Last Friday night Latvian startup scene has got a new star on the horizon – TechChill named a winner of Fifty Founders Battle. The healthtech startup, Anatomy Next, went home with a check for 10 000 EUR in cash from Google for Entrepreneurs and closed a partnership deal with a big corporate. The company designs a human body simulator for doctors to practice in virtual reality.

Anatomy Next has appeared in 500 Startups Pitching Competition finals at Digital Freedom Festival and Bett Conference in London. Last month the company announced a big partnership deal with Microsoft. Sandis Kondrats, CEO of Anatomy Next, shared his startup story and tips for corporate synergy. If you plan on teaming up with a big corporate, read on how Kondrats’ company Anatomy Next successfully established cooperation with Microsoft!

How Not to Fail at Corporate Synergy – My Experience With Microsoft

Sandis Kondrats Angel List

My startup Anatomy Next has had quite an exciting start to the new year. We announced a partnership with Microsoft in January, then participated in a panel on cooperation between corporates and startups during the Riga Venture Summit, and also won the ‘Fifty Founders Battle’ at the Baltic startup event TechChill in Riga, where we came first out of 50 startups to win the 10,000 euro prize.

However, the topic most startup founders and investors I meet these days are specifically interested in is our cooperation with Microsoft. Long gone are the days when startups would never dream of forming a partnership with a big corporation, and corporations didn’t see any incentive for cooperating with startups. Corporate synergy has become such a trendy buzzword, that it’s discussed at almost every tech event. Yes, our corporate partnership experience not only shows that we have a quality, innovative product, but it also proves the viability of our business model. While this partnership has worked out well for us, I also realize that for many startup-corporate synergies this is not always the case.

The scope of cooperation is broad. According to a 2016 INSEAD and 500 Startups report 68% of the top 100 companies listed by Forbes had engaged with startups, and over half of so-called startup ‘unicorns’ have raised funds from at least one corporate. However, the central question remains – how to tell both sides are ready? With plenty of risk in forming such partnerships, I’ll share my experience as a startup on how not to fail at corporate synergy!

Take it to the Next Level

No matter what I’m working on, I’m always looking for ways to make a bigger impact. As someone who began their career in the art world, I’ve had a somewhat non-traditional path to founding a health tech startup. My first big business venture was a book of 3D human body visualizations for artists. After realizing that artists and medical professionals have some of the same needs for highly accurate 3D portrayals of human anatomy, we decided to found Anatomy Next and pivot from publishing books to creating the most precise web-based, AR and VR human anatomy diagrams and 3D renderings.

As software creators, when we began to look at how we could make a bigger impact, we, of course, looked towards corporate hardware producers to help take us to the next level. In a huge milestone for Anatomy Next, we ended up forming a partnership with Microsoft. It’s definitely a win-win partnership – we help them find innovative new uses for their hardware, and they give us a platform on which to build and experiment. The contacts and network from such a well-known corporation also helps both the startup and company make a bigger impact on wider society. We use our platform to advance innovation and accessibility in digital learning.

Don’t Partner Up Just for the Photo Op

This goes for both corporates and startups – corporates shouldn’t partner with startups just to seem trendy and innovative without actually aiding their development, and startups shouldn’t cooperate with corporates just to create the illusion of legitimacy.

First, start by aligning your values and expectations. Neither startup nor corporation will gain long-term benefits if there is a misunderstanding on this level. A successful partnership can happen when both have the same big picture goals and understand what they expect out of the partnership from each other.

There is a misconception that big, old, slow-moving ‘dinosaur’ corporations just stick their name on a startup event. If they are seen supporting innovative new startups, that this will give their company credibility as being progressive and innovative themselves. However, if the corporation is not actually ready to implement innovation internally, no amount of public relations will magically turn your company into the next Apple or Google. You have to put in the work!

Same goes for startups. Getting acknowledgment about your product from a corporation will make people look at your startup with more credibility. This may bring a short-term boost, but if you don’t have anything solid to back up the buzz you’ve created, it can be very difficult to regain your reputation. In a successful startup-corporate partnership, the corporation truly believes in the startup’s product as well as the big-picture vision, and the startup can show how they plan to use to corporate support to take their business model to the next level.

Find Your Unique Value Proposition

When exploring our partnership with Microsoft, we shared the same idea – we want to use digital technology to save lives and revolutionize learning. It was the perfect match. They invest in hardware technologies, but we create software. Microsoft was very effective in integrating Anatomy Next into their team at the international Bett conference on education and technology in London to present our software on the Microsoft HoloLens and Windows Mixed Reality devices. In this way our cooperation serves a bigger purpose than simply presenting our products together – we showed a common commitment to improving education through digital learning.

Don’t Take ‘No’ For an Answer

Sometimes it’s good to consider advice from more experienced players in the field. However, when I had countless advisors telling me ‘it’s never going to happen’ about forming a successful partnership with such a big corporation as Microsoft, I chose not to listen.

I was aware that forming this partnership would take time, so I needed to be persistent and not give up. It took Anatomy Next two years before we finally signed the cooperation agreement with Microsoft. Startups are not always stable businesses, so it can be risky for a corporation to begin a partnership with a startup. Corporations don’t like taking on risk. There are plenty of cases where corporations begin forming cooperation with a startup, but it bankrupted before the cooperation can even be finalized. This makes corporations skeptical about startups.

Practice and prepare! Be able to show that you have a solid business plan – and one that involves more clients than just your corporate partner. Having an innovative product is a good way to get on the radar of a big corporation, but it won’t be eager to cooperate if you don’t already have money in the bank. If you have some level of financial security as a startup, this means you are less likely to bankrupt right away, and other investment shows that other stakeholders also believe in the product and business model.

Also, as a startup, never rely entirely on your corporate partner. The best way to lose your money is to put all your eggs in one basket, and then have that basket break. Show how the combination of the corporate contacts and startup experience with innovation can lead to more clients and development for both parties. This can be a fast-track to validating business cases.

Don’t Get Scared by Red Tape

Hacking new technology might come naturally to your startup, but hacking a corporation that speaks a whole different ‘language’ can sometimes seem impossible. Keep in mind that they have their own inside jargon, policies, and hierarchies. Things might move very slowly by startup standards, but keep trying until you find the right channel of communication.

Coming from outside the slow-moving corporate system can be a big advantage for startups. However in the modern economic environment corporates also need to change to survive. As a startup, you can show corporates, using their own technology, how they can innovate.

Don’t deal with corporations that don’t have designated people dealing with innovation. Form a clear plan of what you want from them – a pilot, public relations, research support, or something else. Things might not happen as quickly as you want them to, but investing time to form a strong relationship with a corporation can have a big pay-off. Depending on the specific industry your startup is targeting, the corporations can even help to circumvent red tap in heavily regulated industries. Partnering with corporations can lend credibility to clinical trials, or other projects requiring some form of legitimate backing.

Don’t Change Who You Are

Most importantly, never change who you are as a startup to fit better with a corporation. Focus on what you are best at, and sometimes accept that a corporation might not be ready for cooperation with a startup. There has been a huge hype around corporate accelerators, but once again if there is not a professional outside the corporation managing it, maybe rethink your options.

I’ve shared many ‘don’ts’ with you, so to end on a high note, I have a ‘do’ as my most important piece of advice: always stay positive!

No more articles