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Startups should read this checklist before they go “whale hunting” for big partners

by
David Frankel
Founder Collective
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Many promising startups have blown up due to ill-advised business development deals that swelled teams in a bout of euphoria only to see them wither if interest and focus from their partner wanes. Ask yourself these questions before going whale hunting:

How much monthly recurring revenue will it add to your business?

Once that money is spent, what will the ongoing revenue be? What is the opportunity cost of not supporting the current business plan? 

How will this project help your core business?

If the project will allow the startup to speed up the development of a core technology that is generally applicable to other customers, it would seem far more worthy of consideration.

What happens if this doesn’t work out?

When considering a high-risk, high-reward partnership, founders need to spend time envisioning a gruesome demise.

How well do you understand the bigger company?

Founders with little exposure to big companies are susceptible to misreading cues. 

Are you aware of the work pace differential?

Startups often drown in the number of process leviathans required to make the smallest of improvements while this is not the case for big companies.

Who are the internal champions?

Promising projects can die on the vine because the internal champion gets reassigned or leaves the company. Successful partnerships will involve multiple high-level people from the larger organization. 

Is the project a priority for the Chief Experience Officer/Vice President?

Below the level of a VP or CXO-level executive, we’ve seen startups spend large sums and risk their future on what amounts to a proof of concept project for a mid-level director with no real juice.

Are you competing with another startup?

Founders considering competing with another startup should give serious thought to skipping the process and building out a less concentrated revenue base with fewer impediments while your competitors fight to the death.

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