The opinions expressed by Entrepreneur authors are their very own.
Implementing technology is normally a challenge for startups that wish to develop quickly. The startup understands the advantages of its technology, but it might not be widely known in the market. In my experience, it is useful for a startup to speculate in firms not only to secure financial support, but also to leverage the experience and expertise of the corporation. In addition to helping implement technology, research is conducted by Global corporate enterprise indicates that owning corporate investments reduces the occurrence of startup bankruptcies while increasing valuation at exit.
Venture Capital-as-a-Service (VCaaS) is a unique and modern investment model that enables corporations to speculate in startups by relying on an experienced enterprise capital partner. This enables firms to speculate in the most modern start-ups in the world without having to create their very own enterprise capital organization, which is a difficult and expensive task. VCaaS allows an investor to align investments with corporate strategy while easily scaling investments up or down as needed.
Benefits of corporate investing
Let’s first look at how corporate investment helps startups succeed through technology adoption and other ways. One profit for startups is that corporate investors typically have a strong network of shoppers, suppliers and partners. Introductions by corporate investors help startups bring their products to market faster. Startups can easily profit from the experience and knowledge of their corporate investors. Using this expertise helps startups make higher decisions quickly and avoid common mistakes entrepreneurs make.
Another advantage for startups is that the majority corporate investors have large financial resources. After making a startup investment, startup founders have almost immediate access to large financial capital. This helps them invest more in technology, hire additional people or acquire critical infrastructure. Startups often need financial capital to provide or purchase higher levels of inventory so that when business suddenly booms, they’ll sustain.
Startups also profit from an established status as a corporate partner and investor, as the corporation is likely well-known in the business community. Many corporations have globally recognized brands, and the startups they invest in typically gain value from the association. When customers or other members of the ecosystem see that a reputable corporation has invested in a startup, they are more likely to take the startup – and its products and services – seriously.
The role of cooperation
I consider that collaboration is crucial in any business relationship and this fact is well-known in the industry. McKinsey research shows that 75% of startups consider corporate cooperation to be crucial, and only 27% are satisfied with corporate relations. I would really like to share my observations on the best way to increase the success of cooperation between a startup and its corporate investment partner.
The first step is to make sure startup-corporate communication is clear and easy. Each party must present its goals at the starting of the cooperation to avoid misunderstandings later in the cooperation. Ideally, they’ll establish mutually helpful goals that work for each the startup and the corporation, even if they approach the relationship from different perspectives. Continuous clear communication is necessary so that startups and corporations can learn from each other and clearly define what goals they are trying to attain.
It’s also smart for startups and corporations to be honest – with each other – about what they know and what they do not know. If they are experts in a specific field, then in fact it is price profiting from this information. On the other hand, if they are less knowledgeable in certain areas, I think it is necessary to hunt advice elsewhere. This may come from an investment partner, third-party research, or a connection to other members of the startup ecosystem. You can often find individuals who have already been in a similar situation so which you can learn from their experience and knowledge.
Finally, I consider that a flexible approach and approach is necessary in any collaborative relationship. By listening rigorously to the other side and the market, partners can be more successful. Rather than interjecting into their behavior, I like to recommend that startups and corporate investors remain open throughout the relationship. By quickly adapting to feedback and changes, you may normally adjust your strategies and ultimately achieve a higher result. This will likely translate into a larger variety of transactions for the startup and a simpler financial investment for the corporate investor.