Business Development at Startups: Why Is It So Tough?

by Sreejita Deb

Partnerships with a large organization can offer a start-up access to a large base of users, validate the business model in the eyes of an investor and unlock revenue potential- the real question is how do you make it work? Deal making is much like recruiting the right team for your start-up. Most of all you want to make sure you’re watching for “fit”- right attitude, right skills and at the right time.

Let's start with attitude. Chances are limited that you'll find a large organization where processes are lean. In the absence of that, look for an organization where the culture is similar to a startup- organizations that are more entrepreneurial and most importantly that have a real sense of urgency about getting things done and not one which is slow and lets hierarchy overwhelm critical decisions.

“ Critical decisions” is a good segue to the next point-  the organization you want to partner with has to have a natural sense of urgency and you need to heighten it by establishing that what you offer is valuable to the firm- it creates not just incremental value but is critical to their business in some way- either you can offer them an insight about their customers and help them address that need in a way that their business currently isn't, or you identify an area where they face considerable competitive disadvantages and offer your services as a solution. In other words, you've got to make them need you as much as you need them.

Much like finding the person in your network who can refer a good candidate to you, finding your "champion" within the organization you want to partner with is critical.There is a trade-off here between approaching someone seniority and risking deprioritization and wading through layers of middle management to get the senior guy to sign off.  My thumb rule while identifying a “champion”, would be to assess whether my solution is critical to their agenda within their firm. If their evaluation is tied to the problem you are solving, they are incentivised to make sure they implement your deal fast enough since it positions them as a creative problem solver and gains them credibility, recognition and visibility within a larger organization.

Finally, how do you get over the hurdle of " Are you really going to be around?" and "Do you really have the capability to get this done?" The last thing your “champion” wants is to fight for you and then realize that they are no longer priority for you because you've pivoted. To address this, make sure you're approaching large organizations at a point when you are certain about your business model and have a honest conversation with yourself about what exactly is it that you want out of it. Make a list of things you want and prioritize them. Is it the access to users you want, your brand out to the users or do you need short term revenue? You can’t have it all, so know what you can compromise on, what's not negotiable and never sign the deal out of desperation, because the chances are that you're not going to support it using your limited resources if it doesn't meet your requirements.

To summarize, provide a clear and realistic assessment of what you want and they can get out of the deal, find organizations that move fast and finally identify a champion who can move things along. If you’ve got these figured out, understand that you still need to be patient- because it’s still going to be a long process- but remind yourself of the value the large firm brings at every mundane middle management meeting, and chances are you’ll make it work!