Many entrepreneurs do not think about teaming up with a corporate strategic partner to fund their invention or idea and/or to bring it to the marketplace. Today, finding a corporate partner is one of the better ways to tap money sources. A corporate strategic partner can provide the capital resources, credit, management expertise, distribution channels, and/or manufacturing services necessary to successfully market your product or service. A corporate strategic alliance can provide needed funds for research, development, and marketing your product or service.
There are several advantages to partnering with large corporations. First, a corporate partner is usually willing to wait longer to receive a return on its investment than traditional lenders or investors such as bankers or venture capitalists. The return on the investment is not as important as the potential of establishing new divisions. If corporate partners are interested in taking an equity position in your business, you probably will give up less ownership than working with a venture capitalist.
Corporate partners can contribute more than capital to your business. They may offer good business advice and moral support and provide state-of-the-art technology. Establishing a corporate strategic alliance can also provide valuable contacts in the business and financial community.
The disadvantages of corporate strategic alliances include loss of control or the risk of the corporate partner making demands that you are opposed to. For example, you could be required to share your research results in exchange for use of its facilities. Also, your affiliation with one corporation may affect your ability to sell your product to its competitors. Or corporate mission and goals could change, causing your corporate partnership to sour.
To identify a potential corporate partner, look for corporations searching for complementary products to distribute through their existing channels. The key is to find a corporation with the resources but not the time, commitment, or creativity to pursue the product or service you provide. Remember, corporations are mainly interested in building and strengthening their basic business. Therefore, your output must fit their mission and goals.
Focus on corporations that are interested in early-stage ventures and have already invested in your industry. Also look for a corporation that might be interested in the right to license your invention.
An excellent resource for structuring corporate strategic alliances is Winning Combinations by James W. Botkin.