As large corporations move haltingly toward circular business models, circular-economy startups can provide innovation, fresh thinking and new technology.
Some companies are partnering with green startups to advance their zero-waste and other sustainability goals, but that presents challenges.
Small, privately financed and moving rapidly, startups operate on tiny — or sometimes nonexistent — profit margins. Larger companies have the luxury of time, resources and money; but mismatches in pace, business culture and communication styles often hinder partnerships.
Partnering with startups can help companies to "solve a product problem, create a new avenue for revenue, accelerate R&D, or accelerate time to market for a specific product," according to Otilia Barbuta, principal at HP Tech Ventures, the venture capital arm of HP. She was talking at a breakout session at Circularity 2024. "There are solutions in the market created by startups and in this circularity realm, I think it's more important than ever to partner with [them]."
Here are five takeaways on forging fruitful partnerships with startups:
1. Structure an official program for working with startups
Figuring out who the right people are to connect with at a large company is daunting for startups. David Cutler, co-founder and CEO at Fortuna Cools, for instance, said he identified Grab (NASDAQ:GRAB), the "Uber of Southeast Asia," as a strong potential buyer for his startup’s coconut husk packaging but it wasn’t obvious how to engage the company. Grab’s services include food delivery, and Fortuna Cools’ packaging is a cleaner alternative to the polystyrene coolers used by the company and others delivering food.
"There were a few people that had overlapping areas of responsibility around materials, and sustainability, but also around packaging and procurement. For us, it was about finding the right individuals and the right teams within this big company to be able to move fast," he said.
Ultimately, Cutler "went nine levels over people's heads to meet with someone in Palo Alto, who sent a WhatsApp message back to Singapore," to get the ball rolling. Patiently working through channels "in the standard B2B way, frankly, I don't think it would have happened."
Creating an official program to give startups an entry point makes it easier for both the entrepreneurs and the company, Barbuta said. A formal program can tie together an internal champion and alignment on incentives and resources, she said. It provides "a structured way to motivate everybody and give them clear milestones, a clear timeline, and clear metrics that you want to achieve."
2. Internal champions should keep the ball rolling
Barbuta scouts for startups, figures out where they can plug in and serves as an internal champion at HP Tech Ventures, following them through the vetting process. "I'm going out and convincing other people [internally] that there is value and … here's why we should think about it," she said.
She spends a lot of time meeting with stakeholders, "going back again and again," pinging them when decisions are needed. "It’s active management of the relationship," she said.
Navigating the process without an internal champion to see why delays are occurring, or where the friction points are, is tough for startups. Deals can die if startups spend too much time figuring out "who has P&L, who ar
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