Corporate-startup partnerships in Southeast Asia can be vital to the growth and success of the region in many sectors. These forms of collaboration between the corporate and startup worlds occur for several reasons, promising to deliver win-win situations for both if teaming up is handled correctly and aligned toward shared outcomes.

According to McKinsey & Co’s report—You Can’t Buy Love: Reimagining Corporate-Startup Partnerships— startups want to partner to access the corporate partner’s market and boost their reputation by being associated with a credible company. They also get the corporate as a customer. Furthermore, they can leverage corporate assets and resources, obtain insights into the industry, and receive financing.

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Corporations benefit from teaming up with startups by gaining access to top tech talent, faster innovation and product development, and insights into new technologies and work models. They can also earn a possible return on their financial investment. Startups are smaller and more agile but need to gain experience bringing products to the market, which corporations excel at. 

In addition, bureaucracy at top organisations limits their ability to adopt new technologies and operational models faster, which is not conducive to growth and innovation. Corporations can guide startups to scale sustainably, providing resources and technologies that would not be readily available to the startup. With the world adopting ESG (Environment, Social, and Governance) ideals, startups can receive support in transitioning to sustainable, clean energy and developing environmentally-friendly solutions.

Both could benefit from joint research and development (R&D), saving operational costs, focusing resources, and tapping into the combined knowledge of the tech staff to achieve practical solutions for Southeast Asia.

Risks and challenges with corporate-startup partnerships

While these partnerships offer many benefits, they also bring significant risks and challenges. The primary issue is finding the ideal partner whose products and services fit the other company’s solutions. Some partnerships fail because there is a misalignment in goals and differences in the approach to work.

Startup founders may struggle to come to terms with lengthy approval processes and contracts designed to protect the corporation if something goes wrong during the partnership. Corporate leaders are wary of founders who overcommit yet fail to deliver on their promised outcomes. 

According to the HSBC Navigator: Southeast Asia (SEA) in Focus report, nine out of ten global corporations seek to expand to other countries. While such expansions sometimes lead to partnerships with local startups, there may be challenges with finding suitable local talents, and businesses may need help in places with different regional languages.

Moreover, due to the deteriorating global economy and other challenges for startups, such as supply chain issues, collaborating has become risky as a company collapse could bring down the partner.

Mitigating corporate-startup partnership challenges

Various solutions are available to mitigate the challenges listed in the previous section. First, companies should collaborate with businesses that share their ideals and have clear goals and expectations of what the partnership will bring. Both must deliver value and have good governance models to ensure streamlined and effective operations, which save cash flow and operational costs. In essence, they must be mutually-beneficial relationships.

Secondly, both companies should work on overcoming the world’s current economic challenges. For example, they can look for alternative solutions to the rising energy and production costs by using clean energy. They can seek to overcome supply chain issues caused by the Ukrainian-Russian conflict by searching for other goods and raw materials sources.

Thirdly, both companies should be comfortable about losing clients. Once they know their objectives, they must focus on the new customers they will obtain and serve them more effectively. They should check the startup and corporate ecosystems and learn from other companies in their respective niches.

As the McKinsey & Co. report says, a fourth consideration is that they should base the partnerships on specific purposes rather than be general-based unions. For example, the corporate-startup collaboration could focus on joint product development. With this particular goal in mind, both companies can align their operations to meet their collective results.

Finally, startups must plan well and continue innovating to attract more corporate partnerships. Large organisations constantly seek to improve their reach, access fresh markets, and obtain technology that sets them apart from their competitors. Accelerator programs organised by corporations may also serve to attract innovative startups and help establish new relationships.

Even though corporate-startup partnerships in Southeast Asia may seem unlikely due to their different statuses and objectives, working together can benefit both. The startup ecosystem needs nurturing to overcome the challenges faced by new businesses, but it also has features like agility that make it a strategic partner for top corporations. Choosing the right companies to partner with and aligning goals will help to drive innovation and growth in the region.