Inside the world of business development for your startup
Apparently business development is a term and a title that only a handful of people can actually define. It’s a confusing subject, but entrepreneurs and founders all alike agree that a little biz dev does every company good.
Business development can be summarized as the ideas, initiatives and activities aimed towards making a business better. That being said, let’s clarify how the strategic function varies depending on a startup’s size and industry. It typically can include a variety of activities like strategic partnerships, content licensing, product distributions, monetization and, sometimes, acquisitions.
We’re talking about efforts that can be made across all different departments — operations, marketing and product management, among others — within a startup. Nonetheless, here we’ll cover business development as strategic partnerships with deal intent.
Our very own Business Development Manager, Cristina Tamayo, explains it simply. Her job is connecting the startups with big companies, either local ones from Puerto Rico or international companies that have a presence on the island, that will help them grow. “What I basically do is some sort of match-making. First, I identify startups from our cohort that bring a much needed innovation to these big companies. I sought out to a couple of them and arrange a meeting so that our startups can pitch to them.” Afterwards, Cristina is in charge of facilitating and moderating the company’s relationships while a deal can be closed.
Of course, Cristina’s case is very particular because she works for an accelerator. But what is it really like inside a startup itself? Why do they need to focus on forging impactful relationships with bigger companies?
When to start
Once a startup has traction, the means in which growth opportunities come begins to expand. During what we know as startup’s momentum, business development’s purpose within the company is to evaluate the best way to scale by forging relationships with existing and much larger companies in need of innovation. This it is what we call a partnership. A business relation that creates value — that meaning higher valuation, standing or prestige — for your company.
Hence why the stage in which your startup is plays a major role when considering whether it’s the right time for business development. A growth stage startup must carefully manage its limited resources as it sets to invest capital and prioritize things such as marketing and development efforts.
“Startups should definitely have something concrete that they can sell to another company or be very very close to it before considering diving into business development. If not, at least be able to have a clear-cut deadline of when that’s gonna be ready and how that product — that’s not ready yet — can work specifically for a corporate partner,” Cristina explains from her experience connecting startups and corporations.
It’s about having a solid product that you can offer even if it’s not a 100% ready. Partnerships become an attractive option to pursue distribution, product enhancements, or brand equity. The ability to sell other companies on the idea of partnership and “do deals” that drive scale is an opportunity that a business developer inside a startup never wants to miss.
Which partner is right for me?
First is really about understanding how that perfect corporate partner works. A good strategy is to contact people without the agenda of just selling to them, but instead with the intent to acquire knowledge. You’re looking for something that makes sense for both parties, business wise. And this may sound cheesy folks, but there also needs to be a feeling. Something that makes you feel like you know that company (that, btw, has a totally different structure from your startup) it’s going to really help you grow.
“I wouldn’t recommend partnering with someone just because it’s a big name or someone that you think you should be working with, if at the end of the day it’s really not gonna help your company’s case,” Cristina continues. She also emphasizes that wanting to partner up with a big company just for the sake of it is something that a lot of startups struggle with.
Just because a corporate partner is interested in your product that doesn’t necessarily mean that you should work with them. Especially if it’s gonna take you out of focus from the primary goals that you have traced out for your company.
So to find the partner that is right for you is to look at your startup in retrospective and figure out what is it that could add value to it and what, in turn, can your company do for another. You need to make an industry wide assessment, but also an internal assessment of your best assets. Then, list your options without losing touch with everything else that holds your company together.
A partnership can get in the middle of your business culture and of the values that are already deep within the way your startup works, so anything that goes against that may be a no no. You’re looking to close a deal that’s going to scale and improve operations, not disrupt them in a negative way.
How to make the initial approach
Let’s say you’ve tracked down and narrowed the list of potential partners who you want to connect with, how does a startup prepare for a meeting with a long standing multinational?
In this case, research is your best ally. From LinkedIn to articles to public data. Everything you need to know about a company is a step away from pressing enter in the search bar. “I always encourage the startups to do research, look online, look at their LinkedIn profiles and really understand what the company does. What are their business lines. Who’s the person inside that company that’s going to be really in need of your product, who’s in charge” points out Cristina.
