Startups and large corporations might seem to belong to opposite ends of the business spectrum. But what about taking both and nurturing a mutually beneficial relationship between them? In the end, everyone is looking for the winning formula that brings out the best from what each party has to offer, right?
In the dynamic technology market, a collaboration between tech startups and large corporations could be the key to fostering innovation for both sides. New ideas, opportunities, and revenue growth is usually the result of bringing together the complementary strengths of a large and a small player.
Back in 2018, Flashnet, a technology startup based in Romania, a rising star on the smart street lighting market, nominated as a worldwide innovation leader in the industry, was acquired by ENGIE, a leading multinational corporation providing low carbon energy. How did such a “marriage” impact both businesses? Can a startup like Flashnet (around 50 employees) positively impact such a big corporation like ENGIE? And how can ENGIE support the growth of a small company?
At first glance, there’s more incompatibility than synergy…
Startups are usually small, fast, and flexible aiming to foster innovation. They can adapt to any changes in a relatively short time and follow instant, last-minute ideas, innovation trends and market opportunities. However, this also means they can become unfocused, sometimes inefficient, and lack the resources to scale up their business.
Large corporations, on the other hand, are renowned for implementing changes slowly and securing endless procedures often accompanied by burdensome bureaucracy. Although, corporations have financial stability, predictability and global reach, they prove to be resistant to adjustments and change, renowned for to be preserving the status-quo.
So could a small company put to good use the financial power and global reach of such a strong partner, without being encumbered by procedures? And how would a corporate giant benefit from the cooperation with a small, vastly unregulated, and seemingly uncontrollable startup mentality?
Let’s explore startup-corporate collaboration benefits then!
Financial stability and focused power
Flashnet came in contact with ENGIE procedures long before finalizing the acquisition. Once the entire process was finished, the benefits started to be noticed. They came in different forms: from support in the recruitment process to access to new markets and better exposure. All of that encouraged Flashnet’s R&D activities to remain at the forefront of innovation in the industry and address more new markets. And that was only the beginning, as being associated with ENGIE Group, gave the potential customers an added layer of trust in Flashnet.
Know-how and skills
Collaboration with a big corporation is not only a way to acquire new resources but also gaining a series of competencies from a leader with experience.
Indeed, an acquisition is an opportunity to get expertise and exploit previously unexplored areas. On the flipside, the startup also gains access to the highly specialized base of knowledge on various topics (that the startup itself would otherwise not be able to afford) to support testing and validating product features, user experience, etc.
Flashnet teams up on a daily basis with ENGIE’s experts who bring their vision and input into important management decisions and organizational processes. More than that, ENGIE had substantial involvement in the recruiting process and a significant input in organizing the sales processes.
Through a consolidated partnership between the two parts, staying up to date with the latest trends, processes and uncovering new ways to solve business problems gets easier for the small company. Having access to valuable business information and some complex procedures or management structures helps startups make accurate and more deliberate decisions.
Internal marketing and access to new markets
Big corporations usually have a strong global presence involving hundreds of salespeople all over the world, with thousands of potential customers within their reach. But how do you tap into such diverse, complex and spread-out resources?
The notion of internal marketing was completely new to Flashnet’s sales engineers back in 2018, however, it turned out to be one of the most efficient engines for growth. Everyone involved in sales and market development needs to find out about the offered product the team needs to experience it, be convinced by it, see it as an opportunity.
So it took an important effort for Flashnet to promote the startup to ENGIE business units and its subsidiaries all over the world. Even by using internal communication channels, global or regional conferences, direct sales or indirect technical influence, it was not easy to encompass the scale of such an effort - it’s almost like having the second global market to care for.
However, once you start creating internal awareness, results start showing up immediately. Backed up by ENGIE, Flashnet succeeded in contacting new prospects, communicating more efficiently, significantly reducing the time from the first contact to the first sale – even in previously hard-to-reach areas of the world (see the smart street lighting control project in Santiago de Chile).
Co-branding, trust and exposure
Even though the startup still preserves its brand equity and its individual personality, its brand image becomes stronger and visible. Ideally, the two partnering businesses would have similar purposes and brand visions, and being associated with a large established corporation could bring only benefits for the startup.
From another perspective, large corporate customers might enhance the reputation of the startup and serve as reference cases for future sales. For instance, in the case of Flashnet, the decision-makers (municipalities, businesses) look for references before engaging in a collaboration, which triggers a positive network effect.
Furthermore, large organizations come with fast-paced challenges, mentorships, events and many other opportunities that enable meeting potential customers. For instance, as part of ENGIE’s global effort for Inclusive & Sharing Cities, Flashnet featured its solutions at the Barcelona Smart City Expo World Congress in 2018. At the same time, big corporations can engage with innovation accelerators that give startups access to expertise.
Subsequently, increasing the exposure of the company will lead to building brand image, trust and expansion to new markets. But what’s in it for the big player?
The ability to innovate
To protect their position in the market, corporations need to become aware of any market shifts caused by new technologies or innovations in their field. As a result, the acquisition of a startup might prove a good solution to create the necessary disruption of one’s own business model.
Being involved in mutual projects with innovative startups may provide the corporation with a competitive edge, as small companies have a stronger innovation focus and also aim to meet their customer needs by implementing technological advancements.
Due to the fact that startups can adapt and customize solutions more easily, they improve customer service functioning in corporations. A good example is both Flashnet’s and ENGIE’s implication in developing inteliSENSE, a highly innovative smart IoT system that identifies any gas leaks and acts preemptively to inform, alert and avoid any potential accidents.
Inspiring by the managerial methods
Most startups, due to their small size, can complement formal structures with informal mentoring and a learning mindset, helping employees grow right along with the organization. These people-focused managerial methods together with the CEO’s vision could bring about a shift in the way the big corporation operates. In a fast-changing business environment, fostering a culture of openness that allows for innovation as much as for failures is not to be neglected.
To sum up, an acquisition is a mutually beneficial partnership for both parties involved, bringing numerous benefits. If played right, the unique combination of resources and capabilities that both sides are ready to offer can result in faster innovation, greater market share, and even the creation of new markets.
Related Posts:
Best Ways To Fund Your Startup (by Olga Chechłacz, Editor, Vestbee)
Where To Find The Right VC Fund For Your Startup (by Olga Chechłacz, Editor, Vestbee)
5 Tips On How To Kick Off Your Your Startup And Attract Investors (by Alex Serdiuk, CEO, Respeecher)
