An invitation to Corporate New Zealand
We are on a quest to get more of New Zealand's largest organisations and corporates to buy more start-up products. Here are a few reasons and an invite.
When I am talking with CEOs or CIOs of large corporates about using more startup products, I hear a lot of enthusiasm but also the old adage “no one got fired for buying IBM”.
There is some annoying truth in that tried and tested products bring some comfort to large businesses that have significant shareholder bases and reputations to uphold.
However, have we ever considered how many folks got promoted for “buying IBM”?
Having spent the early years of my career at a major corporation, I relished the chance to present new products or technologies to my Directors. They thought it showed a depth of thinking when it came to problem-solving and a passion for ensuring that our company remained on the cutting edge of innovation. We trialled new products while still remaining friends with compliance and procurement. Most importantly, we helped startups gain custom with one of the largest brands in Europe. Was it difficult? Yes. Did it require lots of cajoling? Yes. Was it rewarding and mentally stimulating? Hell, yeah.
Did I get promoted partially because I tried new things from early-stage companies? Yup.
Now, I know that there are a handful of corporate venture funds in New Zealand in various guises, but my quest in this regard isn’t about getting more capital for Kiwi startups. My voyage is to get MORE CUSTOMERS for New Zealand-based startups. More customers = increased financial sustainability, smoother growth capital raising and an enhanced attractiveness to top talent.
So, enough chest-beating; what are we asking for? A handful of considerations and one ask (for now):
How does your business handle inbound, cold approaches from startups selling their wares? Do you have a process? Do you ignore them? Send them straight to the rubbish bin? Or do you entertain pitches from startups? What would it be like if you nominated a person or a team to be a startup champion to handle all of these leads and assess their viability? Someone who was well networked and knowledgeable about your business and can direct qualified opportunities to the right person.
Does your procurement function have the ability to easily onboard and set up invoicing to and from startups? Do you have payment terms that are suitable for companies that operate on short runways? We have seen some invoice payment periods to be up to 180 days. That is quite simply unworkable for a startup that has a 12-month runway. On a similar procurement note (please don’t think I am picking on you!), I appreciate that some companies do not like their business representing more than 30% (for example) of the total revenue of the supplier’s business. If you are keen to engage with startup products, please recognise that these types of requirements will strike a mortal blow to any such aspirations. You will likely represent well north of 50% of a startup’s total revenue, especially if they are early stage.
We know that some corporates believe that investing in early-stage startups de-risks the investment for a plethora of reasons (greater visibility into the machinations of the business; defensive measures; ease of sharing internal data with affiliated companies; increasing the chances of buy-in etc.) To put in plainly. we are not believers in corporates investing in startups when they are pre-Series A. The potential for conflicts of interest amongst sales pipelines is too much for us to stomach, and we do not recommend these sources of capital to our founders. We would like you to consider saving making any entrance onto the cap tables of startups until later. Perhaps instead, derive value from your relationships through market competitive advantage, inviting founders to come and inspire your own teams and from the personal satisfaction of being instrumental in the success of a new company.
We are seeding a new community of corporate decision-makers who are open to receiving and buying technology products from early stage startups. We are focusing initially on New Zealand corporates but international businesses are more than welcome.
We will be looking to host a think tank dinner in early Nov for senior decision makers and CIOs and those who connect with me will get an instant invite.
Feel free to connect with me on LinkedIn or send me an email.