Cleantech growth journey: third annual CEO retreat
Partnerships and alliances with large corporations
- Have a scaling plan. Know how your solution can scale to your partner’s needs. With a large corporation, your solution must be scalable enough to make a substantive difference in the bottom line. But remember that with scale comes complexity.
- Solve your partner’s problems. Partners are looking to solve specific problems. Know what those problems are, how you can solve them, and be able to communicate that.
- Be prepared to give your partner preferred status. Your corporate partner may want exclusivity for your product in the public sector, preferred supply, preferred pricing and so on. Be prepared to give it to them or to negotiate an alternative.
- Know why they want you. Is your buyer interested in your business as something they want to own? Or as a way to explore a new technology or market niche for strategic purposes? Or as a way to jump-start another part of their business or develop a new market for existing products?
When embarking on a partnership or alliance with a large corporation, you should keep in mind that these companies aren’t usually looking for early-stage investment opportunities. That said, your earlier investors can provide the credibility that opens doors to partnership discussions.
A change in strategy, regulation or direction can also give you an opening to a partnership that wasn’t there when you first started discussions. It is important to remember that green doesn’t necessarily give you a selling proposition. You have to meet your partner’s price or cost criteria.
If you would like to partner with a utility, be prepared for a very long process with a large and slow-moving counterpart. Cited among the success factors in working with utilities are the following:
- Be deliberate, intentional and selective — it’s not about chance
- Understand where you are in the maturity curve and what you want out of the engagement
- Understand the company you’re trying to partner with — don’t assume it will see the need for your product or service
- Know whether the risk of inaction is greater than the risk of action for your partner — the utility business is oriented toward safety and margins, not growth
- Determine whether the utility is organized to take action; if not, you’ll get stuck in the process — in many cases, utilities do not have the incentives or organization to act
Before you engage
Participants advised considering these key questions before engaging with a large corporation:
- What are you willing to give up? If your buyer asks for a non-compete agreement, are you prepared to give it to them?
- Is a larger company going to ask for something that will chill your access to capital, like a right of first offer, right of first refusal or a purchase option? All of these can limit your exit strategies.
- Be wary of hair-trigger termination provisions. If you don’t meet expectations, what’s your risk?
- Are you able to adjust to all the possible changes your corporate buyer might experience without damaging your business?