What Actually Motivates a Corporation to Work with a Startup?

August 22, 2017

8:30 am

Working with a corporation can offer all kinds of opportunities to a startup. It lets you test new functions of your app, figure out implementation techniques and, most importantly, learn from and build a lasting relationship with a potential partner.

I’ve watched this process first-hand at the Techstars Retail Accelerator, in Partnership with Target, where many of our startups have run successful pilots with major retailers. We kicked off our second class on July 17, and I’m watching our latest class set themselves up for potential pilot opportunities in the near future.

Sadly, many pilots end up failing, and I think one of the main reasons is that startups do not clearly understand the motivations of their pilot partners. So, why would a corporation run a pilot with a startup?

Learning

None of us knows everything, even in our own field of expertise. Pilots let corporations explore areas of strategic interest without betting the house on something new and unfamiliar.

Testing

A pilot allows a corporation to test your startup’s idea, and whether a potential partnership is actually feasible and worthwhile for it. Testing the waters is standard when you’re getting in a pool, why wouldn’t the same apply to the business world?

Assessing Workflow

Few things derail a partnership faster than two systems that just don’t work well together. You want to be peanut butter and jelly, not peanut butter and sushi. A pilot gives you a way to better understand the contours of a potential relationship without risking too much.

Employee Motivations 

While a corporation’s strategic motivations get you in the door, the motivations of the employees you’ll be working with are what ultimately get you the deal. Always ask yourself:

“Does the success of this pilot somehow influence your internal champions’ bonus?”

If the answer is “yes,” you will have much higher engagement. If the answer is “no,” you may not ultimately have a path forward with this company.

Find Budget 

Running a free or discounted pilot allows the testing to move forward while a corporation actually finds budget for a larger roll out. Sometimes this is just a matter of budget cycles, but it could also be budget reprioritization, which takes longer.

Customers 

In a B2B pilot, it’s ultimately your customer’s customers who will vicariously sustain your business. Meaning that if your customers die, you die. A good pilot can teach corporations more about their customers, and whether your product helps serve them better. That’s the ultimate return on their investment in you.

How One Company Connects With Customer It Never Meets

Iteration

In addition to thinking big picture, pilots also teach you what granular tweaks separate good ideas from great ones. In a pilot, you can experiment with what changes to a product bring the best results, and what trainings for employees supercharge adoption and boost impact.

Now that you (hopefully) understand the motivations behind piloting, how do you actually pull off a successful pilot? Check back soon as we lay out the key steps to actually implementing a successful pilot.

Check out our latest series on corporate accelerators on TechCo

This was originally published here.

This article is courtesy of Techstars, the best global ecosystem for entrepreneurs to bring new technologies to market. From inspiration to IPO, Techstars empowers the world’s most promising entrepreneurs throughout their lifelong journey by providing a global ecosystem made up of tens of thousands of community leaders, founders, mentors, investors, and corporate partners.

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Techstars helps entrepreneurs succeed. Through the Techstars Worldwide Entrepreneur Network, founders connect with other entrepreneurs, experts, mentors, alumni, investors, community leaders, and corporations to grow their companies. Techstars operates four divisions: Techstars Startup Programs, Techstars Mentorship-Driven Accelerator Programs, Techstars Corporate Innovation Partnerships, and the Techstars Venture Capital Fund.

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