Tips for the cooperation between startups and medium-sized companies

More than 60,000 startups offer innovative solutions to medium-sized businesses in Germany. In an interview with the moderator Zackes Brustik, Christoph Baier, founder and managing director of Ambivation, answers questions about cooperations between startups and medium-sized companies. He also gives some tips on what is important in this context and how to find the right cooperation partners.

Christoph, how far do you think we are in Germany in terms of collaboration between medium-sized companies and start-ups?

The middle class in Germany is beginning to work with start-ups, but it is actually still in the early stages. There are many companies in Germany that are already working with startups, but not so much is happening in the SME sector.

What is the reason for this? What are the companies afraid of?

With the middle class one sees that there culturally simply still a larger difference is. For example, many SMEs do not have their own innovation or research department, which is of course much more difficult to implement in small companies. That is one of the most important reasons. At the same time, it is also the case that, especially in boom phases, many SMEs are faced with the challenge that they have so much to do in their core business that they do not want to deal with innovation and start-ups with which they do not yet have so much experience.

Due to the Corona crisis, many mid-sized companies have the opposite of a boom phase, do you think now would be a really good time to start such projects?

In any case, it is a good opportunity to get involved in innovation right now. After all, the products and services of start-ups are only used because they bring added value to the company. And now that there is perhaps a little more time available, it is a good time to get involved with such things. But on the other hand, I also see that there is a lot of uncertainty in the market right now and that many companies have shopping stops, hiring freezes, etc., which of course makes cooperation more difficult again.

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What three things are needed to make a collaboration successful?

What we often see is that good expectations management is very important. This is a mixture of project management and good communication. Companies and start-ups need to talk clearly about what goals they want to achieve, what the results of that are, and ideally document this. You make sure that you manage the expectations of your counterpart and then react to them. A second important point is that you talk at eye level and create a win-win situation. Both sides need to understand what the goals of the partner are and consider how to make sure that both benefit. What we have never seen before is that if one party has selfishly gone into such a situation that successful cooperation then occurs, that actually rarely happens. The third point is that you also have to adapt internal processes and structures. Companies often need many decision makers. Of course, you have to know who makes which decisions, how you can ensure that such cooperation is supported by managers, and what prerequisites must be in place to ensure that it gets through to purchasing. So to summarize the most important things again, clear expectation management, a win-win attitude, simplifying internal processes and structures and full support of the management.

How quickly do I have to decide as a company so that a start-up does not run out of patience or even money while negotiating a cooperation?

I once heard about the best practice of a major investor who said he could get decisions through in three months – after getting to know them. I think that’s a benchmark you should use as a guide. I think three to six months is a good window of opportunity, everything beyond that becomes a problem. In San Francisco, I spoke with many different startups that also work with German companies, for example in the field of AI. They talked about how difficult it is to work together because the decision cycles last up to 12 months and longer, sometimes up to 24 months, I was told. And that is very difficult for startups because they usually don’t have that much time.

What do you think is the biggest mistake companies make, or one of the most popular mistakes medium-sized companies make when they cooperate with startups?

I think the most common mistake is that you don’t deal with startups much or at all. If I don’t know what is happening in the market, I can’t add business value to my company or develop my business structures around it. On the other hand, it is sometimes the case that companies are a little hasty in their dealings with startups. Not rash in the sense that they should have taken more time, but rather that they sometimes don’t look at what the market looks like. This is one point, for example, where companies approach us. If they want to work with a startup, we can show them what the market environment looks like, whether this is the only startup that delivers that performance.

What can you help with Ambivation?

At Ambivation we bring companies and start-ups together. These are different tasks that we fulfill. For example, we carry out a startup scouting to see which start-ups are available on the topic, create a market overview as already mentioned or a startup monitoring, where we compare the strategies with the market.

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About Ambivation

Ambivation connects innovative companies and startups for cooperation and innovation partnerships. As an innovation consultancy and matchmaker, Ambivation promotes cooperation between established companies and startups within the framework of concrete customer, supplier and research partnerships. We support companies in the identification of needs, startup identification, startup evaluation and cooperation initiation with startups. Formats such as research on relevant startups, startup monitoring, strategic cooperation consulting or event formats such as startup tours serve this purpose. Our monthly newsletter also provides information on current examples of cooperation and events.