4 reasons why startups and corporations fail to collaborate

Corporates often turn to partnerships with startups in order to find a new innovation source. On the other side, startups are those who bring “fresh blood” into the industry and create new products that disrupt the normal flow of things. Partnerships between startups and corporates are great for both sides – corporates get new innovations, while startups get access to more expertise, and of course, more funds. 

However, when a partnership between a corporate and a startup is decided, a long process awaits both sides. There are many legal and bureaucratic procedures that need to be completed. More importantly, the startup and the corporate need to create a precise collaboration plan that will define the purpose of their partnership. 

It all sounds very attractive from the outside, but it becomes much harder when the whole process starts. That’s why many partnerships between startups and corporates fail very soon. Choosing the right partner, defining goals, and creating collaboration teams aren’t easy things to do, and many partnerships are doomed before they even begin.

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Here are the most common reasons for failure:

1. Startups don’t have a plan

It’s not hard to find a startup that has some complicated words in its product description – so complicated that you have no idea what’s it about. But, you think it must be something really big when it contains all these cool words.

In reality, they don’t even have a product. Some startups think they can just get away with complicated words, enchant investors, and create the product later when they get the money. The worst part is, they usually don’t have a target group, a clear technology plan, a vision, or a strategy. 

Another case is when startups have great technology, but no ambitions. They have no idea how great their potential is or how they can grow. The founders are probably engineers who don’t know a lot about business and don’t know how to make a plan for growth. 

Both cases can cause rotten partnerships with corporates. Corporates need startups with clear vision and goals. They need startups who know what they’re doing and know how to get there. Corporates should be just a growth booster. Startups should know how to grow on their own.

2. Startups risk too much

Yes, you won’t gain anything without taking risks. But, those who gain usually put a lot of effort into research and testing before taking the risks. Unfortunately young and enthusiastic startup founders often fail to estimate their chances and risk a lot. Most of their knowledge bases on assumptions – not on real facts. 

This can be a great problem when it comes to partnerships with corporates. Risking too much and failing can make corporates lose their trust in startups and end partnerships. Corporate people have much more experience and are careful with their enthusiasm when it comes to new products and features. 

Taking risks that don’t make sense won’t create a sustainable business plan – something that all corporates are looking for. Ventures that want to find businesses that really pay off won’t make decisions in a hurry – they will take all the time they need.

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3. Collaboration isn’t precisely defined

Corporates and startups often fail to understand each other. For example, corporates sometimes need to find some side-projects or socially-responsible projects, so they partner up with startups. They look at this type of partnerships as something on the side, something that’s not a priority and main focus of the company. This way, these projects get overlooked and pushed on the side by projects with a higher priority, and startups end up disappointed.

On the other hand, startups consider partnerships with corporates a really big thing. These small companies, often consisting of only a few people, look at corporates like someone who will completely change their lives. They put the partnership in their main focus, and start losing hope when they realize that they aren’t really the primary focus of the corporates.

4. Partners aren’t suitable 

Startups sometimes partner up with corporates just because it’s some big name that can bring in a lot of money. 

Corporates sometimes partner up with startups just because they have some technology with great potential and are on the rise.

Both sides often don’t think about whether their goals and visions are compatible with joint future growth. When goals start to differ over time, problems come up and solving them is quite difficult. That’s why teams from both the startup and the corporate need to carefully review their plans for the future, and see where each of them can fit in. Moreover, they need to have a clear vision of how the startup’s technology can help the corporate’s project and the other way around. 

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Conclusion – corporates with startups

Corporates do need to be socially-responsible and turn to startups. Every successful big company has at some point collaborated with a startup to look for a way to boost its technology and create a more user-friendly product. Startups are closer to customers. They don’t waste time – they go straight to the point and solve real problems with their products. That’s why partnerships between corporates and startups are essential for a successful and rapidly-growing ecosystem. 

However, problems occur much more often than it seems. That’s why the process before the partnership starts is even more important than the collaboration itself. Choosing the right partner, defining the right goals, creating a detailed strategy, and understanding from both sides, are mandatory to have a successful collaboration. 

This doesn’t mean that things will go smooth. Unexpected obstacles come up almost always. But, having the right plan makes it easier to overcome them. 

Both sides have to be careful when choosing a partner. First of all, corporates need to choose startups with a clear vision of where they want to get in the future. Every startup struggles on the way, but it’s important to know the goal they’re pursuing. 

Secondly, startups also need to choose corporates who won’t change their product completely and drive them on a whole new road. They shouldn’t risk and should choose partners who respect their vision. 

Moreover, both sides need to define the terms of the collaboration. Unpredictable things happen often and guidelines for solving them need to be defined. 

Finally, the startup and the corporate need to know they can benefit from the partnership. The only way assure is to choose a partner with similar goals and vision. 

 

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