Something else that comes off as very useful on your way to your first big corporate pitch meeting is knowing someone from within the industry, like a mentor, that can really go over the details of which are the needs and challenges of the type of corporations you’ve targeted. Overall, before walking it that make-it-or-break-it meeting, make sure you have a very clear vision of how your startup fits into that big company world.
Now, let’s jump forward to the meeting, let’s talk a little bit about how should this pitch be.
Something that’s definitely a DON’T is trying to sell something that essentially does not exist. Save yourself the disgrace and be very honest when talking about the product’s current state and the company’s development. Just be upfront and transparent. You don’t want to pitch something, make it seem like it’s ready and then when it’s time to carry on with the deal and actually implement that product… they realize it’s not ready yet.
Being is honest is extremely important. However, when that is the case, that you’re not quite ready yet, make sure to have a plan. “What you can do is have a proposal ready, so that when the time comes you already have this company on board. If you’re still too early, then that’s the perfect opportunity to focus your product or whatever you’re offering to a specific industry and if that’s the case, then offer it to them,” Cristina suggests.
For example, you can offer them a pilot, maybe a free pilot where they can test it out and see that they’re dealing with something that they’d definitely need — of course, when it’s ready. The key is just making them want to work with you.
The right way to follow-up
We’re not going to lie. Following up with corporate partners is time consuming because essentially you’re not in their priority list. Ultimately, however, the effort proves to be worth it. It trains you for the rest of your business career.
“Definitely you can’t let them forget about you, but you can’t be over eager either because it does take time. Something that has really worked for me is trying to identify that big champion within a company. It doesn’t have to be a decision maker, just rather someone that you know is interested in working with startups or really bringing something innovative to their business,” Cristina adds.
Following up and establishing an engagement with that person paves a way for you to have an open conversation about the status of the possible partnership and the things that you should do so it becomes a priority for them.
“Keep in touch with that person that can really move things forward. If you do that, you’re going to have really great results. This is a person that you really can communicate with without having an expectation that they’re going to close the deal for you or that they’re going to convince the decision makers,” advises Cristina on having someone that can help you really foster that relationship little by little.
Another thing investors and entrepreneurs have pointed out in our mentor sessions is how much they appreciate update emails. Just a monthly update on product improvements, sales and new offerings can spark that desire to advance deal talks. Don’t stalk them, though. You just want to let them know you’re still interested and committed to making the partnership work for the benefit of both companies.
How P18 connects startups and big companies
P18Connect is basically the name of the meetings that Cristina arranges. The subprogram aims to create connections with big companies in the island and LATAM by facilitating that first introduction through group meetings, conferences and pitching events. These connections can sometimes turn into key partnerships that set the ground for startups to enter new markets with a strong lead.
Basically, when we start a new generation, Cristina analyzes the cohort and then matches them with our corporate partners according to their needs. She picks out companies that could be a great fit for our startups and schedules the meeting with the multinational.
What we ask from our partners
To make sure the meeting is meaningful, we require our corporate partners to have, at least, one decision maker executive in the meeting. What’s important for us is to have someone in that group that can move things forward and speak on behalf of the enterprise.
We have over 40 corporate partners, including HP, Merck and Puma, as of now. We ‘ve had deals made and contracts signed, as well as corporations that have invested in our startups or entered in collaboration.
On your plan for Puerto Rico
If you’re applying for our seventh generation, getting to know the island’s business landscape is essential. From our experience, we’ve come to see Puerto Rico as an innovation hub for B2B companies whose business development strategies really take form during the program’s run.
Why? Because Puerto Rico’s economy is based on a wide range of industries with big companies now focused on finding partners that can simplify or optimize their internal processes and operations through smart deals.
This provides plenty of opportunities to connect with global companies in a whole different way and it’s something the program works hard on from the moment we select the companies that will be part of a new cohort. More than 60% of our last cohort described P18 Connect’s contribution to their companies as significant or very significant and we want to keep that number up and strong.
If by the time you’re done reading this blog post you’re really eager to really start diving deep into your business development efforts, know our team is ready to facilitate the process and, if you’re a LATAM startup, help you close a deal with your first US client.
