Corporate innovation people get pitched by startups All. The. Time. In theory, a startup may reach out or be introduced and they’re a perfect fit at the perfect time, leading to a quick deal. I’ve personally never seen a deal happen that smoothly and certainly wouldn’t bet on it. The far more likely scenario is you’ll be rejecting startups that reach out to your corporate innovation group.
Startups are rightly rejected by large companies for a variety of reasons. The startup may have misinterpreted the corporation’s existing capabilities or the corporation is already building a similar solution, internally or with an external partner. But many times, a startup with an objectively needed capability comes around – and yet, the timing isn’t quite right so a deal doesn’t get done. Sometimes the issue is budget. Other times, it could be an attention problem – decision-makers are focused on another, more important problem.
No matter the reason, the world is always changing and corporate needs are no different. Smart corporations (similar to VCs) are great at saying no while leaving the door wide open for future collaboration when a need arises. There’s a fine line between misleading a potential partner and clearly saying no but leaving the door open for future opportunities.
I get contacted regularly by startups looking to partner with large, global companies who can give them scale. My work over the years has shown me a number of these deals from both sides of the table. While almost all of these relationships make some logical sense on paper, in reality they are way more difficult to implement than founders initially think.
On the surface, the logic for these relationships is straightforward – one party has a unique technology or product that can improve things for end users while the other party has global distribution and scale. What’s not to love? But there are several other factors that go into the decision making process for large companies which founders often fail to consider.
Last week, I had the pleasure of attending and keynoting Carnegie Mellon University’s Corporate Startup Lab Demo Day. My friend and mentor Sean Ammirati first shared the Corporate Startup Lab model with me in 2017 and I’ve been a fan since Day One. The idea is to bring together Fortune 500 companies with interdisciplinary teams of students to build internal startups solving problems and developing new business models.
I recently had an opportunity to chat with Ryan Helms on his Hustle to Freedom podcast. It was a pretty wide-ranging conversation that included lots of background on Unlimited Brewing as well as The Startup Gold Mine. In particular, we got into how to start a business as a side hustle and de-risk it along the way. This episode should be useful to anyone interested in side hustles, beer, and problem solving.
Give it a listen and make sure to subscribe to the podcast!
“Sorry, this just isn’t a good fit for us right now.”
This simple but terrifying sentence is a recurring nightmare for founders trying to close deals with corporate partners. And it’s even worse when you’ve been working on a deal for months and were banking the fortunes of your company on its success. So when you’re rejected, is it all over or is there something you can do to turn things around?
Here are some tangible next steps to take when your corporate partner says no to a deal: