Strategic Partnering For SBIR-Stage Companies: What Motivates Large Companies to Partner?
Tags: Business Development, Business Planning, commercialization, Product Development, SBIR, Strategic partnering
Strategic partnering is an important component of the commercialization plans of many SBIR awardees. This is the first in a BBCetc series of blogs on various aspects of finding, consummating, and maintaining a productive inter-company partnership.
From the perspective of the small company, the motivation seems both simple and obvious – the need for funding. However, whether an entrepreneur is simply chasing dollars or views alliances more strategically, he or she might be surprised that large corporations are even more interested in partnerships. A Booz Allen survey of 2,000 firms identified six reasons why big companies partner, including:
- Accelerating growth
- Accessing critical capabilities
- Entering new markets
- Building critical mass
- Accelerating R&D, and
- Reducing costs or capacity
Two or three of these goals can be pursued through partnerships with small technology companies.
Big company−small company alliances might be most common…and most successful…in the pharmaceutical industry. Merck claims to have “more than 50 actively-managed alliances currently underway.” That level of activity is understandable when the company reveals that approximately 60% of its revenue comes from alliance-related products and enabling patents.
As they struggle to build sophisticated products and get them to market faster, even large corporations are challenged by today’s accelerating pace of technological change. In response they must concentrate on their core competencies and on those areas where they can add significant value. As a result, other capabilities, including innovative technology and expertise, must be sought outside the organization. These market realities present opportunities to SBIR-stage companies that are able to position themselves correctly with a well-matched corporation.
Next time we’ll explore the most common types of strategic alliances and what, in addition to money, should motivate small companies to partner.
Michael Kurek, PhD, is BBCetc’s Partner in charge of commercialization planning. He also provides SBIR/STTR consulting focusing on NSF,DoE, USDA, DoC, DoT, DoED, and EPA.