Using technology is usually a challenge among startups aiming to grow quickly. The startup understands the benefits of its technology, but it may not be widely known in the market. Based on my experience, it is beneficial for a startup to take on corporate investment as a way not only to secure financial support but also to benefit from the experience and expertise of corporations. In addition to helping with technology deployment, research from Global corporate entrepreneurship shows that corporate investment reduces the occurrence of startup bankruptcy while increasing exit valuation.

Venture Capital-as-a-Service (VCaaS) is a unique and innovative investment model that allows corporations to invest in startups while relying on an experienced venture capital partner. This enables companies to invest in the most innovative startups globally without having to build their own venture capital organization, an exercise that is difficult and expensive. VCaaS allows the investor to align investments with their corporate strategy by easily scaling investments up or down as needed.

Connected: Corporate Innovation Through Effective Startup Investment

Corporate investment benefits

Let's first look at how corporate investment helps startups succeed through technology deployment and in other ways. A benefit for startups is that corporate investors usually have strong networks of customers, suppliers and partners. Pitches made by corporate investors help startups get their products to market faster. Startups can easily leverage the experience and knowledge of their corporate investors. Using this expertise helps startups make better decisions quickly and avoid common mistakes that entrepreneurs make.

Another benefit for startups is that most corporate investors have extensive financial resources. After they make one initial investment, startup founders have almost immediate access to large financial capital. This helps them invest more in technology, hire additional people or acquire critical infrastructure. Startups often need financial capital to produce or purchase a higher level of inventory so that if the business suddenly takes off, they can continue with it.

Startups also benefit from the established reputation of a corporate partner and investor because the corporation is likely to be well-known in the business community. Many corporations have globally recognized brands, and the startups they invest in typically gain value from the association. When customers or other members of the ecosystem see that a reputable corporation has invested in a startup, they are likely to take that startup — and its products or services — seriously.

Connected: 5 ways to identify a promising business investment

The role of cooperation

I believe that collaboration is critical to any business relationship and this fact is recognized in the industry. McKinsey Research shows that 75% of startups consider corporate collaboration to be crucial, but only 27% are satisfied with their corporate relationships. I would like to share my knowledge on how to increase the success of the collaboration between a startup and its corporate investment partner.

The first consideration is to ensure that the initial-corporate communication is clear and direct. Each party should make its objectives known at the beginning of the cooperation to avoid any confusion down the road. Ideally, they can create mutually beneficial goals that work for both the startup and the corporation, even if they approach the relationship from different angles. Continuous clear communication is important so that startups and corporations can learn from each other and make it clear what goals they are trying to achieve.

It's also smart for startups and corporations to be honest – with each other – about what they know and don't know. If they are experts in a particular subject, then, of course, it makes sense to use that expertise. On the other hand, if they are less knowledgeable about certain areas, I believe it is important to seek advice elsewhere. This can be from an investment partner, third-party research, or by connecting with other members of the startup ecosystem. It is often possible to find people who have been in your situation before so that you can learn from their experience and expertise.

Finally, I believe it is important in every cooperative relationship have a flexible attitude and approach. By listening carefully to the other party and the market, partners will be more successful. Rather than being set in their ways, I recommend that startups and corporate investors remain open-minded throughout the relationship. By quickly adapting to feedback and changes, it is usually possible to adjust strategies and ultimately achieve a better result. This is likely to result in more business for the startup and a more successful financial investment for the corporate investor.

Connected: This is the key to a true 'founder-friendly' venture capital