Five Reasons Corporations and Startups Should Collaborate
Collaboration is the key to innovation. When startups and corporations work together, they are each more likely to achieve optimal results. For example, Google, one of the largest and most successful companies in the world, proves why working with startups is crucial to growth in their acquisition of over 200 companies. Here are five reasons why this type of collaboration is instrumental to a corporation's success.
1. Mutually beneficial partnerships - Both sides experience a positive impact
Entrepreneurs are problem solvers and are oftentimes wired differently than the employees of large companies. They will see problems in the company that the “higher-ups” often look past and believe there is no reason to solve. It’s always beneficial to have an extra set of eyes looking over your work to point out mistakes that you may have missed.
In addition to having financial leverage and resources for fundraising, corporations offer advice and mentorship that is valuable to startups. The goal of a startup is to grow and produce successful business outcomes. Many corporations have already pursued a similar path and have been through the journey that startups face. A young company can learn a lot from those with more experience about the potential challenges and obstacles they may encounter.
2. Startups bring innovation to larger corporations
Due to the large size of many major corporations, producing innovative ideas requires significant collaboration. As companies scale, it becomes increasingly difficult to develop new and innovative ideas. Therefore, acquiring startups and gaining insight from entrepreneurs with groundbreaking ideas and technologies can accelerate growth. Startup employees are constantly challenged to come up with new ideas to resolve new problems on a regular basis. This pours over into the corporation and disrupts outdated business practices that have never been revised because it’s what we’ve always done.
Innovating to keep up with new trends is how companies stay competitive. Ultimately, entrepreneurs are equipped with the tools to spark innovation that many corporations need.
3. This collaboration increases employment and helps the economy
Employment is a major factor in dictating the strength of the economy. With the increase in successful startups, the demand for jobs increases. This is an opportunity for the economy to grow, which decreases the unemployment rate. Many of the world's most successful companies began as startups. For example, companies such as Uber and Airbnb began as a small startup and eventually scaled to employ thousands. Key partnerships with investors and corporations allowed for these small companies to achieve success. These companies eventually grew to employ thousands of people over time. As a result, the world is experiencing a stronger economy that boasts more jobs.
4. Acquiring startups reduces the constant need for corporations to search for talent
The stereotypical entrepreneur is a young hotshot who just graduated from a prestigious business school and is just starting to get their feet wet in the real world. While they lack traditional experience, they do have the passion for success and the desire to learn. From the point of view of a large corporation, recruiting and searching for new talent requires significant efforts on both ends and collaborating with startups can make this far easier. Likewise, the ambitious owner of the startup finds a reliable mentor figure who can lead them down the right path. In absence of acquisition, partnerships provide corporations with qualified and easily accessible pools of hard-working and talented individuals to pick from when beginning the search for new employees.
5. Improves the reputation for both corporations and startups
As a result of the partnership, the reputation and public image of both corporations and startups will experience a significant boost. Smaller-scale startups now have a more established partner to increase their credibility—ultimately, startups aim to create an image that their company is trustworthy and will continue to maintain success.
Partnering with startups increases a corporation's reputation as an innovator. Startups are oftentimes on the cutting edge of their field. By partnering with these startups, large corporations not only gain access to this cutting edge technology but also position themselves as innovators.
Do you think it is time for your business to start working with startups?
If so, contact us to get a head start on taking your company to the next level.