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5 Recommendations for Startups Preparing to Engage Corporates

While both startups and corporates have their sights set on growth and providing value, they are entirely different beasts. In fact, they are almost at opposite ends of the company life cycle, but their interaction is inevitable.

In every B2B startup’s life comes a day when it must engage with a large-scale corporation. At first, this seems very appealing (“I have Microsoft on my pipeline!”). In fact, according to recent research from Startup Bootcamp on startup-corporate engagement, over 70% of startups believe that collaborating with corporates is important for their success.

Having said that, without a proper preparation, such relationships can do more harm than good.

As the CEO of a startup, how can you set yourself up for success when you’re faced with this kind of exciting opportunity? Here are my top 5 recommendations:

1. Research

The first thing you should do is gather as much information as possible in order to better understand the corporate you are preparing to engage with, keeping these questions in mind:

Try to gain a deep understanding of the technological and business gaps the corporate is dealing with so that you can adjust your pitch to highlight how you can best fulfill their needs. For example, a bank that has launched a mobile app is probably more open to mobile user engagement solutions.

If knowing your corporate’s goals is important, knowing the motivations of your contact in the organization is crucial. For example, talking to a CIO who’s looking to cut expenses is one thing, but if the CIO is looking to adopt innovation, you will need a whole different pitch.

If knowing your corporate’s goals is important, knowing the motivations of your contact in the organization is crucial.

A few months ago, one of our startups reached out to a large insurance company with a “cheap, on-prem data management solution.” During the research phase, though, the startup learned that the company’s real pain is managing their stored data in a hybrid cross-platforms way. They immediately changed their pitch and closed the deal.

Almost all corporates want to work with startups, whereas few of them have managed to implement a startup’s solution in their organization.

This is an extremely important point worth considering carefully. With limited resources, you don’t want to start a long and expensive climb without knowing that you will eventually get to the top.

Try to find out if the corporate you are in discussion with has ever done business with startup companies before. If it has, learn as much about the process as you can prior to the engagement so you can plan your resources ahead.

An IT solution startup I used to work with began discussions with a large retail company. Quickly, the startup realized that the corporate had a very structured process where the company requires a meeting in person, then requests a live demo, a one-month POC and so on. This was great news: the startup realized that not only had the corporate worked with startups, but also it also enabled them to plan their budget for next quarter accordingly. This leads to my next recommendation…

2. Fuel your engines

Unlike corporates, a startup’s resources are much more constrained. It’s important to understand what the corporate will expect from you and make sure you have adequate resources. This way you won’t find yourself promising a technical lead for 6 months of implementation that you just can’t provide.

Another valuable resource you don’t want to waste is your time. Corporates have time; you, on the other hand, don’t. In fact, according to the research from Startup Bootcamp mentioned above, 70% of startups believe the biggest challenge when trying to work with corporates is their long internal processes, and almost 50% said it took them over 6 months to sign a deal with those corporates.

70% of startups believe the biggest challenge when trying to work with corporates is their long internal processes.

Although you must be patient as these relationships take time to establish, make sure you define a clear timeline with reasonable buffers prior to the engagement. Be cautious of spending a too much time “exploring opportunities;” relationships that aren’t concrete will cost you a massive amount of time that could have been invested in a more promising customer looking for an immediate solution. In fact, if you feel like this relationship takes too much time and resources, KPMG suggests that you pull the plug if you must.

In any case, take into consideration that negotiating, implementing, and maintaining will cost more resources than you might think. Make sure you allocate the proper resources, because at the end of the day, there’s no second chance for a first engagement.

3. Make promises you CAN keep

Startups should be very careful when making promises during their “first dates” with corporates. According to Roberto Ortega, Head of Digital Innovation at Caterpillar, “Startups tend to make outlandish promises; most are overstating the case. We work hard to figure out exactly what they bring to the table.” While this is understandable (they are eager to engage with the company and their vision is as innovative as they describe), it might backfire on them later when it’s time to evaluate the actual results.

Your goal here is to build a long-term relationship with the corporate that will gain your company recurring revenue and growth opportunities. Otherwise, you have just invested tons of resources for a one-time deal. If you fail to deliver on what you promised, you’ve just a wasted much of your valuable resources.

Moreover, as important as relationship establishment is, avoiding churn and a bad reputation is far more crucial – these could appear as a red flag for investors and potential customers. Present what you know you can deliver (and equally important, what you cannot deliver), so that at the end of the day, there won’t be any disappointments, only a willingness to expand the engagement and provide recommendations for potential customers.

4. It’s (not) all about the money

One thing you should know is that corporates know how to negotiate, especially when it comes to a product’s price. Now, I’m not saying you should hand out your product for free or reduce its price, as this might set a precedent you don’t want. In fact, Didem Un Ates, Microsoft Accelerator’s Global Partnership Director, highly recommends charging the corporates early on, during the pilot phase.

However, you should be careful of potentially losing a great customer and an interesting “foot-in-the-door” opportunity simply because you were too MRR-oriented. For startups, it’s not always about MRR, and sometimes the value you get from engaging with a corporate is much more meaningful than how much they are willing to pay.

Sometimes the value you get from engaging with a corporate is much more meaningful than how much they are willing to pay.

5. You are not alone (or, at least, you don’t have to be…)

One way to engage with corporates is to build a relationship with a large-scale and well-connected partner. Engaging with partners is not easy, but it sure will help you scale rapidly and shorten the sales process while working with corporates.

Microsoft, for example, is working with many corporates and has well-established relationships with them. If you manage to get an introduction to the corporations through Microsoft’s teams, it will be much easier for you to engage. Not only will partners open doors for you, they will also share valuable information, such as who’s the right contact in the organization and what resources you should expect to allocate for this engagement.

Additionally, when it’s a win-win relationship (co-selling, for example), your partner will help you appear as a trustworthy company from day one. This will obviously speed things up and save your startup some serious resources.

I hope these recommendations help you prepare for an exciting and successful corporate engagement. What would you add to this list?


Nofar Amikam is a Partner Success Manager in the Microsoft Startup Growth Unit, helping high-growth, high-potential startups engage with large corporates.