Witness the Transformation: Why Startups and Tech Giants Team Up Now

In 2020, the question was “Can startups partner with major companies?” 

Now it has changed to “What are new ways for startups to partner with major companies?”

Learn how tech partnerships have evolved, what are their benefits, and what’s next for business cooperation in Fintech.

Cooperate or die

A couple of years ago, corporations would squint down at startups and turn to long-established organizations to team up. Now, the union of the Big-and-Hefty and the Small-and-Nimble is a common thing. What has changed?

First of all, corporations have got a good look at the benefits of such a partnership. Next, startups have become more confident approaching big players and perfected their line. What has accelerated these processes is the COVID frenzy hitting the market. The pandemic has kicked tech giants into the unknown and unstable environment, which has also become the uncharted waters for enterprising out-of-the-box thinkers. If Pfizer-BioNTech cooperation is not yet a textbook example of a startup-corporate crisis clutch, then it’s almost there.

Is acquisition the only “happily ever after”?

Joining forces is mutually beneficial for both a startup and a corporate, as illustrated above. However, there’s a reason for startups to be squinting up back at tech giants. And this reason looks like a big “one way” sign in the direction of a possible acquisition. 

While acquisition may actually sound like a sensible choice to both sides, there are alternatives to it. First, it’s a common thing for a partnership to stay a partnership. Next, looking for an investment is still an option. 

What’s more, an acquisition doesn’t necessarily presuppose a lost identity of “the smaller one.” It could be about influence rather than control. The status of a startup may be well negotiable and vary from a temporary to a permanently stand-alone business, if the acquired tech organization chooses autonomy. However, circumstances may change, and the disbalance of power may not play in the hands of a startup. 

In fact, the palette of interaction patterns may be infinite. Let’s take a look at a couple of curious cases.

Cases: How startups can build a muscle for partnerships

Staying independent in a match. Early in its startup years, Redtail wouldn’t even accept outside funding. Now, an established company, it’s been acquired by Orion. For the time being (which seems to be a long one in this case), Redtail will act with little difference to how it operated before, keeping its current business relationships the same priority as Orion. 

Becoming your own parent. Lennart Asshoff is twice a CEO, and that allows for interesting combinations. First, he founded Exo Investing. Next, he co-founded Nucoro, which became Exo’s parent and the power behind its platform. Exo Investing was a step from being acquired by an investment manager Abrdn. Now, the latter has changed its mind and decided to invest in and partner with Nucoro instead to explore more tech options. 

Community is the new black

What if the needs of big corporations and startups were a joint challenge, not their own concerns? That’s the question the Cincinnati Business Committee answered by laying the basis for the creation of Cintrifuse. The idea was for big techs to form a public-private partnership to help local startups flourish and boost the state’s economy. Here’s what the initiative brought for startups:

• More flexible funding through a “fund of funds” (direct, cross-country and cross-sectoral investment)
• A better understanding of corporate’s concerns and how they match their own ones
• A better position to survive talent shortage

On the final note 

You may have noticed that the tendency in and between the lines is forming a robust tech community based on the shared goals. The geopolitical crisis that has blown up in a full-scale war in Ukraine and led to major economic reshuffle has only intensified the instability spun by the pandemic. So, the mushrooming ecosystems are here to stay and evolve.

As the sense of community is gaining weight, we at INSART cannot but feel proud of the one we managed to build. Our Solution Development Team is as strong together as their Fintech expertise, and that’s the power behind our robust results and the growth of our clients. 

We’re always up to form a durable tech partnership. If you consider it, schedule a quick intro call to let us learn more about each other.