Investor and managing partner of TECHIA Holding, Yura Lazebnikov, told Forbes Council about the competent interaction between corporate business and young projects.
A startup is a technology company with an innovative product, customers, and revenue. It solves a specific problem in a new way for the market. It is a team of mobile and flexible people who quickly make decisions, correct errors, and test new hypotheses.
So, how can a young company plan cooperation with a corporation? There are three questions to help clarify it.
#1: What Is The Motive Behind This Collaboration?
For a startup, corporations may become the first major customer for a product, buy a stake in the young company, or even absorb it. On the other hand, corporations can increase their efficiency, that is, the money supply per unit of time, “grow” a product for further sale, and even create the image of an investor and curator of young teams.
Cooperation with a startup can be an experiment with questionable results for a corporation. Therefore, after some time, the corporation will evaluate its decision and either continue cooperation or write off the experiment.
#2: What Could Be The Funding?
The corporation is not an accelerator or a venture company. Therefore, startup negotiations should focus on how the proposal can increase the efficiency of the potential donor’s processes, improve its position in the industry, and/or raise its market value.
“In my company, we are not limited to specific areas because we believe that you can find interesting projects anywhere. These can be young products with promising developments and a strong team,” says Yura Lazebnikov.
He adds that it is easier for the TECHIIA holding to decide on cooperation if the startup is connected to markets where projects are already operating. Other large corporations have a similar approach. So, startup leaders must first determine why the two organizations are a good fit for each other.
Even if the corporation has denied the startup funding, one of the company’s key people might see the project as promising. Personal financing in the form of angel investments is another possible option for cooperation.
Aspect #3: Do Your Worldviews Match?
The worldview of a corporation is different from that of a startup. Starting interaction, a young team should understand that the speed of decision-making and response to changing conditions will decrease. The corporation will delegate several consultants who will be the actual controllers of the startup. They will have one of two motivations. One – proving the uselessness of the project and convincing management not to refrain from spending money on it to receive a bonus for the economy. Another one – getting efficiency from a startup in the sense of a corporation – again, to get a bonus.
Despite this, one should remember that the value of a startup is in a fresh look at old problems. Therefore, reasonable managers do not deny young colleagues the right to make decisions. After all, by imposing a solution, you may miss some creative ideas. And they are treasured. However, if the leaders of a startup are planning scandalous steps, the corporation will have to intervene. Inappropriate promotion, engaging with a client with a bad reputation, or interest in a hopeless or sanctioned market all cast a shadow on the corporation, so it will definitely be vetoed.
“Corporate partners need to ensure that the startup is protected from the potentially extreme experiments of its founders, Lazebnikov comments. “In everything else, as for me, a startup should have freedom and responsibility.”
A startup and a corporation can give each other a lot – strengthening, accelerating, and facilitating certain aspects or processes. How to build cooperation depends on each specific case. Even if your paths diverge over time, that’s okay too. For the parties to better understand each other, it is necessary to prepare in advance and know what the companies want from each other.
TECHIIA is an international technology holding founded by Yura Lazebnikov and Oleg Krot. The company combines expertise in more than 10 business areas: development of IT products and services, creation, distribution, and sale of content, development and sale of merchandise, services based on unmanned technologies, innovative construction technologies, etc. The company has representative offices in Cyprus, Ukraine, and the USA.