4 Crucial Considerations Before Launching a Strategic Partnership The first step to finding the right partner is figuring out specifically what you need the partnership to accomplish.

By Tx Zhuo

Opinions expressed by Entrepreneur contributors are their own.


The idea of partnering with large corporations can send even the most risk-averse entrepreneurs running for the hills. But to succeed as a startup, you need partners, and that goes double for anyone just starting out in the enterprise software space.

Partnering with a large organization can lend your company some much-needed credibility. It can also expand your distribution channels, improve your industry knowledge, support your marketing efforts and increase your lead generation.

Take ChowNow, one of our portfolio companies. In 2014, it forged a partnership with Yelp, which provided the tech startup access to a whole new batch of restaurants potentially interested in contracting its online ordering software. The partnership also improved the sales reach of its existing client base, adding further value to its ordering platform.

But these benefits only come when you form your alliances wisely and take the time to structure and execute them properly. If you enter into a partnership blindly, you could end up eroding your company culture and weakening your internal capabilities, ultimately squelching your innovation.

To find the right partnerships, I recommend the following:

1. Assess your current challenges.

Take a long, hard look at the specific needs of your company, searching for insights into which partnerships make the most sense for your startup at this time. If you need to expand your customer base, consider partnering with a company that has a broad reach. If you're looking to legitimize your brand and improve its recognition, partnering with a company that serves your target audience may make more strategic sense.

Related: Accelerate Your Business Growth Through Partnering

2. Identify where you fit in the broader ecosystem.

To narrow your search and target the right partnerships, think about what other products or services your users might need and value. This will help you better understand where your software fits in the marketplace. For example, do your customers use CRM systems? What about a particular aggregator for discovery? Incorporating other products or services that your customers find beneficial will lead to partnerships that are not just strategic, but also logical.

3. Establish complementary partnerships.

Sometimes, partnering with a competitor makes sense. However, it's much easier to structure partnerships with companies that offer products or services that complement your own. Engage with these companies before venturing into choppier waters.

For example, Lisa Lavin, Anser Innovation's CEO and co-founder, knew that her company's pet communication product, PetChatz, would eventually find a competitor on its horizon. To overcome that obstacle early, her company partnered with an established pet brand, Tuffy's Pet Foods. Tuffy's Pet Foods created a treat to be used specifically with PetChatz, giving Tuffy's another revenue stream; in turn, PetChatz was able to use Tuffy's name recognition and distribution channels.

Related: 6 Challenges Confronting Every Business Partnership

4. Evaluate the benefits against the time commitment.

Establishing and maintaining partnerships will almost always be time-consuming. When a company is in its infancy and the founders don many hats, partnerships can cost more time and trouble than they're worth. Be mindful of what you want to get out of a partnership, and agree upon the responsibilities of each party from the start.

Look at partnerships as opportunities. For any enterprise software company, these partners can give you the breathing room necessary to survive until your next sale, which can take upwards of six months in SaaS startups' early stages. Just make sure to look at your challenges, do your research and engage with companies that make the most sense for your business. You could end up in a relationship that leads to even greater innovation.

Related: Partners Await Inventors Who Need Help Building Prototypes

Tx Zhuo

Managing partner at Karlin Ventures

 TX Zhuo is a managing partner of Karlin Ventures, an L.A.-based venture capital firm that focuses on early-stage enterprise software, e-commerce, and marketplaces. Follow the company on Twitter.

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