Five reasons why corporations should buy from startups

May 23, 2019Blog
Five reasons why corporations should buy from startups

Corporations and startups are working together more than ever, both in the form of collaboration where both learn from each other and as buyers and sellers. Whether a corporation co-operates with startups in the form of co-creation or is sourcing from a startup, they are most likely looking for for something new. They maybe want to strip off old habits and see if they could create a leaner process, find an entirely new angle or solve a problem no one has solved before.

But is it risky to buy from a startup? Can they deliver on time and are their resources adequate for the needs on a global multi-million euro corporation? The answer is yes. It is as risky as anything else is where you are turning accustomed ways of doing things upside down and trying to create something new. It’s always risky to take a step into the unknown and be the first – or one of the first ones. Just as with investing, the higher the profit expectations are, the higher the risk. If you’re ok with low profit margins, you can play it safe and keep doing what you’ve been doing. But if you want change and higher profits, it means higher risk. And in the long run, is playing it safe a sustainable approach that maintains your competitive advantage in a constantly evolving world?

I wanted to share five good reasons to buy from a startup as a corporation. (There’s plenty more, but I’m trying keep this compact.)

  1. Innovation. You’ll almost definitely get something new that challenges current models. Startups are not stuck in old habits and are not in the business of repeating history. They have a vision of how things should and could be, and they tear down barriers to reach it.
  2. Cost efficiency. Startups operate with limited resources and have had to be innovative in order to reach where they are now financially as well. They’ve built their internal processes to be as lean and cost-effective as possible. They have avoided anything that doesn’t bring value. This means customers don’t end up paying for inefficiently used resources hidden in the price of the product.
  3. Commitment. People who work at a startup didn’t join in because they wanted an easy-going job where they can complete given tasks and then go home. People who work at startups are hungry for change and results. They’re passionate problem-solvers who want nothing more than to succeed in their mission. They commit to solving your problems and value each customer as their highest priority.
  4. You’ll receive a product suited for your company’s needs. Startups are rising from a blank sheet of paper. They want to hear your ideas and know your needs as a customer and will build their product on that, and keep building. (Or at least they should.) When you buy from a startup you can be a part of that development process without carrying out the work, and enjoy using a product developed for your needs.
  5. You’ll be a forerunner. Do you look at your competition and try to do what they’re doing or do you want to stand out as a forerunner who does things differently and is willing to renew yourself to keep up with the world? Build your image and brand as a trailblazer that’s constantly moving forward and developing, and you’ll attract like-minded talent and clients.

With that said, startups come in as many forms and colours as the people founding them. Relying on a startup isn’t a guarantee of innovation or progress and selecting a startup to source from – or any company – should be done with thought. When buying from a startup, ask the difficult questions and learn about how committed they are to your cause. Whichever way your shared journey goes, it will help the startup clarify their purpose and eventually become better.

If you’d like to discuss further reasons to buy from a startup or just have a chat about the subject in general, you can reach me at johanna@alvinone.com.

 

 

Author: Johanna Varje, CEO & co-founder at AlvinOne