Partnering is one of the best ways to strengthen startups
By Adi Gaskell
We tend to have something of a complex relationship with creativity and innovation. This creates a strange paradox whereby uncertainty prompts us to seek new ways of doing things while also craving the comfort blanket of familiarity. It’s perhaps no surprise, therefore, that meaningful change is often driven by the proverbial “burning platform” that gives us little option but to change.
The Covid pandemic has been a perfect example of this, with Microsoft chief Satya Nadella famously remarking in April 2020 that we have seen 2 years’ worth of digital transformation in 2 months.
Tech entrepreneur Jacqueline-Amadea Pely, founder of the German startup Loyee.io, which provides culture-as-a service, agrees. “The pandemic saw a huge investment in digital technologies in a really short space of time, with companies simplifying and streamlining their procurement process to enable them to adapt to the rapidly changing circumstances," she explains.
These observations might suggest that now is a golden age for innovative technology start-ups. But that would be the wrong conclusion. More than ever, we are in a world where the strong survive. To make it, start-ups need to be resilient and, in many cases, to work with partners.
A survey from Startup Genome revealed the intense pressure many startups were under in the initial wave of the pandemic, with nearly half stating that they had enough cash in reserve to maintain operations for fewer than 3 months. These cash flow problems prompted significant changes, with 58% of the entrepreneurs surveyed laying people off.
The need for resilience
Resilience is the key quality required by entrepreneurs to survive. According to recent research from the UK’s Durham University Business School, the survey found that whereas pre-Covid, qualities such as self-confidence were key to entrepreneurial success, this was not the case during the pandemic. During Covid, resilience was key, especially among those operating in highly adverse environments. In more challenging conditions, entrepreneurs needed to adapt to rapidly changing circumstances and have the resilience to cope with those changes.
A recent study from the World Economic Forum echoed that, highlighting the importance of being able to adapt effectively to changes. Firms that have been able to pivot during the pandemic have actually emerged stronger and better able to capitalize on new opportunities.
Building entrepreneurial resilience
So, being resilient is obviously important, but how do you acquire the trait? One approach is to generate enthusiasm among investors so that they constantly fund your company. There is evidence that this can be a viable strategy. The Covid pandemic has seen record levels of VC investment, and research from the University of California, Davis shows how this can provide resilience by allowing firms to weather whatever financial storms await them.
But constantly finding new investors is obviously not a viable approach for all start-ups. A more sustainable solution is to team up with a corporate partner. One company that has been enjoying great success that way is the German startup BioNTech. The firm is highly innovative in vaccine research, but is far from having a global reach of its own. By teaming up with Pfizer, it quickly gained muscle in manufacturing, distribution, regulatory affairs, and even brand recognition.
Huawei is another example of a company that helps others punch above their weight. For instance, the non-profit organization Rainforest Connection (RFCx) has worked with Huawei to automate the monitoring of highly complex rainforest ecosystems. By tapping into Huawei's Cloud AI, RFCx was able to develop automated monitoring systems that detect and distinguish natural sounds, such as from spider monkeys, from man-made sounds, such as from trucks or chainsaws. This enables the NGO to protect endangered species and their habitats.
Collaborating with others at the individual level also boosts resilience. Research from the University of Notre Dame indicates that having a support network helps leaders cope with the challenges of entrepreneurship.
Pely, of Loyee.io said she gained network support through Seeds for the Future, a Huawei training program for promising university-age students. Through the intensive three-week program, which is designed to provide insights and exposure into the Chinese market and culture, participants forge bonds that last long after the program officially ends. This gave Pely a support network who knew well the challenges involved in entrepreneurship. Seeds for Future alumni report that they regularly communicate via messaging apps and in-person get-togethers.
In stormy seas, developing the resilience to sail through a difficult period is crucial. Partnerships can be a source of support for smaller organizations, such as startups, because they do not come with the strings attached to VC funding.
Unlike investors, partners are less likely to dictate the strategic direction to be taken or mandate that startups pursue scale at all costs. Instead, they will together develop solutions that create a win-win for both parties. This support can be vital in ensuring that start-ups emerge from catastrophes like Covid stronger, both at the individual and organizational level.
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