a partner. 

“We are looking at partnerships with startups of all sizes and foray into new areas of the market. With the new age requirements that are coming up and evolving, we can’t do all of it alone. We are constantly on the lookout for what our competitors are focusing on and we want to partner with the best of the startups to beat the competition," she explains. 

Derrick spoke about the “informal checklists” of corporates before forging a partnership with any startup. 

“Companies first look at if they are budgeted for the solution and how would the partnership impact their balance sheet,” he says.

Corporate-startup partnerships often depend on a number of factors. For a corporate extending a hand of friendship to a comparatively smaller startup lies in whether they plan to scale or plan to disrupt.

No failure, only learning

Abhay explains that some corporate giants want to scale gradually, while the established ones interested in creating newer solutions are looking for disruptive startups. Then there is also a third category of corporates who want to scale and disrupt the market.

However, he adds that each motive has its own pros and cons.

“In incremental solutions through startup partnerships, there is less experimentation and more plugging in gaps. If we choose the wrong partner who cannot handle incremental solutions, then we are going to fail big. Then the narrative that goes inside the organisation is that you wasted money and could not deliver the outputs and results. And that’s why it is important to first create the framework and then find the right startup to partner with," he adds.

Abhay puts the onus on larger corporates to change their understanding of failures in order to partner with startups that can help them bring in disruptive solutions.

“There is no failure, there is only learning,” he says.

India: the deathbed of pilot projects

Advising startups, Ashok says, “India is known to be the deathbed of pilots. So, don’t call it pilot but call it the phase 1 of innovation when you go ahead and talk to corporates.”

While there is no one way to land the first corporate customer, panelists agreed that startups need to keep a few things in mind.

1. Get clarity before investing time with any corporate customer;
2. Do the competitive analysis to find global competitors instead of being the best solution in the country.

Sruthi adds, “It is not you versus me. It is about ‘we’ - how we do it together for solving the needs of the customers. There might be differences in attitudes and mindsets which need to be converged; technologies need to be integrated. The relationship between corporates and startups has to be symbiotic.”