Dancing with Giants: Why corporate venturing could be the secret to success
How start-ups need to punch above their weight with mega-corporations
If you are a tiny little mouse with almost no voice, how do you get a huge elephant to dance with you in a big noisy jungle where the elephant can barely even see you or hear you and is focused on navigating its own way through the tangled growth of shrubs and trees?
This poorly phrased mixed set of metaphors begins to give you a sense of the scale of the challenge a start-up faces when trying to establish some sort of partnership with a large, multi-national corporation. It is often the case that at some point in the start-up’s journey from fledgling idea to profitable growth business, it is helpful to secure one or more major deals with large businesses – either as customers, suppliers, routes to market or corporate investors.
But if trying to get an elephant to dance with you is such a monumental challenge … why bother?
The answer is simple – the benefits can be just as monumental. By partnering with a large established corporate, a start-up can benefit from the huge operational gearing such a relationship can provide without having to spend years and years and untold millions of pounds trying to build these capabilities itself.
Imagine a 20 person start-up having a sales force of 10,000 people, factories of millions of square feet and a balance sheet of billions. However, getting the attention of a massive business is extremely hard and then securing a good deal with them is almost impossible.
Almost by definition, a massive, profitable, global business is so busy doing what it’s doing that it only gets out of bed to do new things that are enormous in their own right because the company’s opportunity cost is so high.
In addition, at a personal level, individual people within large corporations often have smoother career paths by avoiding failure than by delivering a bold new success. So, one of the key challenges for a start-up is to find ways of punching above their weight and to get the attention of the mega-corporation by influencing other organisations that they care about far more than the start-up itself. Yes, in short, the first step is to acknowledge the large corporate can ignore you and probably will unless you can find ways to shout very loudly indeed.
Over the next couple of months I will be writing a series of blogs looking at the world of corporate venturing and providing some tricks of the trade to help start-ups find a rhythm for dancing with giants.
Some of the most powerful indirect routes to influencing the giants include selling your concept to their key stakeholders – be it their own customers, their shareholders/analysts in the City or their regulator etc.
It’s amazing how quickly you can get the Board’s attention if the top rated analyst in the City (who can influence their share price and hence the CEO’s bonus) asks about what the company’s strategy is for this hot new technology area that a start-up they just met is set to revolutionise!
Time and again many man-years of effort are wasted by start-ups who fail to grasp that B2B engagement with large corporations requires far more than a classic frontal approach – namely, selling to the obvious senior contact in the target organisation. Fortunately, there are methods for punching way above your weight that can help secure the deals you want.
Dancing with giants takes skill, patience and many angles of attack… but it can be very rewarding if done well.
Peter Bance is Entrepreneur in Residence at Octopus Investments , which typically invests £250,000 to £5m in early stage UK businesses.