“Every founder is presented with opportunities that seem great. That are “company making.” That are once in a lifetime. That are too good to let pass.. ”
Bigco’s regularly offer Startups partnership opportunities that seem too good to let pass. Let’s unpack a few of the bigger reasons Startups without strong product market fit shouldn’t waste time on these Strategic BD* opportunities:
- Startups don’t have anything strategic to trade. Before startups have significant product market fit the most valuable thing they can offer partners is outsourced development or beta testing
- Big companies don’t move quickly. A classic deal maker phrase is “time kills deals” and I promise you this is true
- Startups need distribution and money, not event-based co-marketing. Bigcos don’t contractually commit to distribution or money because they know their priorities may change. Read’s Micah’s blog post again with this idea in mind.
- Big companies have lots of people who need something to do. One of the most fun things for them to do is to talk to Startups because they get paid no matter what happens.
BTW, the first point above effectively kills true Startup to Startup BD. Nothing I or your Board says will keep you from investing time in BD with bigger companies. Try to minimize the time spent on it and unless there is a contract to be signed don’t waste board time discussing potential BD deals.
Bottom line: Don’t waste your time on strategic BD until you have strong product market fit!
*Strategic BD is not sales because it is not incentivized by a quarterly, or even yearly, quotas. This leads quota carrying sales guys to often quip, “BD is sales without a quota”.