Three reasons an enterprise company will partner with a startup

risk

From an investing company’s point of view, Illinois Chief Information Officer and former Cisco Connected Cities Chief Hardik Bhatt said three things motivated an enterprise company to consider a risk on a startup:

  • A solid idea the corporations couldn’t or wouldn’t try on its own
  • A reliable entrepreneur, and,
  • Evidence of traction.

It only takes one thing to kill the relationship, he added: When it becomes clear the startup only wants the corporation’s sales channels – which probably aren’t built to sell the startup’s wares in the first place.

“When we were dating, it was perfect,” Bhatt said. “When we tried to get married, it wasn’t a match made in heaven.”

Bhatt described such an experience at Cisco’s Smart Cities project, which entered into a relationship with a startup for access to parking space sensor technology. It soon became clear the startup expected Cisco to sell its sensors. Things quickly fell apart, he said.

(“Our sales people can talk about data and routers. But parking management?” Bhatt asked.)

It might have blown up over any subject from the partner’s communication style to inconsistent sales cycles. The bottom line was that the startup and the corporation were out of sync on basic issues.

(For more on the process and point of view of how successful enterprise companies engage with startups, see: What should corporations be seeking from startups?)

– James Janega

@JamesJanega

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