Disruption talk is now commonplace, writes Paul Smith, co-founder and chief executive officer (CEO) of South African equity-free accelerator Ignitor.
Globally there are 193 unicorns – private companies with a valuation of US$1 billion). The top 10 tech companies have market cap of US$4 trillion. Uber, AirBnB, Facebook are hurting South Africa’s hotel, taxi and advertising industry. And South African startups – like GetSmarter, Zapper, Jumo, Zoona, Gyft, WooThemes and many more – are doing great things.
Executives are taking notice and collaboration with startups is on the rise. Working together makes sense as startups move fast, can take big risks and have strong teams. While big business has distribution networks, known brands and lots of money.
Successful partnerships can lead to shared growth, enhanced business models and win-win situations. As a result big business is investing programmes like Barclay’s Accelerator, Nedbank LaunchLab, RMIs AlphaCode, Investec FinTech programme, MMI exponential, Orange Corners and many more. Now is as good a time as any for entrepreneurs to be working with big business.
In the last two years we at Ignitor have worked with many large organisations to help them partner with startups. Here are are a few lessons we have learned.
Innovation theatre is real. Not all big businesses are serious about partnerships. So qualify executives to see if they have the authority, mandate and budget to make things happen. If they don’t, walk away.
Find a champion
Corporate deals do not involve a single person. Decisions are made by many people. Meaning you will need to convince other departments and executives. To do this develop relationships with a champion and support them to win over other decision makers.
Big business moves slowly. Things take time. We have seen deals take from three to 18 months to happen. We have seen startups quit just before the finish line. Be patient. Keep going. Closing a large corporate deal can change the game.
Jump through the hoops
Finance, procurement, executive signoff, board decisions, agreements, risk, legal – there will be lots of adminstration. Get your house in order and jump through the administration hoops. Expect a lot of paperwork. This is just a ticket to the game.
I am always surprised at the amount of change happening in large organisations. People leave, roles change and organisations get restructured. We have seen deals die when a point of contact leaves or changes roles. If there is a real opportunity take the time to develop multiple relationships to ensure people moving doesn’t don’t kill the deal.