STARTUP-STARTUP COLLABORATIONS: A RISKY ENDEAVOR OR A CATALYST FOR GROWTH?
We’ve all heard of startup-corporate collaborations but what about startups working with fellow startups? Is it a good idea especially when both companies are still in the early stages, which usually means no fully working products and barely enough resources to keep themselves afloat? Can it serve as a tactic to further accelerate cutting-edge technologies and help strengthen the startups behind them? We asked a few founders from our Deep Tech Pioneers community who shared their personal experiences, the pros & cons, and their tips for successfully working with fellow startups.
Here are the key take aways:
PERSONAL COLLABORATION STORIES FROM FOUNDERS
Maksym Plakhotnyuk, CEO at microelectronics manufacturing company Atlant 3D Nanosystems, has had rather positive experiences and indeed, highlighted that Atlant 3D’s core technology was developed thanks to a collaboration with a startup.
“We’re always looking for complementary technologies. Very often advisors tell us: ‘don’t try to collaborate with other startups’. But it really depends. We have had mostly very positive experiences. We actually built our core technology with another startup. They risked their time and effort and we risked that this could fail. Actually it succeeded and that’s why we’re here.
This also creates a really great opportunity to combine two critical innovations that nobody else has yet integrated, so you can get even further ahead in the industry. Today, we work with companies building AI solutions and sensors, and it’s amazing to see what ideas come out of it. In a more practical sense, entering into collaborations can also mean being able to tap into public funds that encourage and enable such collaborations.”
Dorian Kieken, Co-founder & President at AI Redefined who’s developing a collaborative AI-human system, understands that the advantages of startup-startup collaborations depends highly on the type of company. For AI Redefined, collaboration is inevitable and in fact, a good strategy to take on more ambitious projects.
“For us, the choice is either to collaborate with very large companies that can do it all or with medium-sized companies for whom we can also provide complementary value. Our platform helps people to train in AI, so by definition, our goal is to enable others and we are designed for collaboration. But for others, I can understand why it could be complicated and why it would be better to build your company alone and approach everything in a very vertical way.
Currently, we are discussing with a French startup called Delfox, located in Bordeaux. Their expertise is in reinforced learning, which fits really well as a complement to what we do. In general, we have are very large-scale projects and the barrier to entry is very high. We need simulations and visual capabilities on the one hand and AI expertise on the other hand, so it’s not uncommon for us to collaborate with other startups working in one of those spaces. By doing so, together we can deliver on large-scale projects that we would not have been capable of doing alone.”
Betsy Lindsey, Co-founder & CFO at Aircision who is building optical wireless telecom systems, mentions the centrality of trust in the relationship as well as the importance of having in-person contact with your partners.
“Startup collaborations in deep tech are like most things, about trust. Covid has made some of these collaborations go slower, because as a hardware company, we truly need to meet people face to face to discuss the plausibility of our technology actually supporting each other’s goals — not to mention carrying out a proof of concept. At Aircision, we are trying to build future-proof optical wireless telecom systems that in the future will deliver 10X the current bandwidths on the wireless networks today. We want to make sure that we are using bleeding edge components that are extremely energy efficient, and luckily, our ecosystem in Eindhoven is rich with a network of people who ‘get it’.”
Daniele Ramirez, COO at exoskeleton company AGADE, on the other hand, has had quite a mixed experience.
“Working with a start-up is like playing Russian roulette, you either win and gain a wonderful partner to share your journey with or spend too much time trying to make things work.
Often, the startup also does not yet have fully working products, so you need to take a chance. Combining two deep tech startups’ know-how into one single solution is groundbreaking, but it takes double the work because you are designing two things at the same time. In the end, all that really matters is how the people on either side are responding.”
Mari-Ann Meigo Fonseca, CEO at nanofiber manufacturing company Gelatex, agrees that there are pros and cons to this type of collaboration but is convinced that collaboration is the key for success.
“It is easier and quicker to work with startups as we speak the same language and are used to getting things done fast. It is also usually very transparent and honest. Finally, there’s less bureaucracy, so more actual work. The cons are the limitations financially and consequently, to what can be done. There is also more uncertainty about whether the other party will continue the collaboration or even be alive in a year or two.
Startups are often warned about IP protection and there is a lot of pressure to have all IP in-house, to constantly apply for new patents, etc. However, this may restrain collaboration and in doing so, slow down actual innovative results. I wish there was more open collaboration between startups. We are on a mission to convince cultured meat companies that collaboration is the key for success and are happy to see that many are starting to change their initial mindset of doing everything alone.”
WEIGHING THE PROS & CONS
Indeed, there are a lot of pros and cons when it comes to working with fellow startups. We gathered below the other most important ones identified by some of our Deep Tech Pioneer founders to give you a better overview of what to expect.
The pros of collaborating with startups
Ksenia Moskalenko, CEO at advanced space weather monitoring company Mission Space, believes that “working with fellow startups is great in terms of flexibility, speed, and motivation. Because both of you are going or have already gone through a similar experience of fundraising, market identification, product fit, etc., it is much easier to be on the same page and get the most out of your collaboration.”
Max Gulde, CEO at ConstellR whose microsats monitor the Earth’s temperature echoes the value of speed. He notes that “compared to working with larger organizations, working with startups can mean achieving much faster results.”
Claire Baker, Co-founder & Director at Toothpick Project whose bio-herbicide tech restores crop yield, had this to say: “We’ve found we can align goals and reduce redundancies. We can work with similar networks to share best practices and services. For example, we are currently working with another startup to reduce the negative unintentional consequences that their program has on ours.”
The cons of collaborating with startups
Tushar Jadhav, CEO at Manastu Space who develops green propulsion systems, identified these disadvantages: “one of the startups can decide to change plans very quickly and generally, both startups lack infrastructure and maturity so they can tend to make the same mistakes.”
Animesh Jha, Co-founder at high-performance batteries company Volt14 Solutions, noted particularly that “fluid priorities and timelines on both sides mean projects can be deprioritised/shelved by the collaborating party”.
Yann Dufournet, CEO at SkyEcho who provides hyperlocal rainfall intelligence, said that “the main con is that the startup’s flexibility often comes at the expense of a resilient organization and a lack of financial buffer, which can limit the outcome of collaborations (and sometimes even end them).”
Sahitya Yarlagadda, Communications Strategy Manager at sustainable batteries developer Enerpoly, warned that “startups wanting fast results sometimes means all the kinks in an idea are not yet worked out nor well planned and we have to go back and reiterate. So it’s not always comprehensive and implementation can take more time.”
So, after all that, the question remains: should you or should you not collaborate with another startup? Well, as you heard from the founders themselves, there is no blanket response to this question. It depends on several aspects, including: the type of company you are or the kind of technology you’re developing, your company’s overall vision and objectives, the goals of the potential collaboration, the value proposed by the other party as well as your own capabilities and what you can realistically deliver in the collaboration, among other things.
TIPS FOR A SUCCESSFUL COLLABORATION
If you are considering collaborating with a fellow startup, now or in the future, here are some valuable tips from founders that can help you build the basis for a successful collaboration:
- Alignment is key so make sure you and the other company share a common vision and some similar values.
- Verify that you have the bandwidth to complete the collaboration.
- Ensure commitment by having strong economic incentives embedded in the collaboration for both sides.
- Specify clear objectives, roles and responsibilities between and within each company.
- Mutual trust and transparency is crucial, so be honest with your partner about your capacities and limitations.
- Maintain regular communication with your partner throughout the collaboration and plan for some face-to-face meetings.
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