This is the sixth part of our 10 part series of the challenges and solutions in corporation-startup collaboration. In this article, we'll go through the most common external barriers that this type of collaboration sometimes faces. However, this article mainly focuses on the external barriers of phase one of the collaboration process.
As summer holidays are right around the corner, we'll be continuing this series after we get back from a few weeks of relaxation. In the next couple of weeks we'll be sharing tips on how us busy entrepreneurs and professionals can fully destress and relax during our time off and what issues to take care of before you sign off so you can have a stress free holiday. In the mean while, if you haven't familiarized yourself with this article series covering some cultural, structural and processional barriers that corporation-startup collaboration can have, you should catch up on your reading! These issues are important for corporations in order to fully understand and be able to utilize startups and initiate partnerships with them. And if it is unclear on why you should utilize startups in your business, be sure we have an article that covers these questions as well.
The catapult team wishes everyone an energizing summer vacation!
External Barriers and Solutions
External barriers are factors which are at least in part, outside the corporate's control. External barriers can be divided into two main categories: environmental barriers like for example legislation, and relational barriers, such as trust.
Relational barriers often arise from mismatched, unequal and asymmetric relationships between corporations and startups. They can also be the creation of public and economic policy, legislative hindrance, taxing issues and geographic barriers. According to Nesta's research, environmental barriers have proven to have less importance compared to internal or relational barriers. Due to the transference of digital technology, geographical distance hasn't been considered as a significant barrier in the startup-corporation collaboration. According to research tax breaks or subsidies have little significance in collaboration. Differences in legal frameworks and company structures seem to be more significant, although might not directly inhibit collaboration. To fully understand relational barriers, it's useful to think about the chain of events regarding establishing and sustaining a collaboration.
Relational barriers & Collaboration
Phase 1. Initiating the Collaboration
The first challenges in initiating the relationship with a startup, are problems related to searching for the right ones. It can be difficult for a corporation to identify the right startups that could help them in their business development needs. Many corporations look for startups mainly from startup events and hackathons but most startups that you find from these events, are in an early-stage phase. With early-stage startups the collaboration process can be slower, since their product might not be ready to market, which adds risks to the corporate end if the product hasn't been tested. For early-stage startups the slow-decision making process of corporations on the other hand, can be fatal, since they are really dependent on getting the payments upfront and fairly fast. Corporations often face problems with screening for suitability, because usually only a handful of startups fit the corporation's technical and organizational requirements.
The corporation should have a contact person for startups, who understands the technical and organizational needs of the corporation and has the budgetary and decision-making power to handle the collaboration and take responsibility of its success. For this process to work efficiently in a large corporation, this person needs to have a dedicated role for the startup partnerships. This person should split their time between looking for relevant startups globally, as well as networking within the corporation to fully understand the needs of the organization. When the corporation encounters a potential startup a connection should be made fast.
Another approach to finding startups could be partnering up with another company that can help the corporation with the search and the matchmaking process. It's not always sufficient to rely on lucky coincidences at networking events, partnering up with a third party can provide the corporation with tools and ways of finding the right startups much more efficiently. A company like Catapult that provides startup scanning services, can streamline the matchmaking process via online platforms and set you up with potential partners that are qualified for the corporations needs.