Start-ups and large corporations have a lot to offer each other, and collaboration between the two can be a win-win. The fast-paced, tech-based world of start-ups can offer the slow-moving corporate culture new innovative products for customers. On the other hand, developing a business relationship with a well-established corporation can provide entrepreneurs with the financial stability to bring them out of the start-up phase.
But collaboration between the two is often impeded when they fail to successfully communicate with each other. In many cases this is due to a misunderstanding of start-up and corporate culture, as noted during a panel discussion at this week’s SWIFT African Regional Conference in Cape Town.
One example of this is the mismatch between the approach of start-ups and corporates during the initial business meeting.
Keith Jones, co-founder of tech start-up accelerator Sw7, said entrepreneurs generally deliver their elevator pitch when meeting potential investors. The idea behind this is to communicate their concept as quickly as possible. “If you can’t get your value across in the first 30 seconds, you don’t have a deal.”
However, in the more slow-paced world of a corporate, this might not be what they are looking for, as noted by Jill Murtagh, head of payments and settlements at Bidvest Bank.
“Banks take a long time [to make a decision]. They don’t want to hear the elevator pitch, they just want to see the numbers and they want to know the product works.”
She added banks and corporates also want to take the time to see that start-ups have done their homework around their strategy and the market. Furthermore, corporations want start-ups to have put in place the right systems to deliver their service or products.
“A lot of start-ups are all over the place and they don’t have focus and the right systems in place [to deliver],” she continued.
“And another thing which I think is important is whether start-ups have a mentor or business coach. A lot of these start-up founders are engineers, tech guys or programmers and they have got no business knowledge. So to have a mentor or an accelerator or someone who is helping them is absolutely key, because we corporates talk about financials.”
Peter Vander Auwera, co-founder of SWIFT’s Innotribe, advises start-ups to avoid approaching business partnerships with large corporations like they were pitching their idea to a start-up investor.
“An elevator pitch is an investor’s pitch. But with the story you try to tell to a banker… I think start-ups should avoid beginning with ‘I have a vision’. I think they should go straight into what sort of problem they can solve [for the corporate].”
Avoid start-up jargon
Minimum viable product, A/B testing, rapid iteration and pivot. These might be all familiar terms to those in the tech start-up world, but for others it is jargon that can make concepts confusing.
“A/B testing is one of the things I don’t know about,” highlighted Murtagh. “And if I don’t know about this as a banker, what would I do if a start-up presented this in a presentation to me? It would go straight over my head.”
She advises entrepreneurs to keep it simple when communicating. If ‘to pivot’ simply means ‘to change strategy’, then “why not just say that?”
“It’s about making sure we collaborate, and if start-ups are going to be doing any sort of marketing then they really need to keep it simple. Otherwise the language of technology is changing so much that we won’t be able to understand the product they are selling. So make it simple for us.”