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Corporate-Startup relationships: Moving beyond the David versus Goliath archetype

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In the last article, we read about how large organisations work with startups to fuel their inorganic growth and how venture builders like build3 help in accelerating this growth. Now, let’s understand better the dynamics of this relationship between corporations and startups and whether or not this coming together benefits both parties.


Corporations carefully consider both strategic and financial factors when deciding to partner with startups. For a startup to form a partnership with a corporation, it must have synergies with the corporation’s current product lines and future expansion plans. The startup’s track record of growth (measured by revenue and new products added) is also important, but the most crucial factor is having a clear path to long-term profitability.

Other reasons why corporations wish to partner with emerging startups include –

  • Experimenting with new technologies, products, and markets without committing significant resources to R&D.

  • Acquire a competitive yet disruptive technology before it scales to protect its own markets.

  • Increase value for their existing customers or get access to new customers that can leverage the pre-existing products of the corporate.

In return, a corporate provides a startup with –

  • Assured capital: As a startup shows promising growth and increasing revenues, the corporate may continue investing in every successive round of investments. In some cases, the terms of successive investments shall be locked in on Day 0, so that the founders can focus on what they do the best, i.e. build world-class products and not care about fundraising ever. Also, debt capital (normally raised to meet working capital requirements) can be easily received through the corporate.

  • Access to resources: A corporate partnership can provide a startup with access to the resources of a larger corporation, such as expertise, networks, and funding.

  • Strategic guidance: The corporation’s experience and industry knowledge can help guide the startup’s strategic decisions, leading to better product development and market positioning, including selecting an appropriate business model.

  • Access to new technology: By partnering with a corporate, a startup gains access to sophisticated machinery, well-rounded engineering tools, and better technology that it may not have been able to access easily.

  • Market validation: A corporate investment can provide validation and credibility to the startup, making it more attractive to prospective customers. Sometimes, the corporate partner’s customers also become the startup’s early adopters.

  • Distribution channels: The corporation may have existing distribution channels that the startup can leverage to bring its products or services to market more quickly. This also includes import-export potential.

  • Potential for acquisition: The corporation may ultimately acquire the startup, providing an exit strategy for the startup’s founders and investors.

An example of a successful corporate partnership

Siemens, a multinational engineering and electronics company, formed a strategic partnership with Nexa3D, a manufacturer of high-speed industrial 3D printers, in 2020. As part of the partnership, Siemens provided Nexa3D with its automation and digitalization technologies, including its MindSphere IoT platform and Simcenter simulation software. In return, Nexa3D’s high-speed 3D printing technology was integrated into Siemens’ Additive Manufacturing (AM) Network, designed to enable the industrial-scale production of 3D printed parts. The partnership has allowed Siemens to expand its Additive Manufacturing (AM) offerings and provide customers access to advanced 3D printing technologies. It has also enabled Nexa3D to access Siemens’ extensive customer base and resources, accelerating its growth in the industrial 3D printing market. A win-win situation!

When corporate partnerships are not viable for startups

While corporate partnerships can be a valuable source of funding and resources for many startups, they may not be the best fit for every company.

Here are some examples of startups for which a corporate partnership may not be the most effective way to secure funding or support:

  • Ideation-stage startups: Corporate partnerships focus on long-term strategic goals where at least the product-market fit is determined, and the innovation is beyond TRL-6 (Any NASA enthusiasts here?). This may not align with the needs of early-stage startups that require more immediate funding and support. In such cases, raising grants from incubators may be a better option.

  • Startups in highly competitive markets operating with a significant MOAT: Corporate partnerships may not be ideal for startups operating in highly competitive markets, where access to proprietary technologies or market intelligence could be a significant advantage. In such cases, partnering with a corporate entity that is also a competitor may not be the best approach.

  • Startups with limited growth potential: As stated earlier, corporations want to fuel their own inorganic growth. Hence, such partnerships are often designed to help startups scale and expand into new markets. Considering this, startups with limited growth potential or those operating in niche markets may not benefit from such partnerships.

  • Startups with incompatible cultures: Corporate entities and startups often have different cultures, priorities, and working methods. If the startup’s culture is incompatible with that of the corporate entity, a corporate partnership may not be successful. This is often seen where corporations take the route of profitability, liquidity, and growth, whereas startups focus on swelling revenue lines backed by capital inflow.

  • Limited exit options: The startup may be limited in potential exit options if it becomes too closely tied to the corporation.

Thus, it’s important for startups to carefully consider their goals, needs, and compatibility with potential partners to determine if a corporate partnership is the best fit for them. Startups should primarily ask themselves if the corporate investment is serving their needs beyond capital, are the resources promised by the corporate easily accessible, and most importantly, how deep value generation is beyond the term sheet.

Sounds interesting? To know more about the Pennar-build3 partnership, including our current target areas, and to apply, please visit

You can also e-mail me at for any help you may need to set up your corporate venture programs.

Next up: Understanding corporate-startup relationships through some use cases.

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