BETA
This is a BETA experience. You may opt-out by clicking here

More From Forbes

Edit Story

The Hard Truth About Making Collaborations Between Deep Tech Startups And Corporate Work

Following

Imagine the industrial 3D printing company you founded 30 years ago is now worth billions, with manufacturing customers in 68 countries and over 1,200 employees.

You’ve been a pioneer in the field, and yet, you know your technology has enormous untapped potential that your own internal R&D can’t fully unlock.

One day, you get a call from a deep tech founder who can create a working design of the aerospike rocket engine – a challenge that stumped NASA for decades.

You quickly establish an exclusive partnership, and now, you’re poised to dominate the space propulsion industry, projected to reach nearly $33 billion by 2031.

This is the story of the successful collaboration between EOS, the 3D technology and solutions provider founded by Hans Langer, and Hyperganic, an AI-based engineering start-up founded by CEO Lin Kayser.

The aerospike rocket engine is up to 20% more efficient than traditional rocket engines. But, because of its complexity and the constraints of traditional CAD tools, it’s never been successfully realized.

Using their AI-based engineering platform, Kayser’s teams create algorithmic models that enable a wide variety of aerospike designs within minutes that can be quickly iterated and tested to identify the best design. Together with EOS’ 3D printing capabilities, it’s a winning combination.

Sadly, this isn’t how most collaborations between deep tech startups and corporates play out.

According to a 2016 study, 82% of corporates view interaction with startups as important and 23% indicate these interactions are “mission critical.” And yet, 50% of startups said their experience working with corporates was mediocre or worse.

Puzzling, isn’t it. On the face of it, the two sides are perfectly complementary:

Deep tech startups are developing disruptive technologies that advance scientific and technological frontiers.

Corporates have operational levers – customer base, distribution channels and business expertise – to scale and amplify the technology.

In reality what happens, says Massimo Portincaso, Chairman of Hello Tomorrow, a global initiative that connects deep-tech entrepreneurs with corporations and investors, is that collaborations expose the fragility of startups and the bureaucracy of corporates.

Clearly, having synergies is not enough. Realizing the full potential of collaboration requires a fundamental shift in mindset – by both parties.

Corporates have attitude.

Increasingly, companies in virtually every industry will need deep tech and sustainability at the core of their operations – capabilities that they’re unlikely to develop internally.

And yet, corporates often have this condescending attitude toward start-ups, says Kayser, a serial entrepreneur. “What they need to understand is, deep tech start-ups are in a position to disrupt their business, to make them obsolete. Corporates are an important part of the ecosystem, but their main role is as a multiplier and a credibility giver.”

Herbert Mangesius PhD, general partner at Vsquared Ventures, agrees. As an early investor in Hyperganic and other European deep tech startups such as Isar Aerospace and IQM Quantum Computers, he’s frustrated with the conservative mindset of large companies and how long they take to make strategic decisions:

“Once they’ve recognized the value of working with a startup,” he says, “they need to ensure there’s high-level sponsorship, a clear directive from the top.”

When top management transmits their excitement about the partnership, it creates urgency for doing the actual work, says Kayser. That means we can meet with project managers twice a month instead of twice a week.

Startups have an inferiority complex.

Here’s the thing: Most of the solutions for our greatest planetary problems – not to mention exponential productivity, growth and competitiveness – are going to come from deep tech startups. The best ones will have multiple partners to choose from.

But their attitude is too obsequious, says Kayser: “We’re just a little startup, we're not making money. Please, Corporate, can you give us a chance?”

Instead, they need to understand the value they bring to the table.

It starts with being clear on their mission. “Founders are obsessed with their technology,” says Kayser, “but they can't tell you why they exist. I can tell you exactly why my company exists: to dramatically accelerate the pace of innovation in order to solve one of humanity's greatest threats, climate change.”

“When founders have that conviction in their mission, they negotiate differently. Their attitude is: ‘Do you want this? Or should I go to someone who does?’”

Startups don’t need to wait to be enabled by corporate partners, dependent on them for survival. They can show up as an equal: taking responsibility for defining the project and not relying solely on corporates for funding.

Making these mindset shifts will create a more productive power dynamic, where both deep tech startups and corporates respect the mutual strengths they bring to the table.

When that happens, we’ll all win.

Follow me on Twitter or LinkedInCheck out my website or some of my other work here