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HomeFederal FundingStrategic Partnering for SBIR-Stage Companies: Types of Strategic Alliances

Strategic Partnering for SBIR-Stage Companies: Types of Strategic Alliances

May 6th, 2014 | by Michael Kurek
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This is the second in a BBCetc series on various aspects of finding, consummating, and maintaining a productive inter-company partnership. Read part one.

bridging-the-gapStrategic alliances come in all shapes and sizes and adapt to a variety of purposes. The most common include:

  • Pooled Purchasing
  • Supplier Partnering
  • Distribution Partnering
  • Franchising and licensing agreements
  • R&D Partnerships (sometimes via joint ventures)

Relationships between corporations and small technology companies generally fall into the latter two categories. Although distribution partnering does occur, most SBIR-stage companies are still developing their products and therefore are not yet ready for distribution partners.

Technology licensing agreements and R&D partnerships can be a source of operating capital for early-stage companies, especially when up-front payments are involved. However, in many cases partnerships with large corporations can bring benefits more valuable than cash. Significant credibility can accrue to an unknown technology company that announces a partnership with a well-known corporation, and that exposure often leads to inquiries from other market players.

With an established market presence, a corporate partner brings not only intelligence about critical market trends but often a different, and important, point of view about customer needs. Additionally, the partner can offer first-hand experience by opening doors to influential prospective customers that the technology firm could not easily approach on its own.

Operational expertise is not typically a strong suit of early-stage companies, but one in which larger companies excel. Their talent and experience can help smaller partners navigate the rough patches in product development or outsourcing with fewer spills.

Certainly, alliances are not without their potential pitfalls. Seattle entrepreneur, T.A. McCann, offers some words of caution. To avoid distraction he advises postponing partnering until you’re confident of your product-customer fit, and he says don’t partner with other startups. They might know less about the customer than you do.

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Michael Kurek, PhD, Partner, BBCetc
Check out Michael’s OpEd for Detroit’s digital publication, Metromode: “Minority/Women Tech Entrepreneurs: Don’t Overlook Federal R&D Grant Money