Why partnerships between companies and startups are the path to resilience – Crunchbase News

Through Cristina Tamayo

The world throws up all kinds of adversity at us, and business centers, whatever their level of development, are not immune to turbulence. Natural disasters restrict supply chains, political unrest is forcing businesses to close stores, and cybersecurity failures are accompanied by costly infrastructure upgrades.

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These are just a few possible stress scenarios, and they reinforce the need for businesses to put contingency plans in place now to maintain stability during inevitable future shockwaves.

How? ‘Or’ What? One of the strongest solutions is also the simplest: with a partnership. More specifically, a startup-business partnership.

A crisis demands that businesses of all sizes unravel new issues, amplify the value they deliver and fill what is missing. But stopgap approaches such as one-off discounts and media hijacking campaigns only weather the current storm for businesses, and do not protect them from the gray clouds on the horizon.

It is no coincidence that the pharmaceutical giant Pfizer and German startup BioNTech have teamed up to create the COVID-19 vaccine now distributed around the world. The partnership has the unique blend of corporate R&D efforts to manufacture a vaccine and the early stage agility to deploy it in a short period of time.

With that in mind, here’s why business-to-startup partnerships are a natural (and necessary) smart step on the road to increasingly precarious business.

Find your ecosystem

A Deloitte survey found 75 percent of startups consider partnerships with companies to be very important. Having a corporate partnership is like having someone hoist you up a ladder during a flood – and the higher you are, the less likely you are to drown when it rains again.

Companies have the strength to make startups evolve faster, as well as to achieve a level of stability so that they are not destabilized if (or when) the scale is shaken.

A good example is the outsourcing company BMA Group, who partnered with the startup TalentTank to ensure that new hires match the culture of the company. The two (each with offices in Puerto Rico) met thanks to the accelerator’s business development team. parallel18, which is part of the Puerto Rico Science, Technology and Research Trust. BMA Group’s reach and resources allowed TalentTank to expand its team and diversify into different markets much earlier than if they had worked alone, while BMA Group has improved customer retention and satisfaction.

Likewise, the Internet marketing department and the alumni of parallel18 Info Pages paired with startup AI security solutions Guardian systems to introduce COVID-19 symptom detection systems for its customer database. The new partnership has given Guardian Systems high visibility across a wide range of industries, while strengthening Infopáginas’ value offering to customers.

The partnerships not only establish a solid foundation for the growth of the two companies, but they also facilitate the development of the ecosystems in which the companies operate. Closer relationships between companies and startups in a space means that a more diverse group of people are served longer.

Reaching out to a larger audience tends to attract more investment and attract more experts to the region, which ultimately gives companies more resources to leverage their partnerships and prepare for crises.

Share expenses, reduce the social cost

As crises become an expected reality, and not just a ‘worst case’ idea, more and more companies are devoting part of their budgets to social responsibility, which has recently walked away from purely philanthropic actions to investing in smaller organizations. Companies are looking for startups to steer them towards the most pressing societal issues and give them the on-the-ground knowledge to create impact.

For example, Microsoft works with startup International Trust Machines Corp. develop blockchain solutions for Taiwan’s largest energy supplier. In an attempt to track renewable energy sources in the country, the partnership is focusing on recording solar energy data generated by smart meters.

Crises are expensive. Whether it’s making up for lost sales, paying for increased employee care, or paying legal fees, startups are particularly vulnerable to the sudden costs of a crisis. A corporate partnership can help them recover more quickly in the face of adversity, especially by funding the R&D stages of startups in rough waters. Volkswagen, Samsung, Intel, Microsoft, rock, Novartis, Johnson & johnson, Google and Merck are among the top 10 R&D spenders in the world, and all of them choose to work with startups.

With access to larger budgets, startups can continue to develop products during a crisis as well as offer discounts or extended trials to demonstrate additional value (and humanity) to users. This financial flexibility means startups don’t have to compromise on the quality of their product and can retain more users in the long run.

Balancing today’s necessities with tomorrow’s innovation

Companies may have millions of dollars to spend on R&D, but their solutions can take years to deliver. This type of delay is problematic in emergency situations when people need solutions immediately. On the other hand, startups have a higher risk mindset and are more willing to implement early plans for products today, not just tomorrow.

Secure ecosystems need a combination of the two: fine-tuned, controlled services from businesses and faster, iterated-ready tools from startups. Start-up-business partnerships can thus gather customer feedback and information more quickly, and become familiar with changing user scenarios. This understanding allows partners to make more solid predictions about how customers will react both in times of crisis and in quieter times.

Take the start Leena.ai, who worked with the largest cement manufacturer in the world LafargeHolcim during the remote shift. In just a few days, Leena.ai set up a COVID-19 helpdesk for LafargeHolcim employees to improve team experiences while working from home. If LafargeHolcim had partnered with another company, the integration would have taken months and possibly caused LafargeHolcim to lose control over employee opinion at a crucial time.

It’s time to step away from the outdated attitude of corporate David and Goliath and embrace the complementary aspects of businesses and startups. Businesses have the deep pockets and the ability to help startups weather future storms, and startups have the malleability and their finger on the pulse to keep businesses afloat in changing tides. The two can be a life jacket for the other when things take a turn.

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Cristina Tamayo is responsible for business development at parallel18, a performance-driven international startup program aimed at positioning Puerto Rico as a unique hub for innovative business and technology. It is part of the Puerto Rico Science, Technology and Research Trust.