“Our success has really been based on partnerships from the very beginning.”
Coming from the richest man in the world, I think the founder of Microsoft was onto something. And it isn't just huge corporations reaping the benefits of partnerships. For many young startups, they are essential for survival.
Often partnerships can be inherent to a company’s business model, for others they can play a role in customer acquisitions.
Yet, entrepreneurs, especially first-timers, are in a difficult spot when it comes to finding and negotiating potential partnerships. A young startup or founder often lacks credibility or experience to negotiate a partnership (or even score a meeting) with a Fortunate 500 company or other established businesses.
When I founded Travefy as a first-time entrepreneur, I was in a similar situation. As a travel company, teaming up with online travel agents (the gatekeepers of hotel listings) was essential to our business model and a vital revenue stream. Although it was extremely challenging to pin down our first partner (took countless meetings and iterations), once we did so, each subsequent partner was easier and quicker. Now, a little more than a year later, we have partnerships with multiple online travel agents and serve hotel results from hundreds of travel sites to our users.
For those looking to secure a critical partnership, here are five tips:
1. Show your product in action. A pitch or mockup may be great ways to convey a concept, but startups can best overcome the credibility gap by demonstrating their idea in action.
Show your actual product, let people experiment with it or do a walk-through of your service. This requires more work, time and effort, but it ensures your vision is clear to potential partners and confirms you are fully committed.
2. Be strategic when targeting partners. Sometimes startups see the biggest potential partner as the only one worth pursuing.
This is a common misconception, as smaller or lesser-known companies can often be the best first partnerships. These “lower-hanging fruits” provide both credibility for future partnerships and help you work out product kinks in a lower-risk environment.
When identifying partners to target, be strategic in your thinking. Recognize who might be hungrier for a partnership or eager to innovate.
3. Realize FOMO is real. FOMO, or the fear of missing out, is a real phenomenon that drives much social behavior. Despite what some may claim, FOMO is also prevalent in business.
Put yourself in the shoes of a business development person at a large company. Being the first mover in a partnership with a young startup has many advantages if that startup takes off. Often, these people want to be involved on the ground floor.
That said, big corporations are still taking a chance teaming up with young companies (brand risk and financial losses, to name a few). But if other partners are on board, the risk is shared, which may incentivize the corporation to join.
Take advantage of the FOMO phenomenon and shamelessly leverage your existing partnerships to build additional ones. Your first few partners may be extremely difficult to reach, but it gets easier.
4. Utilize your network for warm introductions. No matter what your startup is or what partner you are looking to connect with, chances are that person receives hundreds of emails a day. While this doesn’t mean cold emails don’t work (they have many times for us), it does mean these emails can get lost in the fray.
So when possible, seek warm introductions from a friend or colleague. If you have a particular partner in mind, start scouring LinkedIn, alumni databases and other areas to find anyone who can make an introduction. If you find a mutual connection, send the person an explanatory email that can be forwarded on to the potential partner so your pitch is exactly what you want it to be.
5. Believe in yourself. Be confident in yourself and your product. When reaching out to partners you must be your biggest champion and your company’s top evangelist. Keep in mind, if you don’t appear to believe in your product, no one else will.
What other tips do you have for forming a key partnership? Let us know in the comments below.